Deductible - A deductible is the amount of money you must pay into your own health care costs before your insurance will begin to pay their contracted rates. Say you have a plan that covers costs at 80% with a $400 deductible; your insurance will pay absolutely nothing until you have paid $400 out of your pocket. Deductibles can range from $0 (generally only applies to HMO or Medicare beneficiaries) Now depending on your particular deductible you may have to pay for a single doctors visit in full to meet it, or you may have to pay for several doctors visits before your insurance is going to pay their share.
Co-payment (copay) - A copay is a set amount of money you pay each time you seek out certain services. Generally anyone with a copay in their insurance plan has a separate copay for each distinct type of service; for instance the copay may be $15 for a routine doctors visit, the copay for prescriptions may be $10, and more intense services such as a visit to the emergency room may require a copay of $100. Again some beneficiaries of Health Maintenance Organizations or Medicare do not have a copay depending on their plan. Co-payments are also typically waived if the Out-of-pocket maximum for the calender year has already been met. Failure to collect a co-payment on the providers behalf can be cause for payment reduction or even claims denial.
Co-insurance - Co-insurance is the amount of the total bill that the patient is responsible for paying. Although it is often confused with a copay it is in fact quite different. Co-insurance is never a set dollar amount but rather a percentage of the total bill for services rendered. It is a way to share cost between insurer and insured. Typically patient responsibility for higher end PPO plans is 10-20% in-network and 30-40% for out-of-network care. The cheaper PPO health plans sometimes have as high as 40% patient responsibility for in-network care and 50% for out-of-network care.
Out-of-pocket Maximum - Per calender year this is maximum amount of money a beneficiary can be required to pay out of his/her pocket. After they reach this limit typically all further co-payments or co-insurance (for the calender year) should be waived. Basically it is a spending cap on your own funds.Typically this is a few thousand dollars per calender year a common limit is $4000 per year. If you seek out health care on many instances in a year and reach your OOPM limit, your insurance plan should pay for services at their contracted rate and for the remainder of the year as long as you remain in-network you should not have to pay any further co-pays or co-insurance.
In-network/Out-of-network - These terms confuse most patients because they are generally only used by PPO/EPO type health plans. Even though PPO/EPO type plans that always claim to allow patients the choice of their provider - there are limits to those choices and thats where these terms are used. Any provider who signs with your specific insurance carrier/provider network is considered in-network and any provider who does not is out-of-network. Going to any provider that is out-of-network in any insurance plan is going to cost more and in fact many beneficiaries (especially those insured through smaller employers) do not even have out-of-network coverage; which leaves them stuck with 100% of the bill.
NOTE: Some groups/plans refer to the same principal in different terms such as; participating providers vs. non-participating, in-area vs out of area, or preferred vs. non-preferred providers.
Pre-authorization/Pre-certification - Pre-cert. or pre-auth (for short) are processes through which insurance plans review services on a case by case basis to determine medical necessity and issue approvals or denials. Most PPO/EPO plans have specified guidelines that state which services do and do not need pre-auth. or pre-cert. whereas with most HMO plans almost every service requires pre-authorization.
NOTE: All insurance plans will tell you very specifically that pre-auth and/or pre-cert are never a guarantee of any payment, but simply a determination (prior to any actual service is preformed) of whether or not the service(s) are deemed medically necessary by their guidelines.
Pre-determination - Often confused for pre-auth. or pre-cert., pre-determination is actually a process of determining the estimated pay out from the insurance company and the estimated financial responsibility of the patient. Again this process does not guarantee anything. The final pay out of the insurance company will never be given until after the claim is submitted, this is how they ensure that the insurance companies cannot be blamed for any physical damages suffered by the patient while awaiting insurance approval.
If the insurance companies did not use the infamous 'claims payment not determined until services rendered' clause hospitals and doctors could simply delay your care and blame the insurance company for not responding and all damages (or death) could be blamed upon them. Using this clause ensures that determination of 'necessity' in urgent situations is the responsibility of the provider.
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