Bush: Studying health insurance 101

By CARLA Y. BUSH

Health insurance is essentially a contract between you and an insurance company designed to protect you from health care expenses exceeding what you might be able to pay out of your pocket. In the contract, the health insurance company specifies the percentages or amounts of charges they will pay and how much will be your responsibility for different health care services.

The amount the insurance company charges you for a policy is called the premium. The premium is determined by the level of coverage you have-generally, the more medical expenses that are covered by the insurance company, the higher the premium. The Affordable Care Act requires that all policies now cover at least 60 percent of expenses.
One of the most important things to know when you're evaluating a health insurance policy is the amount of the deductible. The deductible is the amount that you must pay for expenses other than preventive services each policy year before any insurance coverage kicks in. The Affordable Care Act designates which basic preventive services are covered by your premium with no deductible. Preventive services may include annual physicals, immunizations and screenings that can keep you from getting sick.

For every medical service not a part of your preventive care, you will be charged a co-pay. A co-pay is a fixed fee such as $15 that you are asked to pay, usually at the time of service. The co-pay is subtracted from the amount filed with your insurance company. The amount may vary from doctor to doctor.

A third way you share the cost of your medical care is through coinsurance. Remember that your premium would depend on your level of coverage? The level of coverage determines your coinsurance. For example, your coinsurance at different levels might be 10, 20, 30 or 40 percent. Obviously, a policy with 10 percent coinsurance would have a higher premium than a policy with 40 percent coinsurance.

You may be thinking that with deductibles, co-payments and coinsurance, your share in the cost of you medical care might be pretty high. That's true, and you should budget for those costs. However, the Affordable Care Act places a cap on your out-of-pocket expenses, currently at $6,350 for one person and $12,700 for a family. If you reach that amount, then deductibles and coinsurance will no longer be charged, although you will continue to pay co-payments.
For example, once you have completed a doctor's appointment, the doctor's office will submit the information to your health insurance company to process (if the doctor is an out of network provider you may be responsible for submitting the paperwork to the insurance company yourself). The health insurance company will make a determination and send payment to your healthcare provider if applicable. They insurance company will also send a claim statement to you for your records explaining what services were covered.

When you receive the statement from your insurance company explaining the details of a claim you have previously filed, you may see the term 'allowed amount'. This simply means your health insurance company has set a maximum amount for the covered health service you received. In most cases your doctor will accept the allowed (maximum) amount paid by the health insurance company as "paid in full" and you will not be responsible for the difference.
In some instances, if your doctor does not accept the maximum allowed then you may receive a bill from them charging you the difference between the doctor's charge and the maximum allowed by your health insurance company. You will then be responsible for making this payment.

Contact your health insurance provider with questions you may have regarding your policy.