Question:
Can you explain how insurance works? I had a mole removed by an out-of-network doctor. Insurance said it would cover it. It never paid anything. I am confused.
Answer:
You probably had not met your deductible. Insurance today is something of a catastrophe, but here are some common questions. Before relying on insurance, it is important to read your policy and call your insurer to be sure you understand what is covered, as best you can.
- Deductibles – what you pay out-of-pocket for your insured medical care, before insurance pays anything. Say you have a deductible of $3000. Your out-of-network mole removal costs you $500. You submit an insurance claim. Insurance sends a notice that it approved $100 for the mole removal. But where’s the check? You don’t get one if you haven’t met your deductible. Instead, a $100 insurance-approved payment lowers your deductible from $3000 to $2900.
- Co-insurance – what you pay out-of-pocket for major procedures. Say you have an insurance-approved breast reduction. You have not paid any of your $3000 deductible and you have a 20% copay for surgery with a $2000 limit and your surgery costs $7500. You will pay out-of-pocket $3750 for your surgery: the $3000 deductible + the $1500 for co-insurance.
- Co-pay – this is what you pay for some insurance covered care. You see your doctor for a visit. You have a $20 co-pay. It also goes toward your deductible.
- Out-of-pocket maximum – insurance limit on what you pay out-of-pocket.
- Networks – each insurance policy has a doctor network. The doctors that are in your network accept your insurance and agree to not bill you for what insurance does not pay. Networks are getting smaller. Say you go to a hospital for a facial laceration. Only 1 of 5 ER doctors is in-network here and she is out sick. You get a bill for $2000. Your insurance pays for instance, 80% of its in-network fee to your out-of-network doctor. If insurance pays $800 to the in-network doctor, it pays $640 to the out-of-network ER doctor. You owe the balance of $1360.
- How to tell if a doctor is in-network? Often you can’t. Insurance policies’ network lists are often wrong and doctors are often not told if they are in network.
- Network-only insurance – Some policies pay nothing for out-of-network care. Let us say you need breast cancer reconstruction. Your in-network plastic surgeon may be hours away. But you will pay out-of-pocket entirely for out-of-network surgery.
- Pre-determination – you want a breast reduction. Your out-of-network plastic surgeon submits a “Predetermination Letter” to your insurance. You are approved! Insurance should reimburse you after surgery for your surgeon’s fee to the limit of the policy – but it may not. Why not? Who knows? Pre-determination is not a guarantee of payment.
- How can you find out in advance how much your insurance will pay? You can’t and neither can your doctor.
Government regulation and for-profit health insurance has made health care expensive by vastly increasing administrative costs. Doctors’ fees remain a very small part of health care costs. Most doctors have to see many more patients than they should because insurance payments go lower and lower, overhead higher and higher. Your frustrations are truly the result of government regulation and insurance management. Your doctor didn’t cause it and cannot fix it.