Breaking Through the Confusion: What Does Health "Coverage" Entail?
If you have a commercial health insurance plan, do you fully understand the “coverage” that it provides? If you go to an “in-network” provider, did you know that you’ll most likely get a bill from that provider?
If you answered ‘no’ to those questions, we highly encourage you to read this page. When you fully understand what your insurance plan does and doesn’t offer, you can make informed decisions about the financial aspects of your outpatient medical care.
In light of that, when you understand how much you’ll truly pay for your doctor visits and testing (when using your insurance plan), you’ll be able to decide if other non-traditional options will save you money. Remember: knowledge is power! On that note, let’s dive into the details.
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Table of Contents
Why You Should Care About Your Healthcare Prices.
Now that inflation is in full force, many people are wisely choosing to research all of their purchases ahead of time to find the lowest price. Doing so can save hundreds or thousands of dollars a year, and that’s a big deal!
Here’s something to ponder: If you shop around to compare prices for household appliances, car purchases, home repairs, and/or groceries, then why should your medical services be any different?
It’s vitally important to do your research when it comes to your healthcare costs, as it could save you a significant amount of money — and the money that you save on healthcare costs can be put toward other household needs.
If you were looking for a new car, and you did your homework by getting quotes from four local dealerships that all offered the exact make and model that you needed, you would choose the dealership that offered the lowest quote.
In the same way, it’s important to shop around for the best prices on outpatient medical testing, especially if you have a high-deductible insurance plan.
You may be wondering, “Why is that? If I have health insurance, shouldn’t all of my office visits and tests be covered?”
The reality is, if you have a high-deductible plan, you do not automatically have full coverage for all healthcare costs. In fact, that’s true of most insurance plans (regardless of whether the deductible is high or low).
Even though you pay a monthly premium for your health insurance plan, in most cases, you still have to pay additional fees for ‘in-network’ medical services.
What are the Terms of Your Health Insurance Plan?
Since most insurance plans require you to pay certain amounts out of your own pocket for medical services (in addition to your monthly premium payments), it’s vitally important to know the amounts of your:
- Out-of-pocket maximum
It’s important to know how much money you have to pay upfront before you receive full coverage for your in-network medical services. It’s also imperative to know which providers and facilities are considered ‘in network’ and ‘out of network’ if you’re going to use your insurance plan.
Many high-deductible insurance plans put all office visits and medical tests toward the in-network deductible and out-of-pocket maximum. This means that you have to pay a certain amount of money out of your own pocket before you receive any coverage from your insurance company.
It’s important to read the fine print in your plan, as there are many different rules regarding payments. For example, even if you have copays for office visits — such as a $75 ‘specialist’ copay — the copay only covers the office visit with the specialist, not the testing and/or procedures that come out of that office visit.
Tests and procedures go toward your deductible, and are paid in addition to your office visit copay.
Why is it necessary to know these things? Because most people are shocked when they receive medical bills that state they owe thousands of dollars for outpatient medical testing.
Many are caught off guard because they assume that if they go to an ‘in-network’ provider, that they will only be charged a small amount, or not charged anything at all.
A good way to avoid those unwanted surprises, is to be equipped with knowledge about the way that insurance coverage truly works.
We believe that knowledge is power, and we want to share with you how all of this relates to your outpatient testing needs, and how it affects your hard-earned money.
If you’re already familiar with the terms ‘deductible,’ ‘co-pay,’ ‘co-insurance,’ and ‘out-of-pocket maximum,’ and if you know the ins and outs of your insurance plan, that’s great!
However, if you’re not entirely sure what all of these definitions mean (which is completely understandable), and if you don’t know exactly how they apply to your plan, we kindly invite you to keep reading this article.
We’ll explain how high-deductible plans generally work, and how you could end up paying more money for your medical tests by using your in-network benefits. It seems like that wouldn’t be possible, but it is!
A Deep Dive into Deductibles
Let’s look at this hypothetical example.
Before we dive into the example, let’s quickly lay the framework. In regard to insurance coverage, it’s important to note that when insurance companies use the term ‘high-deductible plan,’ it’s somewhat misleading. Why is that?
It leads people to believe that once they reach their deductible amount, that they’ll have full coverage for the rest of their medical bills. In reality, the ‘out-of-pocket maximum’ is the total amount you have to pay in any given calendar year.
For most insurance plans, once you meet your deductible, you earn partial coverage from your insurance company for any additional bills. Once you meet your out-of-pocket maximum, then you usually earn full coverage for any additional bills.
It may still sound like a good deal, but does it help you spend less money on medical bills? For outpatient testing, it often doesn’t.
Here’s an example:
- Let’s say that Jane Smith has an insurance plan with a $4,500 deductible, a $7,000 out-of-pocket maximum, and 40% co-insurance.All of her specialist office visits, medical tests, and procedures go toward the deductible (i.e., she doesn’t have copays for those things). This means she has to put $4,500 of her own money toward all of her medical bills before her insurance company will start to provide partial coverage.
- In March, while Jane is having her yearly physical with her primary care doctor, she mentions that she’s occasionally been having shortness of breath, and is referred to an in-network cardiologist.
- Jane doesn’t have a specialist copay, and is billed $350 through her insurance for the new-patient office visit, which goes toward her deductible.
- During the office visit, the cardiologist conducts a comprehensive echocardiogram, and Jane is billed $400 for that test through her insurance plan.
- After reviewing the results of the echocardiogram, the cardiologist recommends a Dobutamine nuclear stress test. Jane schedules the stress test and has it done, and through her insurance plan, she is billed $3,750.
- At this point, since all three of her cardiology-related bills are put toward her deductible, her total has come to $4,500. Since her deductible is $4,500, this means Jane has to pay the total amount of those bills.
- Now that Jane has paid $4,500 for her cardiac office visit and two tests, this means she has met her deductible.
- Six months later, Jane has a follow-up appointment and gets another comprehensive echocardiogram. She is charged $250 for the follow-up appointment and $400 for the echocardiogram through her insurance, and her co-insurance percentage is applied.
- Since Jane has met her deductible, any amount that goes beyond that (such as the cost for her follow-up appointment and second echo) is paid in part by her insurance company in the form of co-insurance.Co-insurance applies to the difference between the out-of-pocket maximum and the deductible. In Jane’s case, the difference is $2,500: $7,000 (‘Out-of-Pocket Maximum’ Amount) – $4,500 (‘Deductible’ Amount) = $2,500 difference.
- Her 40% co-insurance percentage is applied to any medical costs that come after she meets her deductible, and until she reaches her $7,000 out-of-pocket maximum.
- This means that she will pay 40% of the cost of any medical bills moving forward, and her insurance company will pay 60%. This will continue until she pays $2,500 out of her own pocket for any additional medical bills she may have.
- In this scenario, she would pay $260 for the second echocardiogram and follow-up visit since the total for both of those is $650, and she has to pay 40% of that cost.
- Once Jane meets her out-of-pocket maximum, she would then have full coverage for in-network services that are approved by her insurance company. (Full coverage, meaning, that they will cover all of the costs for additional medical claims that are submitted by ‘in-network’ providers).
- Before that happens, it means that Jane would have to pay $7,000 of her own money in one calendar year before her insurance company would provide full coverage for any additional medical bills. That amount is in addition to her monthly premium.
- Let’s say her monthly plan premium is $475 a month. That’s $5,700 a year in premiums, plus $7,000 for her out-of-pocket maximum, which means that she has to pay $12,500 a year in order to obtain 100% coverage for in-network medical services.
Are you exhausted after reading all of that? We don’t blame you for feeling that way.
Navigating insurance coverage is complicated, which is why it’s very important to know the terms of your insurance plan, especially when it comes to outpatient services.
While it’s absolutely a good idea to have a high-deductible insurance plan for emergency situations, there are times when using it for outpatient medical testing doesn’t work in your favor financially.
When you have a high-deductible insurance plan, and you use it for testing at an ‘in-network’ hospital-based medical practice (i.e. a medical practice that is owned by a large hospital), you’ll most likely be charged thousands of dollars if you need multiple tests.
What if there was a way to avoid paying several thousand dollars, and instead, pay 50-80% less for the same exact testing? That’s where an independently-owned, insurance-free medical practice can work in your favor.
Taking a Different Approach
Let’s use the hypothetical example above, and say that instead of using her insurance at an in-network facility, Jane came to Trinity Heart and Vascular Group where everything is ‘direct-pay,’ and no insurance contracts are involved.
In the previous example, Jane’s insurance company negotiated rates for her office visits and tests with a hospital-based cardiology practice. The rates that were billed to her for her initial visit and outpatient tests are as follows:
- New Patient Office Visits: $350
- Comprehensive Echocardiogram: $400
- Dobutamine Nuclear Stress Test: $3,750
Through Jane’s insurance plan, her total came to $4,500 to get her initial office visit and two tests tests done at an in-network facility, and Jane had to pay all of that on her own.
If Jane had decided to come to Trinity Heart and Vascular Group for her initial tests, here’s what she would have been charged:
- New Patient Office Visit: $239
- Comprehensive Echocardiogram: $159
- Dobutamine Nuclear Stress Test: $599
At Trinity Heart and Vascular Group, her total comes to $997.
In this scenario, if Jane chose to come to our practice for her outpatient cardiac testing (instead of going to her local hospital for outpatient testing), she would save $3,553.
This means that she would save thousands of dollars by not using her insurance!
When we look at our healthcare costs from this perspective, we can begin to understand when and why a high-deductible plan should be used for outpatient testing, and when it shouldn’t (in terms of financial savings).
While every person’s situation is different, and every person’s insurance plan is different, it’s worth it to calculate these figures if it means saving thousands of dollars.