Insurance

To get the most from your health insurance, it’s important to understand some basic insurance terms and their definitions:

Claim: Paperwork submitted to the insurance company for services covered under your policy. In-network providers usually handle the claims paperwork for you.

Coinsurance: The percentage you pay for services; often the percentage of your responsibility after the deductible has been satisfied. This is usually in lieu of a co-payment, but can sometimes be in addition to a co-payment. This will be determined by the contract you have with the insurance company. For example, you might have to pay 20% of the cost of a surgery, while the insurance company pays the other 80%. You could end up owing very little or a great deal, depending on how much care you get in a year and your policy’s upper limit on coinsurance (called an “out-of-pocket maximum”).

Co-payment (aka co-pays): The dollar amount you must pay “out of pocket” before the health insurer pays for a particular visit or service. For example, your insurer might require a $30 co-payment for each appointment with your Gather therapist, while your insurance company pays the rest of the fee for that visit. Co-pays are due at the time of service and may not contribute to the overall out-of-pocket maximum.

Coverage limits: Some health insurance policies only pay for healthcare up to a certain dollar amount (e.g., $500,000 or $1,000,000) for all of your healthcare or for a specific service. For example, many insurance policies have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when the benefit maximum is reached, and you must pay all the remaining costs.

Deductible: A fixed dollar amount you pay during the benefit period (usually a year) before the insurer starts to make payments for covered medical services. Plans may have both per individual and family deductibles.

• Some plans may have separate deductibles for specific services. For example, a plan may have a hospitalization deductible per admission.
• Deductibles may differ if you get services from an in-network provider or out-of-network provider.

It’s easy to get the deductible confused with the co-pay or coinsurance, but they are different things. Let’s say your policy has a $500 deductible per year. If each trip to one of your healthcare providers costs $250, then you must pay the full amount for the first 2 visits before the insurance company starts paying for your future visits.

Exclusions: Your insurance may not pay for every healthcare service you need. Exclusions are the services that are not covered. Generally, you’re expected to pay the full cost of “excluded” or non-covered services.

Explanation of Benefits (EOB): When you receive a healthcare service and the claim has been processed, the insurance company will often send you a document explaining how the claims for services were processed and any services that were not covered.

In-Network Provider/Contracted Provider: Most health insurance companies contract with healthcare providers who sign a contract with the insurer. Generally, in-network providers agree to accept “discounted” rates for services. The client co-pay and/or coinsurance will be based on this amount. An insurer may also contract with specific providers because of their success rate, quality of care, and/or other factors.

Insurance Policy: Another term for the contract you sign with the insurance company. Most health insurance policies are many pages long with a lot of fine print. As a practical matter, few of us need to read all of the fine print. But if you are struggling to get your insurer to pay for certain services—like eating disorders treatment—you will need to know your policy (including the fine print) well. 

Insurance Regulation: The individual states have primary responsibility for most health insurance companies and their practices. State legislatures write the laws and a state agency enforces them. Each state has a Commerce or Commissioner who oversees health insurance companies. Federal statutes—such as laws for healthcare reform and mental health parity—also govern some insurance practices.

• In Minnesota, it’s the Commerce Commissioner
• In Wisconsin, it’s the Commissioner of Insurance

Out-of-Network Coverage: If your insurance company is not contracted with a healthcare provider, you will typically pay a higher out-of-pocket cost for services.

Out-of-Pocket: The money you pay from your own funds (that is, out of your pocket) for a healthcare service, even though you have health insurance. Some common “out-of-pocket” expenses are co-pays, coinsurance, and deductibles. Important: The same insurance policy may have a co-pay for some services and deductible for different services—it all depends on the details of your health insurance policy/contract.

Out-of-Pocket Maximums: The highest dollar amount your insurance policy requires you to pay out-of-pocket for covered services in a year. Let’s say your policy’s in-network out-of-pocket maximum is $1,000 a year; once you spend $1,000 out-of-pocket, you may not have to pay anything else out-of-pocket—unless you exceed the coverage limits or receive care at an out-of-network provider. Depending on your policy, some costs you pay do not apply to the out-of-pocket maximum. As usual, these issues are determined by your insurance company.

Premium (aka Rate): The amount of money that you or your group (e.g., an employer, labor union) pays to the insurance company to purchase health coverage.

Prior Authorization: Before agreeing to pay for a certain service or procedure, an insurance company may require you to get permission in advance—prior authorization—for it. Many less expensive, routine services—like a physician’s visit for strep throat—may not require prior authorization. An insurer is more likely to require prior authorization for more expensive, complex, and long-term care—like residential eating disorders treatment.

The insurer usually requires the provider to produce documents and other data to prove that the proposed treatment is “medically necessary.” Some insurers use complex criteria in order to grant a prior authorization and may refuse to reveal the criteria they used to determine if a particular course of treatment can be covered. (Remember, though, that a “medically necessary” treatment still won’t be covered if your insurance policy doesn’t include it among the services covered under your benefits.) Since mental health treatment can take a long time, we may run into authorization challenges. Fortunately, we have good working relationships with most insurers, and can often agree with them on a course of action.