Insurance Questions Answered

Written by Jennifer Longoria | Billing Specialist

New year means many things, but, in the world of insurances, it means insurance benefits start over.  Most insurances run on what is called a calendar year.  That means the benefit period is from January to December. Sometimes insurances run on a fiscal year, which renews in the middle of the year and not on January. To determine when your health insurance plan renews, you can call the member number on the back of your health insurance card.

When your benefits start over, that means everything is reset to $0 paid towards deductible and out-of-pocket. (See definitions provided below)   Provider’s offices will need to collect the full allowed amount for services rendered until the deductible amount has been met. Your insurance will again pay up to 100% once the out-of-pocket amount has been met.

In addition to insurance benefits starting over, sometimes an insurance group or policy number may change on January 1st (or the fiscal year date.)  These changes can be because there was a “major life change”, as in employment changes or marriage. Sometimes there is a change due to your employer changing plans or groups, during the companies open enrollment.  When this happens, it is very important you notify your health care providers, specialist, and pharmacies, informing them of the change immediately. Policy and group numbers are specific to your individual health benefits and those numbers are needed to properly submit medical claims to the insurance company.  If the policy and group numbers submitted are no longer valid or inactive, the insurance company will deny processing and payment. This can lead to the costs being transferred to the member/patient at 100%.

Most insurances have a time limit of 1 year, for when a provider may submit a medical claim to the insurance company for processing. If a medical claim is submitted to the incorrect insurance, it can take months for the provider to learn that the insurance policy/group is no longer active. This can result in the provider billing you, the patient, for the full amount, since the insurance policy provided has been terminated.

Health insurance can seem overwhelming. If you have any questions or need better understanding of how insurance works and how insurance benefits you, please do not hesitate to reach out. You can contact your employer for specific plan benefits and/or you can contact your medical provider for specific coverage and benefits in regards to the treatment that is being provided.  Health insurance is designed to help and benefit you. Here’s to a happy and healthy New Year!

Health Insurance Definitions

Coinsurance: The percent of the cost you pay for covered services. For example, you pay 20 percent of the cost for a doctor’s office visit. Your plan pays the other 80 percent.

Copay: A small, flat fee you pay for some covered care at the time of service (for example, $25 for an office visit).

Benefit: A benefit is a service or supply that is covered under a health insurance plan. This might include office visits, lab tests, and procedures during the course of treatment.

Contractual Rate or Allowed amount: The dollar amount that a health plan determines is appropriate for a covered service. The contractual rate or allowed amount is the maximum amount an insurance will allow for a procedure. This contractual rate or allowed amount also assures the insured member that they are not being overcharged for a service.  Example: your provider bills insurance $300 for an x-ray and the insurance company approves the claim, but with a contractual rate or allowed amount adjustment of $175. Now the provider may only collect $175 from the patient, instead of the originally billed amount of $300.

Deductible:  The deductible is the amount of money that needs to be paid by you, the member, before your insurance company will start making payments for you.  Example: Say you have a $500 deductible.  You will need to pay your monthly premiums in addition to the first $500 of medical expenses before your insurance will start making payments for any additional medical expenses that accrue past $500.

Out-of-pocket maximum: The most you could pay each year for covered services you receive in network.

Premium: The monthly amount you pay for your health plan. Usually, a lower premium comes with a higher deductible and out-of-pocket maximum.

Exclusions: Health insurance policies do not normally cover all medical expenses. The non-covered expense may be defined by medical condition, type of treatment, or medical provider. For example, most health insurers do not cover elective cosmetic surgery. Policyholders remain 100% liable for any excluded treatment or expense, and these expenses do not apply to the deductible amount defined in the policy.

Network: The hospitals, doctors, pharmacies and health care professionals that sign a contract with a health plan to provide care for its members. These are also known as participating or in-network providers. To get the most coverage, you receive care from providers in your health plan network. If you visit a provider or a location that is not in the plan network, you will pay more for your care (out-of-network.) These out-of-network costs do not count toward your in-network cost-sharing (for example, your deductible and out-of-pocket maximum).

Coordination of benefits: Coordination of benefits means one plan pays first (is primary) and one plan pays second (is secondary). This prevents overpayment of charges. When coordinating benefits, the total payment to a health care provider will not be more than 100 percent of the covered cost.

Health savings account: Before-tax contributions you make to an HSA account. You can use HSA funds to pay for some covered health care costs.