I work in the healthcare field. I work with health insurance companies. The majority of plans (not all of them, but most) are constructed so that the patient, who is already sick/injured/scared, has to bear almost all of the costs of their healthcare before the insurance will pick up anything. The insurance companies do this in a multitude of ways, and it is evil-genius levels of avariciousness.
High Deductible Plans. Conservatives and certain companies tout these as the solution to rein in out of control healthcare costs, believing that if people know they have to pay more, then they’ll control their healthcare spending. The problem with this argument is that no one plans to get sick or hurt, so there’s no way people can “control” their spending. If they get hurt or sick, then they need to see the doctor. These plans have deductibles ranging from $1000 (a significant chunk of change for a struggling family/individual) to $10,000, if not more. Some plans will NOT cover ANY EXPENSES AT ALL until that deductible has been met. Coinsurance Rates. These tie in with the deductible. If you have a $3000 deductible and your plan pays nothing until it is met, you’re paying $3000 for your care right off without the insurance contributing anything. For a lot of plans, once the deductible is met, you still have the coinsurance rate to worry about. You can pay 10%, 20%, 30%, 40%, or even 50% of your costs even after your deductible is met, and you’ll keep paying that until your Out of Pocket is met. Out of Pocket. This is an “upper limit” that the insurance company sets so you won’t have to pay anything above it. For most insurance plans, once the deductible and out of pocket are met, then they cover your care 100%. The problem is that the out of pocket limits are pretty high, so it’s unlikely you meet them. Some plans are as low as $4000, others get up to $10,000, $12,000, or higher. Some plans do not do an out of pocket, but give you an unlimited amount of costs. Copays. These can be as small as $5.00, but I’ve seen plans where your copay can be $100 per visit. Sometimes they apply to your deductible and/or your out of pocket amounts, and sometimes they apply as coinsurance payments, but the majority of plans I’ve seen don’t have them apply to the deductible, out of pocket, or coinsurance. Networks and Tiers of Care. Some insurances only offer Tier 1 payments (meaning you pay the least) at certain offices/facilities/hospitals within their networks. These networks are small, and sometimes you can’t find a specialist you need within their network. The insurance companies will offer Tier 2 and Tier 3 levels of payment for people outside their network, but in some cases, they will give no coverage at all for care sought outside their network. Non-Covered Services. In my experience, insurance companies will list services that they will not cover. The best plans cover almost everything but will only pay a portion or the full cost once your deductible or out of pocket or both are met. Some plans only cover office visits or emergency services. A lot of plans I’ve seen won’t cover the most common expenses patients need, like certain medications and therapies, anesthesia, radiology, bloodwork and lab tests, MRIs, Xrays, and so on. Some insurances will pay a portion if those services are covered under your plan, but other times, the patient bears the full cost. Some insurance plans exclude those needed services from applying to the deductible or out of pocket, so the patient is paying for a needed service that the insurance won’t cover at all, and those costs will not be applied to the patient’s deductible or out of pocket amount. What Payments Apply Where and How It All Ties Together. The health insurance companies decide what costs will apply to your deductible and out of pocket amount for the majority of plans. They can decide that your deductible amount will not help pay off your out of pocket. Say you have a $3000 deductible, but it doesn’t apply to your $8000 out of pocket amount. Also, your office copay of $40 and your specialist copay of $100 doesn’t apply to either your deductible or out of pocket. You have four office visits for a particular year where you’ve having a health issue that needs seen to. You have two specialist visits as well. That’s $360 just in copays for being seen by healthcare providers, and they contribute nothing to your deductible or out of pocket. You need to have a complete blood count done, which at that particular location costs $500 out of pocket, and is a non-covered service, so you pay the $500, and it doesn’t apply to your deductible or out of pocket. That’s $860 dollars of costs, and you’re nowhere near your deductible, and you’ve paid all of that out of your own pocket while paying your health insurance premiums. You need to have an MRI, and generally that’s $2600, depending on where you are, facility fees, and so on, but since it’s a non-covered service, you bear the full cost, and it doesn’t apply to your deductible our out of pocket. You need other lab services ($1200) and a certain medication for three months ($1500) and your insurance doesn’t cover either of them. That’s $6160 in medical costs, and none of it has helped you in meeting your deductible or out of pocket, so your insurance covers very little aside from covered office visits with your primary care provider, and if you’re lucky, the specialist. That amount is more than twice your deductible, but it doesn’t mean a darn thing to your insurance company. (Before you ask, I have seen this happen to a patient.) Surprise Billing and What Things Actually Cost. This is the other side of the coin. Insurance companies tell hospitals/facilities/doctor’s offices/what they’re willing to pay–that is the insurance fee schedule, so the hospital charges according to that. Hospital facility fees, fees for supplies/medications used in your treatment, and non-covered providers that treat you are all charged to your insurance, and often you’re charged directly by the hospital after your insurance has said the services you received are not covered or part of your plan, but the hospital charges you at the rate your insurance has given them. Often, the true cost of services, certain medications and procedures, and office visits are lower than what is on your insurance fee schedule. I’ve heard patients complain that they’ve paid far more with insurance than they ever paid out of pocket.
So, why do people have insurance? Most will say that they have it so they can have the peace of mind that they’re covered if something truly horrible does happen. Given what I’ve seen, though, that peace of mind is fleeting and sometimes nonexistent, and this is all due to the terms of their insurance plan. I hope this post gives some people some insight into how their plans work and why the costs are so high. Your best chance is to understand your plan thoroughly, what is covered and not covered, and how all your payments apply to your deductible, out of pocket, and coinsurance. Best of luck to you, random reader.
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I work in the healthcare field. I work with health insurance companies. The majority of plans (not all of them, but most) are constructed so that the patient, who is already sick/injured/scared, has to bear almost all of the costs of their healthcare before the insurance will pick up anything. The insurance companies do this in a multitude of ways, and it is evil-genius levels of avariciousness.
High Deductible Plans. Conservatives and certain companies tout these as the solution to rein in out of control healthcare costs, believing that if people know they have to pay more, then they’ll control their healthcare spending. The problem with this argument is that no one plans to get sick or hurt, so there’s no way people can “control” their spending. If they get hurt or sick, then they need to see the doctor. These plans have deductibles ranging from $1000 (a significant chunk of change for a struggling family/individual) to $10,000, if not more. Some plans will NOT cover ANY EXPENSES AT ALL until that deductible has been met. Coinsurance Rates. These tie in with the deductible. If you have a $3000 deductible and your plan pays nothing until it is met, you’re paying $3000 for your care right off without the insurance contributing anything. For a lot of plans, once the deductible is met, you still have the coinsurance rate to worry about. You can pay 10%, 20%, 30%, 40%, or even 50% of your costs even after your deductible is met, and you’ll keep paying that until your Out of Pocket is met. Out of Pocket. This is an “upper limit” that the insurance company sets so you won’t have to pay anything above it. For most insurance plans, once the deductible and out of pocket are met, then they cover your care 100%. The problem is that the out of pocket limits are pretty high, so it’s unlikely you meet them. Some plans are as low as $4000, others get up to $10,000, $12,000, or higher. Some plans do not do an out of pocket, but give you an unlimited amount of costs. Copays. These can be as small as $5.00, but I’ve seen plans where your copay can be $100 per visit. Sometimes they apply to your deductible and/or your out of pocket amounts, and sometimes they apply as coinsurance payments, but the majority of plans I’ve seen don’t have them apply to the deductible, out of pocket, or coinsurance. Networks and Tiers of Care. Some insurances only offer Tier 1 payments (meaning you pay the least) at certain offices/facilities/hospitals within their networks. These networks are small, and sometimes you can’t find a specialist you need within their network. The insurance companies will offer Tier 2 and Tier 3 levels of payment for people outside their network, but in some cases, they will give no coverage at all for care sought outside their network. Non-Covered Services. In my experience, insurance companies will list services that they will not cover. The best plans cover almost everything but will only pay a portion or the full cost once your deductible or out of pocket or both are met. Some plans only cover office visits or emergency services. A lot of plans I’ve seen won’t cover the most common expenses patients need, like certain medications and therapies, anesthesia, radiology, bloodwork and lab tests, MRIs, Xrays, and so on. Some insurances will pay a portion if those services are covered under your plan, but other times, the patient bears the full cost. Some insurance plans exclude those needed services from applying to the deductible or out of pocket, so the patient is paying for a needed service that the insurance won’t cover at all, and those costs will not be applied to the patient’s deductible or out of pocket amount. What Payments Apply Where and How It All Ties Together. The health insurance companies decide what costs will apply to your deductible and out of pocket amount for the majority of plans. They can decide that your deductible amount will not help pay off your out of pocket. Say you have a $3000 deductible, but it doesn’t apply to your $8000 out of pocket amount. Also, your office copay of $40 and your specialist copay of $100 doesn’t apply to either your deductible or out of pocket. You have four office visits for a particular year where you’ve having a health issue that needs seen to. You have two specialist visits as well. That’s $360 just in copays for being seen by healthcare providers, and they contribute nothing to your deductible or out of pocket. You need to have a complete blood count done, which at that particular location costs $500 out of pocket, and is a non-covered service, so you pay the $500, and it doesn’t apply to your deductible or out of pocket. That’s $860 dollars of costs, and you’re nowhere near your deductible, and you’ve paid all of that out of your own pocket while paying your health insurance premiums. You need to have an MRI, and generally that’s $2600, depending on where you are, facility fees, and so on, but since it’s a non-covered service, you bear the full cost, and it doesn’t apply to your deductible our out of pocket. You need other lab services ($1200) and a certain medication for three months ($1500) and your insurance doesn’t cover either of them. That’s $6160 in medical costs, and none of it has helped you in meeting your deductible or out of pocket, so your insurance covers very little aside from covered office visits with your primary care provider, and if you’re lucky, the specialist. That amount is more than twice your deductible, but it doesn’t mean a darn thing to your insurance company. (Before you ask, I have seen this happen to a patient.) Surprise Billing and What Things Actually Cost. This is the other side of the coin. Insurance companies tell hospitals/facilities/doctor’s offices/what they’re willing to pay–that is the insurance fee schedule, so the hospital charges according to that. Hospital facility fees, fees for supplies/medications used in your treatment, and non-covered providers that treat you are all charged to your insurance, and often you’re charged directly by the hospital after your insurance has said the services you received are not covered or part of your plan, but the hospital charges you at the rate your insurance has given them. Often, the true cost of services, certain medications and procedures, and office visits are lower than what is on your insurance fee schedule. I’ve heard patients complain that they’ve paid far more with insurance than they ever paid out of pocket.
So, why do people have insurance? Most will say that they have it so they can have the peace of mind that they’re covered if something truly horrible does happen. Given what I’ve seen, though, that peace of mind is fleeting and sometimes nonexistent, and this is all due to the terms of their insurance plan. I hope this post gives some people some insight into how their plans work and why the costs are so high. Your best chance is to understand your plan thoroughly, what is covered and not covered, and how all your payments apply to your deductible, out of pocket, and coinsurance. Best of luck to you, random reader.
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