I often get questions from family, friends, and patients about why they have to pay for a doctor's visit or a test they had done when they have health insurance. As a healthcare provider (and previous health insurance customer service agent) I understand health insurance basics. The truth of the matter is...there is so much lingo that goes into a health insurance plan it's no wonder they are confusing and often misunderstood. While it is impossible to write about every little insurance detail, read on for some descriptions of common health insurance terminology.
Common insurance lingo:
Premium: the price you pay each month for your health insurance plan
Co-pay: this is a set fee you pay for a service (i.e. $30 co-pay for physical therapy visit)
Deductible: this is a set amount you must pay before your insurance starts to cover your services (i.e. $1000 deductible/year). It is important to note that your plan may have an in-network deductible AND an out-of-network deductible. Some plans allow these to count towards each other, while others have them as completely separate requirements.
Co-insurance: this is basically a way of saying that you and your insurance split the costs. After you meet your deductible it is common for a plan to have co-insurance. Your plan may say "80/20" co-insurance. This means you pay 20% and your insurance will pay 80%.
Out-of-pocket maximum: this is most you will pay out-of-pocket for covered services. This may or may not include co-pays and deductibles. This is often a high amount, such as $20,000/year. Be sure to check with your insurance carrier as some plans state that co-pays, deductibles, and co-insurance all count towards this amount. Other plans state only deductible and co-insurance count. And a few even state only co-insurance counts.
What's the difference between in-network and out-of-network?
For a healthcare provider to be considered in-network they need to have signed a contract with a health insurance company. This contract is basically an agreement stating that the healthcare provider will accept an agreed upon amount as payment in full. If the healthcare provider you choose to see does not have this contract with your health insurance company they are considered out-of-network. Depending on your plan you may have out-of-network benefits, but it is important to know that even if you have out-of-network benefits, these healthcare professionals do not have a contract with your health insurance company so you may be "balanced billed." Balance billed means your healthcare provider can bill you for anything not covered under your out-of-network benefits.
Example of In-network versus Out-of-Network Bill
In-network: Doctor charges $200/visit and bills your insurance. This doctor has a contract with your insurance company to accept $100/visit as payment in full. Under your plan you have a $30 co-pay, so you pay $30 and your health insurance pays $70. This doctor received a total of $100 for this visit.
Out-of-network (OON)- Your plan has OON benefits: Doctor charges $200/visit and bills your insurance. Under your plan you have an out-of-network deductible of $2000/year and you have not met it yet. Your insurance company shows that if you had gone in-network the allowable amount would be $100. You owe $100 towards your OON deductible. But this doctor has not signed the contract to accept this allowed amount as payment in full so they may "balance bill" you for the other $100. This puts your cost at $200, with $100 going towards deductible. The doctor sets their own policy if they balance bill or not. In this case the doctor received $200 for the visit.
Out-of-network (OON) - Your plan does NOT have OON benefits: Doctor charges $200/visit and bills your insurance. Your insurances states you don't have any OON benefits. You pay the doctor $200 for the visit.
IMPORTANT INSIDER TIP: It is your responsibility to find out if a provider is INN or OON. If you call the healthcare provider watch out for tricky words.
It is a common misconception: If a healthcare provider states "We accept your insurance," this does NOT mean In-Network. A healthcare provider can state they accept your insurance if they send the bill to your insurance company for you. Is this right or ethical? Well that is up for debate. My recommendation is to ask "Do you participate with my health insurance?" If you feel that the provider is still only using the word "accept" instead of confirming they are "in-network" or "participate" with your insurance contact your health insurance company directly to verify or just find a different provider.
Keyword break down:
Accept this could mean in-network or out-of-network. This term is used when a healthcare provider sends a claim/bill to your insurance company on your behalf.
Participate this term means in-network. A healthcare provider can only state they participate with your insurance company if they have signed an in-network contract
Fee for service this term means out-of-network. This type of provider most likely will not submit a claim to your insurance company on your behalf. They will give you a copy of the bill for you to submit if you choose to do so.
HMO: These are often the most restrictive plans. They typically require a referral from a selected primary care physician (PCP) for services to be covered. Under this type of plan you have in-network coverage ONLY.
PPO: These plans have in-network and out-of-network benefits. Depending on the plan you have, the insurance company may require a referral to a specialist.
POS: These plans are a bit more complex as they have different level of in-network benefits. You will get better coverage if you select a preferred provider over a different in-network provider. You typically get out-of-network coverage under these plans, as well.
IMPORTANT INSIDER TIP: Another common misconception occurs with larger companies with many locations. For example, Make Believe Physical Therapy has 5 different locations...just because their location on 1st Street is In-Network does NOT mean the location on Park Avenue is In-Network. Always be sure to check the specific location you will be using for your services. While this scenario doesn't happen often, I have typically seen it related to lab work locations.