Making Sense of Health Insurance
Open enrollment for the ACA marketplace has begun at healthcare.gov. If eligible, you have until Dec 15, 2022 to apply for a policy that would begin on January 1, 2023. Many people can qualify for financial assistance with their monthly coverage, but making a choice about what makes sense for you can be confusing. According to a survey by PolicyGenius and Radius Global Research, only 4% of those taking part could correctly define these four key terms related to health insurance:
We at Seven Hills Family Medicine operate outside of the fee-for-service and insurance systems, as these systems are built to prioritize profit over people, often resulting in lower-quality healthcare outcomes. Instead, our DPC patients pay us a monthly subscription fee directly, which covers all visits with the doctor and everything she can provide. They also receive their labs at the wholesale cost. Once our pharmacy is open, medications will also be dispensed at or near the wholesale cost for our patients. The markup on services and therapies necessary for health and wellness in America is absurd and immoral. Our model is based on best-practice, trauma-informed care and sustainability for patients and healthcare workers alike.
Though the health insurance industry is deeply flawed, we all have to make our best choices to live in an imperfect world. A plan from the Affordable Care Act Marketplace may be able to protect you from some financial harm in the event of a catastrophic event. Seven Hills would like to help you make whatever choice is best for you and your family from an informed position. Understanding these four key terms used in policy writing can help to demystify some of the language used for different insurance plans, so you can compare them with better clarity.
This is the yearly amount you as the insured will pay before your health insurance benefits will kick in. Only “covered” fees, services and providers will count towards this amount, and generally, your monthly premium and any copays will not be applied towards this total.
Example: The average cost of an Emergency Room visit in Virginia is $1,941.00.
If you have a $2500 deductible, none of this visit would be covered, unless you have already paid $2500 in covered health care costs for the year. You would now have $559 to go to meet your deductible total before your benefits begin.
If you have a plan with a $1500 deductible, you will have met your deductible for the year, and your insurance benefits should* be applied to the remaining $441 left on your ER bill.
Your co-pay or co-payment is a set amount you pay for certain services. You may have a co-pay for office visits, for prescription drugs or specialists. For some plans, the co-pay system only begins after the deductible is met. Some plans don’t use co-pays at all.
Example: Plan A has a $45 PCP/$65 Specialist co-pay
This could mean two different things depending on how the plan is written in relation to the deductible. It either means that each and every primary care visits will require a $45 fee and that all specialist visits will require a $65 fee at time of service, OR it means that this fee structure will begin after the deductible is met and before that, those visits will be “out-of-pocket” meaning paid in full by the patient.
Coinsurance is similar to a co-pay in that it describes the portion of the bill you will need to pay. The difference is that coinsurance is a percentage instead of a set amount. Coinsurance benefits typically are applied after the deductible is met.
Example: Plan B is a 70/30 plan or a 30% coinsurance plan
This means that once the deductible total is met, the insurance company agrees to pay 70% of covered healthcare costs and the patient is responsible for the remaining 30%
If a chest x-ray costs $420, once the deductible is met, the insurance company should pay $294 (70% of $420) and the patient would pay $126 (30% of $420)
The out-of-pocket maximum for a plan is the maximum amount you would have to pay in one year for services covered by your insurance. An ACA marketplace plan can't have an out-of-pocket maximum exceeding $9,100 for an individual or $18,200 for a family.
Once this maximum amount is met, 100% of covered services should be covered by the insurance company.
Example: Plan C has an out-of-pocket maximum of $7500
A patient stays in the hospital for 4 days at the national average cost of $2,873 a day which ends up totaling $11,492. Any covered costs above the $7500 out-of-pocket maximum should be covered completely, so the $3992 of this hospital stay that exceeds that amount should be the insurance company’s responsibility.
These terms are crucial to understanding what benefits are provided by different plans and what costs you as a patient would be held responsible for. American healthcare is an imperfect and complicated system. Without guaranteed access to care, we all have to find our own path and piece together what will work best for us and our families. It is important that the terms and tools used in these systems are transparent and accessible so that those choices can be informed ones.
*In writing this piece, the word “should” is used multiple times to describe the insurance company’s responsibility in an effort to acknowledge that many people face unpredictable coverage denials when seeking medically necessary care.