What does your health insurance cover?

For many Americans, it’s open enrollment time, the period your employer give you to make changes in your health insurance coverage. You may not understand your insurance very well, but you have to understand this one important fact: your health care providers know even less about your insurance than you do. Most doctor’s offices have a sign that says something like, “Your insurance is your business.” There is know way for your doctor’s office to know all the details of all the different insurance plans.

Each state has different rules, and each part of the country differs in what kind of health plans predominate. In some areas, non-coverage is so common that it almost doesn’t matter what you know, other than the location of a free clinic. But for those of you looking at new or existing health plans, you must read through the documentation, especially the summaries that tell you what is and isn’t covered.

For example, many plans cover a yearly preventative physical. Many do not. If you don’t tell your doctor whether or not preventative services are covered, you may end up with an unexpected bill. Preventative physicals are often covered without a co-pay, but most other visits do have a co-pay.

Your plan will include a glossary, but some terms deserve special attention.

A deductible generally refers to a yearly amount you pay before your insurance kicks in. Your insurance may have a fairly low deductible, say $200.00. Let’s say your new plan starts January 1 and on the 3rd you have a bad cough. You go to your doctor, get examined, get an X-ray and some blood work, and a prescription. The entire service may come to somewhere around $350.00. You would have to pay for the first $200.00 of the bill, and then your insurance would cover the rest, and any other services for the rest of the year. Unless.

Unless you have an out-of-pocket requirement. Some plans may require you to pay for, say, 20% of your costs even after you’ve met your deductible.

To make things even more confusing, some services may not count toward your deductible. Arghh!

One of the popular types of plans meant to defray the cost of coverage is the high-deductible plan. These plans cost much less, but require you to pay a large amount of your costs before the insurance kicks in. These deductibles tend to run in the 1000-3000 dollar range, but there’s a lot of variability.

It’s also important to follow your plan’s network of physicians and hospitals. You plan may pay for most of your services in network, but none at all out of network. To make it even murkier, you may make a choice that sounds logical, but that your plan charges more for. As an example, a friend of mine broke her arm while out of town. She figured that, rather than go to an emergency room and incur a huge bill, she would go to an urgent care center. Oops. It turns out that her insurance would have covered the ER visit, but doesn’t cover out-of-network urgent care.

All of these terms float in an acronym soup: PPO, POS, HMO, PBM, PPA…

Does this all seem a bit confusing? Imagine what your doctor’s office is dealing with—billing dozens of different companies in different ways, never being sure what will or won’t get paid.

I know my non-U.S. readers are going to shake their heads in wonder at the “system” we’ve stumbled into here. Many of the cost-savings ideas are really “cost-shifting” maneuvers. My practice is a very small business—about seven employees. This doesn’t give us much leverage in purchasing a plan for our workers. Low-deductible plans may be out of our price range. High-deductible plans shift the cost of services to the patient, supposedly making them better health-care consumers, reducing waste and costs. In reality, of course, it just makes people avoid the doctor, but that is the idea behind “moral hazard”—if the patient’s wallet is at risk, rather than the insurance company, then the patient will make more economical choices…supposedly. Most sick people are not perfect rational actors.

Well, that’s it for now. Read your choices, and choose wisely.