8 Tips for Reading Your Health Insurance Policy
The last thing you need when you experience a medical crisis is to realize you don’t have the health insurance coverage you thought you had.
Yet many Americans aren’t as knowledgeable about their health insurance coverage as they could be. In fact, only 1 in 5 Americans could determine from their health insurance policy all of the costs they were responsible for, says a 2013 survey by Washington, D.C.-based research firm American Institutes for Research.
The time to go through your policy is before you get sick. If you’re unsure of how your insurance coverage works, your state’s Department of Insurance can likely provide resources to help you understand select insurance products, says Ashley Carr, a spokeswoman for the Florida Department of Financial Services.
Here are eight tips to make understanding your health insurance policy easier.
1. Determine How Much You Will have to Pay
There are several types of fees likely to be outlined on your health insurance policy.
- Your premium is the amount you pay for the insurance, whether you step foot in a doctor’s office or not.
- The deductible is an amount that resets each year that you must pay for medical services before your health insurance coverage will kick in. For example, if you have a $1,000 deductible, you would be required to pay the first $1,000 in health care services. Then your health insurer would start contributing to the costs.
- Coinsurance is a percentage of medical costs you must pay for once the deductible has been satisfied. For example, you might be required to pay 20 percent of your medical bills while the insurer would pay the other 80 percent.
- Copayments are fixed dollar amounts you pay when you receive a service. For example, you may be required to pay $30 whenever you visit a specialist. Copayments typically do not go toward your deductible.
- Your out-of-pocket maximum is the most you would have to pay for health insurance outside of your premiums in a given year.. For example, if your out-of-pocket maximum is $5,000, once you’ve paid that much in deductibles, coinsurance and copayments, your insurer would pick up the rest of the tab.
2. Understand the Type of Health Insurance Plan You Have
Different types of insurance plans work differently.
- A fee-for-service (FFS) plan is one in which your health insurance company will pay your medical service provider directly or will reimburse you once you file a claim.
- A preferred provider organization (PPO) plan is one in which you are encouraged to use specified medical providers that are in a network. Typically if you use providers in the network you don’t have to file a claim. But if you use a medical provider outside of the network, you may have to pay more for medical services or file a claim.
- Health maintenance organizations (HMOs) provide comprehensive medical care through a network of service providers and handle all of the coordination of your care, eliminating the need for you to file claims or fill out paperwork. Some HMOs offer a point-of-service (POS) product, which is an option to use service providers outside of the network as long as you pay more for the services.
- Exclusive Provider Organizations (EPOs) also provide medical care through a network of service providers but you can’t go outside of the plan except in instances when you require emergency care.
- A high-deductible health plan is one in which a policyholder pays a minimum of $1,250 in medical services before health care coverage kicks in.
3. Make Sure Your Doctor and Hospital Are In Network
Check your policy to make sure your primary care provider (PCP) or specialists you regularly use are covered by your plan. Some policies require that physicians be part of a network in order for the insurer to cover the costs.
Your policy might not list every medical service provider in your network, but it should let you know how you can find this information, such as by going online to the insurer’s website, says Kris Conway, an independent agent with brokerage Health Insurance Advocates.
Some insurance plans also limit the hospitals you can use.
4. Get to Know Your Benefits Inside and Out
The benefits page of a health insurance policy provides information on covered services. For example, will your insurance plan pay the entire cost of a hospital stay?
When reading this part of the policy, pay particular attention to limitations — services for which your insurance will only pay a partial amount — and exclusions — services for which your health insurance company will pay nothing.
Also, pay attention to riders, which are additions to a policy that change the standard terms. A consumer can elect to have a rider that adds coverage such as dental benefits.
In the past, health insurers used to be able to use riders to exclude coverage for certain health conditions but under the Affordable Care Act, riders that exclude coverage became illegal in 2014.
5. Take Note of the Health Insurance Policy’s Coverage Dates
Certain dates are important when it comes to your policy. The policy date is the date the policy was written. Perhaps more importantly, the effective date is the date the policy goes into effect.
6. Ensure You Know How the Claims Process Works
Your policy should tell you how payments for medical services are made. For example, one plan might require you to pay for services upfront and get reimbursed after filing a claim, while another plan might designate that the insurer pays the medical provider directly.
If your plan lets you take advantage of in-network and out-of-network providers, also check your policy to find out how claims are filed when you’re seeing a medical provider outside of the network.
7. Know Your Rights if a Health Claim Gets Denied by Your Insurer
A health insurance policy will include instructions on how to appeal a denial of coverage or any other decision your health insurance company makes.
8. Familiarize Yourself with the Terminology Used in Your Policy
Reading a health insurance policy can be like learning a foreign language. However, your policy will likely have a glossary of terms typically at the end of the policy that you can refer to so you don’t feel so left in the dark.