It is a common source of frustration for many people. You keep track of every medical bill and every doctor visit. You finally reach that magic number known as your deductible. You expect that the insurance company will now pay for everything. Then a few weeks later you open your mailbox and find another bill from a hospital or a lab. It feels like the goalposts have been moved.
Understanding why this happens requires looking at how health insurance is structured. A deductible is only the first stage of your coverage. Reaching it does not mean your care is free for the rest of the year. It simply means you have entered the next phase of your plan. There are several reasons why bills continue to arrive even after you have met your initial financial obligation.
The Role of Coinsurance
The most frequent reason for post-deductible bills is coinsurance. Most health insurance plans are designed as a cost-sharing partnership between you and the insurance company. Once your deductible is met the insurance company begins to pay a large percentage of your bills. However you are usually still responsible for a smaller percentage.
A common split is eighty twenty. This means the insurance company pays eighty percent of the allowed amount and you pay the remaining twenty percent. If you have a two hundred dollar office visit you would still owe forty dollars. You will continue to pay this percentage for every covered service until you hit a different and higher limit called your out of pocket maximum.
Out of Pocket Maximums vs Deductibles
It is helpful to think of your health insurance as a three story building. The first floor is your deductible. You pay every dollar yourself until you reach the ceiling. The second floor is the coinsurance phase where you and the insurance company share the costs. The third floor is your out of pocket maximum.
The out of pocket maximum is the absolute most you will have to pay in a single year for covered services. Once you hit this limit the insurance company pays one hundred percent of your covered medical expenses. Until you reach this higher number you will likely continue to receive bills for your portion of the coinsurance. Checking your policy to see the gap between your deductible and your maximum is a good way to plan your budget.
Copays Still Apply
Depending on how your plan is written you might have copays that are separate from your deductible. A copay is a fixed dollar amount you pay for a specific service like twenty dollars for a primary care visit or fifty dollars for a specialist.
Some plans require you to pay these copays even after the deductible is met. In some cases copays do not even count toward your deductible though they almost always count toward your out of pocket maximum. If your plan uses copays for prescriptions or office visits you should expect to pay those amounts every single time you receive those services.
Services That Are Not Covered
Insurance only pays for services that are considered covered benefits under your specific plan. If you receive a treatment that your insurance company deems cosmetic or not medically necessary they will not pay for it. Since it is not a covered service the cost does not count toward your deductible and they will not pay for it once the deductible is met.
You are responsible for the full cost of uncovered services. This often happens with certain types of advanced lab testing or alternative therapies. It is always a good idea to check with your insurance company before a major procedure to make sure the specific codes the doctor is using are covered by your plan.
The Out of Network Trap
Even if you go to a hospital that is in your network some of the people treating you might not be. This was a very common reason for surprise bills in the past. You might see a surgeon who is in your network but the anesthesiologist who assists them is an independent contractor who is not.
While new laws have been passed to protect patients from many types of surprise billing out of network charges can still happen. If you choose to see a doctor who does not have a contract with your insurance company the insurer may pay much less or nothing at all. In these cases you are responsible for the difference between what the doctor charges and what the insurance company is willing to pay. This is often called balance billing.
Processing Times and Overlapping Bills
Sometimes the bill in your hand is simply the result of bad timing. Medical billing is a slow process. A doctor might take several weeks to send a claim to your insurance company. The insurance company then takes time to process it.
You might have reached your deductible on a Tuesday during a hospital stay. However a different doctor who saw you on Monday might not have sent their bill yet. When that Monday bill finally gets processed the system sees that you had not hit your deductible yet on that specific day. This creates a bill for an older service that arrives long after you thought you were done paying.
How to Review Your Bills
When you get a bill the first thing you should do is look at your Explanation of Benefits from the insurance company. This is the document that says this is not a bill. It shows what the doctor charged and what the insurance company paid. It also shows exactly how much the insurance company says you owe.
If the bill from the doctor is higher than the amount shown on the Explanation of Benefits you should call the doctors office. Billing errors are common. Sometimes the office has not yet applied the insurance payment to your account. Comparing these two documents is the best way to make sure you are not overpaying.
Moving Forward With Confidence
Dealing with medical bills is never fun but knowing the rules makes it easier. Remember that the deductible is just the first hurdle. Coinsurance and copays usually follow until you reach your out of pocket maximum.
If you are overwhelmed by the costs or confused by the paperwork we can help. We can review your current plan and explain the specific limits so you know what to expect. Planning for these costs ahead of time takes the surprise out of your mail and helps you focus on your health instead of your finances. Contact our agency today if you want a clear breakdown of how your specific coverage works.