Medical Insurance Benefits 101

If you are a young person just coming off your parents' medical insurance or are starting a new job and need to decide what medical plan to choose during a benefit enrollment period, this primer may help explain some of the more esoteric terms you'll come across. 

Those dollar values and percent’s may not mean much to you when you signed up. I assure you they will when you are faced with a medical problem and find yourself confused as to why that lab test or procedure your doctor ordered was not "covered 100%".

I'll admit that even in my many years of medical training, through medical school, residency and fellowship, that I had no idea what a co-insurance, deductible, co-payment, or out-of-network doctor was! So don't feel bad.

Cost Sharing: 

Basically, you and the insurance plan agree to share the costs of your medical care.  Examples of cost sharing include deductibles, co-insurances, and co-payments. Cost sharing helps to keep your premiums lower. It doesn't apply to all things, so check your plan for costs of imaging, ER visits, screening tests like colonoscopy etc.  

Deductible: 

This is the amount you pay yearly before the insurance pays their share. If the cost is $3,000 and you have a $2,000 deductible, you pay the first $2,000. Thereafter you pay your share of the remaining $1,000 and the insurance company pays its share. 

Co-insurance: 

This is the percentage you pay based on cost the sharing agreement after you have paid your full deductible.  Most often the split favors you and you pay 20-30% while the plan pays 80-70%.   

Co-payment:

This is an upfront payment typically for routine office visits with a specialist or primary care provider. Co-payments also apply to medications. Your medical insurance card typically lists these amounts. These can usually range anywhere from $10-$50.

In-network:

The doctor or facility (provider) is contracted with your insurance plan. This means your provider takes your insurance and has pre-negotiated rates. 

Out-of-network:

Out-of-network benefits may be a part of your insurance plan. This allows doctors who are not contracted with your insurance plan the ability to bill your insurance. However, the fees paid by the insurance plan may be higher and thus your costs will be higher. Insurance plans typically will pass this on to you through a higher premium and cost sharing. With respect to cost sharing your deductible and co-insurance may be higher than the those for in-network providers. Some plans have no out-of-network coverage at all and you will not be able to see that provider unless you are wiling to pay cash and he or she will not be able to send bills to your insurance company for services rendered to you.  Its always best go to an in-network provider if you can. You must known the status of your provider with your insurance plan before you see them.  Actually, in the state of New York the provider must disclose this to you.