Health insurance can be frustrating and confusing. Here are some basic answers to some of our most common insurance-related questions. (Note: Medicare and Medicaid have very different rules, so we've done a separate post here for those questions.)
What is a Premium?
Think of your health insurance like a membership to a store. You have a basic monthly or yearly membership fee that you (or your employer) pays in order for you to have access to the store's goods, but you still have to pay for the items you actually purchase. The monthly amount you pay just to be a member is the Premium. None of the Premium costs are counted toward other amounts for your policy, as explained below.
What is a Deductible?
The Deductible is like a minimum purchase requirement in our store example. Once you spend a certain amount in the store, you get additional discounts. You may be thinking, "If I pay my monthly Premium, and then I have to still pay for a bunch of things in order to access discounts, isn't it better to just pay cash and not have insurance?" Not so fast. Remember, paying insurance Premiums makes you a member of that plan, which gets you an up-front discount in the form of "contracted rates". So even while meeting your deductible amount, you're getting a discount on those services compared to what you would pay without insurance. You also get some stuff "free" in the form of "bundled services", i.e. items or services your membership includes as package deals.
Co-Pay vs. Co-Insurance: What's the difference?
Depending on your insurance plan, once your deductible has been met, you may have something called a Co-Pay. This is a flat fee that you pay for certain classes of goods or services, regardless of the price of that service. In our imaginary store, you walk in and everything on a certain aisle is $10, everything on a different aisle is $20, and so on. Even better, no matter how many items you purchase from the $10 aisle, it's only $10 total as long as it's all in the same shopping trip. The tricky thing about this is different plans rearrange the items on different aisles, so some plans may include adjustments, exercises, exams, and other therapies all on the $10 aisle, so you can purchase any combination of those items and pay only $10 in total. Another plan may put the exams on the $20 aisle, so you have a separate $20 co-pay for the exam but still $10 for the rest of the services, bringing your total to $30 on that day.
If, on the other hand, your plan includes a Co-Insurance, you won't have a flat-rate. Instead, you'll get a larger percentage discount on the items/services you purchase. Instead of a $10 aisle and a $20 aisle, it's like having a 50% off aisle, a 60% off aisle, etc. If you add 4 items from the 50% off aisle that each cost $25, your total on that trip would be $50.
Just in case that isn't confusing enough, some plans combine Co-Pay and Co-Insurance. This is like having a Flat Fee section of the store in one area and a Discount section in another area. For example, in our office you may have a $30 Co-Pay for x-rays, exams, or adjustments, but exercises, traction, electrical stim, or other therapies may have a 40% Co-Insurance. If you receive 1 service from each category, you would have the $30 co-pay PLUS 40% of the charges for the other category.
Max Out-Of-Pocket vs Max Benefit: What does it mean?
Max Out-Of-Pocket is the real benefit of having insurance as this is where the protection from truly catastrophic medical bills comes from. This is the maximum that you will be required to pay in a single year for your services. Everything after that amount is covered at 100% - as long as there's no Max Benefit.
Max Benefit goes by many terms, including Max Payout, Benefit Cap, etc. This is essentially the limit an insurance company places on their own expenses for certain types of care. Your insurance plan may have limits on the number of visits to a certain provider, limits on the number of codes per visit, or other limits in place to control how much they pay out on your behalf, but some additionally place total limits on categories, such as physical therapy, chiropractic, or even limits on certain conditions such as "jaw pain". Most of these limits are annual, but a few companies have been known to place "lifetime" limits on amounts they will cover relating to certain conditions. This limit will last as long as you are a customer of that company. If you've read through this and still have questions about your specific benefits, feel free to ask one of us the next time you're in the office!