BY DR. WENDY WINN, PT & OCS
Health insurance in the United States can be very confusing. There are dozens of companies and hundreds of different plans to choose from, and no two plans are the same! Our goal is to provide as much clarity as we can when it comes to insurance; we are here for you! If you ever have any questions about insurance, insurance consultations and quotes are always available!
“Accident Insurance” was created in the 1850s by the Franklin Health Assurance Company of Massachusetts; its primary function was to cover railroad and steamboat accidents. Many companies started to offer similar reimbursement programs for losses. In the 1920s, hospitals began to offer pre-paid programs for illnesses and in the 1930s Blue Cross was formed. The 1940s saw a rise in interest for government-sponsored insurance, along with the formation of social security. Medicare and Medicaid were signed into law in 1965 by Lyndon Johnson.
Public vs. Private Coverage
Public health insurance is provided by the government at the federal or state level. We know these as Medicare and Medicaid. Often there are wage and/or age requirements for this type of federal assistance
Private insurance is offered by a company, university, or a small group of companies to its employees. It can also be purchased directly from an insurance company, or through a state marketplace. As of 2017, there were 907 insurance companies in the US, with an elite top 10 accounting for 53% of the revenue.
Regulation and Government
Until 2014, private insurance was regulated by the states. In 2010, the Affordable Care Act was passed, making private insurance somewhat federally regulated. Implemented in 2014, it prohibits insurance companies from denying coverage for pre-existing conditions and also from dropping members when they get sick.
What you need to know:
- There are two ways to get health insurance: through the government (Medicaid and Medicare) or through private insurance companies (Blue Cross Blue Shield, United Healthcare, Aetna, etc.).
- Private health insurance policies are often offered by employers to their employees. Employers may contribute to the insurance premiums, but the amount varies.
- Private health insurance companies are FOR-PROFIT companies. While they help pay for your healthcare expenses, they are not “healthcare.” They are independently run businesses with little government regulation and can deny covering your care at any time.
- Under almost every current health insurance plan, you must pay a specified amount of money before your insurance company will pay a claim. This is called a “deductible.” In and out of network benefits may have different deductibles. During this time, you or your provider can submit bills to your insurance company. Your insurance will apply a percentage of this claim towards your deductible. Until your deductible is met, you will pay out of pocket for your medical care. Once your deductible is met, then your coinsurance will kick in.
- Premium: The cost of your plan. Paid by the policy-holder or their sponsor (e.g. an employer) to purchase health insurance from a private company, usually in monthly installments.
- Deductible: The amount that the insured must pay OUT OF POCKET before the insurance company pays its share. For example, policy-holders might have to pay a $1500 deductible per year, before any of their health care is covered by the health insurer. It may take several doctor’s visits or prescription refills before the insured person reaches their deductible and the insurance company starts to pay for care. Furthermore, most policies do not apply co-pays for doctor’s visits or prescriptions against your deductible and the company determines the amount it applies towards your deductible.
- Co-payment (applies to in-network policies only): The amount that the insured person must pay out of pocket for a particular visit or service. For example, an insured person might pay a $45 co-payment for a doctor’s visit. A co-payment must be paid each time a particular service is obtained.
- Coinsurance (applies to out of network policies): The co-insurance is a percentage of the total cost that the insured person may also pay. For example, the member might have to pay 20% of the cost of a surgery, while the insurance company pays the other 80%. If there is an upper limit on coinsurance, the policy-holder could end up owing very little, or a great deal, depending on the actual costs of the services they obtain.
- Exclusions: Not all medical services are covered under every plan. Billed items like use-and-throw, taxes, etc. are excluded from the admissible claims.
- Coverage limits: Some health insurance policies only pay for health care up to a certain dollar amount. The insured person may be expected to pay any charges in excess of the health plan’s maximum payment for a specific service. In addition, some insurance company schemes have annual or lifetime coverage maximum. In these cases, the health plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs.
- Out-of-pocket maximum: Similar to coverage limits, except that in this case, the insured person’s payment obligation ends when they reach the out-of-pocket maximum, and health insurance pays all further covered costs. Out-of-pocket maximum can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
- In-Network Provider: A health care provider on a list of providers preselected by the insurer. Generally, providers in network are providers who have a contract with the insurer to accept rates further discounted from the “usual and customary” charges the insurer pays to out-of-network providers.
- Out-of-Network Provider: A health care provider that is not contracted with the plan. If using an out-of-network provider, the patient may have to pay the full cost of the benefits and services received from that provider.
- Prior Authorization: An authorization that some plans require to cover services, prior to service. This is very plan-dependent. Obtaining an authorization means that the insurer intends to pay for the service, assuming it matches what was authorized.
- Explanation of Benefits: A document sent by an insurer to a patient explaining what was covered for a medical service, and how payment amount and patient responsibility amount were determined.