We go to the doctor and are told that something – a test, service, or procedure – is absolutely necessary for our health and well-being. We ask the doctor if they’ll take our insurance and get a resounding: “yes – we can do that.” Weeks later, when the bill comes, we discover that the procedure wasn’t covered by insurance, after all.

What happened?

It could be that the treatment was medically necessary, but uncovered due to the nature of the procedure, like cosmetic surgery to remove a facial cyst. Or, it could’ve been denied because your insurer deemed the procedure experimental, like the use of Remdisivir for treating SARS-COV-2. Or, you could’ve been out-of-network in some way. Maybe you saw your usual doctor at a different facility, with a separate Tax ID number, which put you out-of-network. Perhaps you were at an in-network hospital, but the on-call doctor was out-of-network.

A wide array of things can go wrong. But, how were we supposed to know? We may have been incapacitated or even unconscious at the time of treatment. We may have made every effort – going in-network to a trusted provider – and still receive surprise bills. What’s going on behind the scenes?

Every single blood test, scan, and surgery – every IV bag and syringe under a hospital’s roof – has a universal, five-digit billing code called a “CPT.” As you’re treated, the codes get added to your chart. The hospital bills those CPT codes, combined with a series of diagnostic codes that describe your medical state, to your insurer. From there, the decision to pay or deny a claim relies on internal policies relating only to those codes – not the actual person. 99% of the time, the decision looks at the combination of CPT and diagnosis code to determine whether or not it’s a covered service.

This means that it’s expected you’ve asked the hospital for the CPT codes associated with your treatment, and then passed the codes on to your insurance company to check if they’re covered, before you even arrive at the ER. A uniquely-insane feature of the United States healthcare system.

Pricing is all over the place, too. If you’re lucky enough to have an insurance plan that only charges copays for everything, you don’t have to worry about so much. You’ve basically won the healthcare lottery. But if you’re like the other 90% of us who can only afford high-deductible plans, the negotiated rate for a given service makes all the difference. Negotiated rates are discount agreements between insurance companies and providers within their network. They’re widespread and pretty much the only reason anybody can afford treatment in America. For example, a PET scan costs around $8500, retail. But if you go to an in-network doctor, at an in-network hospital, you might only have to pay $850 – a 90% cost reduction.

If you need an expensive procedure, like a PET, MRI, or CAT scan, there could be as many as 4-5 in-network facilities in your area. But, the negotiated rate at each facility could run from a few hundred dollars at a small private clinic, to thousands at a large university hospital. You should call your insurance ahead with the CPT code for the test and request that they supply you with the negotiated rates for a few facilities in the area. Most insurers offer this pricing tool now. But again: you have to know how to ask for it.

Just never, EVER expect the doctor’s office to know the details of your plan in advance. On average, they manage something like 3,000 patients across 25 different plans. And the front desk is more than happy to say, “we’ll take your insurance.” But they’re just trying to keep your business.

What they actually mean is: “Sure, we’ll physically take your insurance card and bill them. But are we in your network?  Doesn’t matter as long as we still get paid.”

1. Type of Plans

There are four different health insurance plans to choose from that suit you and your loved ones the most. The plans include:

• Indemnity Plans

Indemnity plans offer the most freedom in terms of choosing doctors and hospitals but also have higher deductibles and out-of-pocket costs.

• Managed Care Plans

Managed-care plans usually have lower premiums, but you are limited to a specific network of providers.

• Preferred Provider Organizations (PPOs) Plans

PPOs allow you to see any doctor within the plan’s network but also have a higher deductible than other types of plans.

• Point-of-Service (POS) Plans

POS plans are a mix between PPOs and managed care plans where you can choose either in- or out-of-network providers but typically have lower deductibles than PPOs.

2. Deductibles

Your deductible is the amount of money you have to pay out-of-pocket for your medical expenses before your insurance plan starts to pay. Deductibles can range from a few hundred dollars to a few thousand dollars.

Additionally, some plans require that you meet your deductible before any coverage kicks in, while others may offer some coverage (like preventive care) even before meeting your deductible. So, it’s vital to consider how much you’re willing and able to pay should you need to use your health insurance.

3. Premiums

Your premium is the amount of money you pay every month for your insurance coverage. Premiums can vary greatly depending on the type of plan you choose, the deductible, your age, whether you smoke, and other risk factors. However, it’s essential to remember that cheaper plans may have higher deductibles and out-of-pocket costs, while more expensive plans may have lower deductibles and out-of-pocket costs.

Thus, it’s essential to find a plan that you feel comfortable with financially. Besides, health insurance premiums are tax-deductible if you itemize your deductions on your taxes. Moreover, suppose you can’t afford to pay your premium in full. In that case, many insurance companies offer payment plans to help break the cost down into more manageable monthly payments to fit your financial situation.

4. Coinsurance

Coinsurance is your share of the cost of a covered medical service. It’s usually calculated as a percentage of the allowed amount for the service (for example, 20%). So, if your coinsurance is 20% and an MRI costs $1000, you would pay $200, and your health insurance company would pay the other $800.

Some insurance plans have no coinsurance, some have a fixed amount (like $100), and others may have different percentages for different services. Thus, be sure to inquire about the availability of coinsurance and find the one you are comfortable it that can suit your financial needs.

5. Medicine Cover

Finally, it’s essential to check what type of medicine your health insurance plan covers. Many programs only cover generic drugs, while others cover brand-name drugs. However, some plans offer a more comprehensive range of coverage for both generics and brand-name drugs.

Consequently, it’s essential to know which type of medicines you and your loved ones need and find a plan that covers those drugs. You can usually find this information on the insurance company’s website or by speaking to a customer service representative. Otherwise, choosing the wrong plan that may not cover your medicine may be costly when you need them since you will pay out of the pocket.

Through an extended example, I’ll show how these concepts interact with each other. Hopefully, you’re able to use it to develop a healthcare shopping strategy that’s right for you.

So, consider that it’s the new year, and time to choose a new health plan.

Do I Really Need Health Insurance?

By now, you’ve noticed how insanely expensive all of this is, and you may be wondering: “What’s the point of even having insurance if they’ll always find a way to keep me on the hook?”

You still need it. Allow me to explain.

There are three starting conditions: personal wealth, the deductible, and the state of your health.

If you’re young and healthy – the primary goal is to minimize the premium payment. You’re young, so you probably can’t afford much. For you, insurance is more of a prevention against catastrophic events. It’s unlikely that you’ll pay anything towards your deductible since routine medical visits are covered under co-pay agreements. If, by chance, you are injured: expect to pay 100% of the treatment cost out-of-pocket. Even if you broke your arm, and it cost $2,000 to treat, you still probably saved money in the long run by making cheaper premium payments.

On the other hand, healthcare pricing is absolutely out of control in the United States. It’s the kind of place where a burst appendix can mean literal bankruptcy. Because without health insurance, every provider is considered “out of network,” and they’ll bill you as much as they possibly can, sometimes for services and products you never actually received. If you’re not conscious: who’s to say what really happened to you in the treatment room, other than doctors and accountants?

So it’s better to select a very affordable plan with a huge deductible than to go without altogether since you can still access an insurer’s negotiated rates. Remember those? An insurance company negotiates, in advance, how much they’ll pay a provider for a particular service. An insured patient at an in-network practice will not need to pay more than the negotiated rate, often a discount of around 90%.

So assume that we’re considering an in-network provider situation in this scenario.

Scenario:

Current Status:

I pay a $500/month premium for a policy with the following characteristics:

Deductible: $2000

Co-Insurance: 20%

Out-of-pocket Maximum: $5,000

First Event:

In January, I notice an irregular mole. I visit a dermatologist to have it removed and biopsied. Because I haven’t yet met my deductible, I have to pay $150 for a visit out of my own pocket.

Current Status:

Deductible: $150/$2,000

Out-of-pocket Maximum: $150/$5,000

Total Medical Bills: $150

Total Cost to me, for the year:

+ $6,000 ($500 x12 months) of premiums

+ $150 (medical expenses)

= $6,150

Second Event:

In June, I have a heart attack. I make it to the emergency room in time and survive. The bill for the hospitalization, ambulance, diagnostic exams, and medication comes out to $2,850. Of that bill, I’m required to pay $1,850 towards the deductible, since I already paid $150 towards it in January. From there, I’ll owe an extra 20% of the difference as co-insurance. Since the original bill was $1000 over my deductible, that’s $200 more I owe for the services.

I’ve now met my deductible and paid $2,200 towards my out-of-pocket maximum. My insurance company has now paid $800 of my medical expenses.

Current Status:

Deductible: $2,000/$2,000

Out-of-pocket Maximum: $2,200/$5,000

Total Medical Bills: $3,000

Total Cost to me, for the year:

+ $6,000 (premiums)

+ $2,200 (medical expenses)

= $8,200

Third Event:

In August, I have another cardiac episode. This time, it’s much worse. I need emergency bypass surgery. I spend another week recovering in the hospital, and the bill comes out to $30,000.

It hasn’t been a good year…

Since I already met my deductible, the 20% co-insurance means this stay would cost me $6,000. But since I’ve already paid $2,200 towards my out-of-pocket maximum of $5,000, I’ll only need to pay $2,800 to cover these costs. Because I’ve now met my out-of-pocket maximum, the insurance company pays the remaining $27,200.

Current Status:

Deductible: $2,000/$2,000

Out-of-pocket Maximum: $5,000/$5,000

Total Medical Bills: $33,000

Total Cost to me, for the year:

+ $6,000 (premiums)

+ $5,000 (medical expenses)

= $11,000

Fourth Event:

Disaster strikes again. In December, I fall off a ladder and break my leg – a severe, compound fracture, racking up another $10,000 in medical bills. But because I already met my out-of-pocket maximum in August, I don’t have to pay anything now. My insurance pays the entire $10,000.

Current Status:

Deductible: $2,000/$2,000

Out-of-pocket Maximum: $5,000/$5,000

Total Medical Bills: $43,000

Total Cost to me, for the year:

+ $6,000 (premiums)

+ $5,000 (medical expenses)

= $11,000

So over the course of a year, I spent $6,000 on health insurance and $5,000 on medical expenses, for a total of $11,000. But my insurance company spent $38,000 (That’s $800 + $27,200 + $10,000) on my medical expenses. Financially, it was worth having insurance. My wallet is hurting, but at least I have something left. I’d be a lot worse without it. Because if I didn’t have any, it’s not like I’d be on the hook for just $38,000. Remember: that’s the sum of negotiated rates. 

Without insurance, I’d owe something closer to $350,000. And you better believe they’re coming to collect. They’ll garnish my wages, seize my assets, and send me straight into bankruptcy.

That’s why you need insurance.

Insurer’s Copay

Your copay is only a portion of the full copay. After your visit, your doctor collects your share through a POS terminal at the office, then forwards a bill to your insurance company for their portion. It’s a very messy process. Insurance companies often can’t pay these bills quickly enough. So after 30 days, the doctor’s office, instead of re-billing the insurance company, tacks the difference onto a patient’s bill. Look out for this hidden fee, and dispute with great prejudice if it occurs.

Insurer’s Co-insurance

If your plan stipulates a 20% co-insurance policy, that means your insurance company pays 80% of any future medical bills. Then, the 20% paid out-of-pocket must count towards your Out-of-Pocket Maximum. Sounds good, right? Finally, insurance is helping to defray the cost.

But co-insurance is ultimately just another strategy insurance companies use to reduce their liability. If it’s early in the calendar year and you’ve already met your deductible: you aren’t well. The chances are high that you’ll continue to need lots of treatment to get better. And those treatments must’ve been pretty expensive since you met the deductible so soon. The insurance company views you as a risk, now. You’re in danger of meeting your Out-of-Pocket maximum, meaning that the insurance company could be legally obliged to pay 100% of your bills.

But by passing on only a percentage of the cost, the insurance company keeps you trapped in that space between deductible and Out-of-Pocket maximum. By the time you get close, the calendar year ends, everything you paid resets, and the insurance company keeps as much of their money as possible.

Negotiated Rates

The fact is, most people won’t have medical bills that exceed their out-of-pocket maximum. That number is too high, by design, for all but the most catastrophic situations.

Health insurance provides a secondary benefit called “negotiated rates” for those individuals. When you visit a medical practitioner or hospital, they can pretty much bill you whatever amount they want. Only a few services have a legally-mandated price.

But for some practitioners, the insurance company negotiates how much they’ll pay them for that service. For example, a hospital may charge $500 for an ER visit. But the insurance company negotiates that they’ll only pay $250 for emergency visits. The $500 bill sent by the ER to the insurance company is the pre-negotiated rate, and the $250 bill is the negotiated rate. And an insured patient at an in-network practice will not need to pay more than the negotiated rate. Think of it as an extreme loyalty discount—a coupon.

The medical practices that negotiated a rate with your insurance company are considered in-network. The medical practitioners that didn’t agree to the discounted rates are out-of-network. And out-of-network providers will charge you the pre-negotiated rate.

In the example above, consider that the patient had to go to an ER out-of-state. Then, the insurance company may only pay $250 of the $500 balance, leaving the patient responsible for the $250 balance.

Insidiously, insurance companies also issue different deductibles, co-insurance, and out-of-pocket maximums for in-network vs. out-of-network visits. For example, the deductible may be $5,000 for in-network visits, but you could have a separate, $10,000 deductible for out-of-network visits. You are effectively trapped inside your insurer’s network of providers, as the financial consequences of out-of-network care can be disastrous.

60% of all personal bankruptcy cases filed in the United States directly result from insurmountable medical debts

An annual study conducted by the Commonwealth Fund compares healthcare systems across the 11 wealthiest countries, globally. Every year since 2004, we’ve ranked last overall. That’s last in equity, last in access to care, last in administrative efficiency, and last in overall quality of health care outcomes.

We are also an outlier in overall cost. The United States Government spends roughly 17% of our GPD on subsidizing healthcare – more per person than any other nation on the planet. That’s high, but it’s not even the whole story. Because we have a private healthcare market, ordinary citizens pay an additional 12% of the GDP, out-of-pocket for healthcare costs. But for most other wealthy countries, healthcare spending amounts to only 8-11% of the GDP, and their citizens pay almost nothing out of pocket. We’re a joke, by comparison.

As such, our health insurance industry was designed to confuse, bore, and obfuscate. The less we understand, the easier it is to take advantage of us. The less people know about what they’re entitled to, the more money the insurance company can save. So today, I’d like to break down some of the most fundamental topics in health insurance. To explain, as plainly as possible, the simplest concepts a person must understand before making choices about their healthcare.

We’ll start by defining items in one subset of costs: all the things you have to pay for, on any insurance plan in the United States.

What’s a Premium?

Your premium is the baseline fee paid in exchange for insurance coverage. It can be billed weekly, monthly, or however your insurance company or employer decides. In most cases, it’s monthly. In any case – it’s the most important payment. If you fail to make timely premium payments, your insurer can terminate your health coverage without warning. Although, for better or worse, many people’s employers automatically pay the premium, then deduct the costs from payroll.

What’s a Deductible?

A deductible is a set amount that you’ll pay out-of-pocket for medical services each year before your insurance company begins to help. There is an inverse relationship between deductible and premium cost – meaning that your premium goes up as your deductible goes down. You pay more monthly for less cost-responsibility, yearly.

If you’re a young, healthy person, you should be looking for a higher deductible plan. For you, health insurance is more of a protection from catastrophic accidents than a way to mitigate expensive yearly costs. If you’re older or have a chronic condition requiring a specialist’s attention, then you should be looking to minimize your deductible. In other words: don’t shop for a lower deductible unless you have good reason to expect lots of medical expenses this year.

What’s Co-insurance?

Co-insurance is the percentage of medical costs you’ll still pay after meeting the deductible. It’s usually a minority percentage – 20-40% -, but still a hindrance and often an inevitability. Very few plans skip past co-insurance, and the ones that do are often copay-only. In that light, this number is a great way to determine the overall quality of a plan.

Generally: the higher the co-insurance, the worse the plan.

What’s a Co-pay?

A co-pay is a small, fixed amount you’ll pay for a particular service. You usually only pay co-pays for services not subject to the deductible – like visits to your primary care doctor or behavioral health services (therapy). It’s a negligible percentage of one’s total healthcare costs.

What’s my Out of Pocket Maximum?

Your Out-of-Pocket Maximum is the most you’ll pay for medical expenses in the calendar year. You pay 100% of all medical costs up to the amount of your deductible. Then, between the amount of your deductible and the Out-of-Pocket maximum, you’ll continue to pay your co-insurance percent. And only after you’ve met your Out-of-Pocket maximum will insurance pay 100% of medical costs for the remainder of the year.

The stereotypical image of insurers – as stingy, clutching, covetous institutions, hell-bent on denying as many claims as possible – is perhaps mostly the fault of the health insurance industrial complex. It’s horrible. But since you’re already reading this, I’m probably preaching to the choir when I say: medical billing, in particular, is a nationwide catastrophe. And there’s precious little being done to change the way hospitals and insurers communicate, because most people just accept the devastating bills they receive at face value.

But there are tricks hidden between the lines. Very, very, very well-hidden. Your medical insurance has more policies than you can imagine, each more arcane than the last. Every year, my insurer distributes a new, 500-page manual on the minutia of every policy they offer – as if anyone’s actually capable of reading it. The rules of the game are out there, just not in a format anyone playing the game can understand.

In most cases: it’s best to call and ask an insurance representative for help. But you need to know what to ask for, first. This post should help:

Scenario 1: Surprise, You’re Out of Network

You fell off a bike and got a nasty cut on your cheek. It’s bleeding quite a lot, so you go to the ER. Since the wound is on your face, they offer to have the residing plastic surgeon take a look. The surgeon determines the damage isn’t severe, that glue will be sufficient, and “what the heck, I’m already here, I’ll just glue you up.” Then, weeks later, you’re slammed with a bill for $3,000. It turns out the plastic surgeon was out of network, and the claim’s been applied to your (much larger) out-of-network deductible.

If it happens to you: don’t panic.

This kind of surprise billing is so pervasive; hospitals even have slang for it: RAP’s. Meaning “Radiologist/Anesthesiologist/Pathologist” – or, referring to those clinical disciplines which most frequently see their practitioners working out of network.

Don’t get me wrong – It’s a lousy hand to’ve been dealt. But don’t go pointing fingers. The complexity of the U.S. private insurance system makes it nearly impossible for hospitals to tell which doctors are or aren’t in a particular patient’s network. And the speed at which these specialists must treat patients often necessitates that they skim past details which would otherwise take days to confirm.

If you’re unfortunate enough to have this happen, call the number on your insurance card. When you reach a representative, explain that this particular scenario was out of your control, and that you’re requesting they process the claim under in-network benefits. If you are incapacitated or admitted to an ER, you are not legally liable for the doctor they provided. 99% of the time, your insurer will agree, shift some numbers around on a screen, and boom: with one phone call, your share’s been significantly reduced.

Scenario 2: Stuck With The Bill 

You’re not out of the woods, yet.

Even if you go through all of the above, you might still be shocked by the resulting bill. Another problem frequently occurs at this step of the bookkeeping process: the “Balance Bill.”

For example: an out-of-network anesthesiologist who attended your surgery bills Cigna $1,000.

You get the bill and call your insurance to complain. They’re sympathetic, and they approve a “reduced rate” payment of $500 – or what you would’ve paid if the anesthesiologist was in-network. From there, normal coinsurance kicks in. You pay something like 20%, and your insurance pays 80%. So theoretically, you should only pay $100 for this service.

The second, revised bill arrives and – “WHAT? – it’s $600??” There’s a line for your $100, plus the $500 that Cigna “dismissed” during the cost reduction process. If it happens; know that this is not your fault. It’s because that out-of-network doctor who treated you rejected the insurance’s reduced-rate offer of $500.

It’s unbelievably scummy, but humans like money. Doctors are no exception. They don’t care if it comes from you or your insurance – they just want to be paid what they expected. So if you get stuck with one of these “balance bills,” call your insurer again. Explain that the circumstances were out of your control, and that the doctor was not kind enough to accept the reduced, out-of-network rate. 99% of the time, your insurer will help you. It’s in their interest to keep you as a customer, so they’ll just recalculate the claim to approve the full $1,000, and assign you the original 20% share (or whatever your benefits happen to be – 20% is better than most.)

Bottom line: don’t pay any medical bill before you’ve disputed it to the furthest possible extent with your insurance company. If you go to great lengths; to get a human being on the phone, to learn just what to ask for, and how to say all the magic words – our health insurance system works almost as well as any other developed nation’s

1. Do Your Research

When looking for affordable insurance, one of the best things is research. By researching the different types of plans available, you will find one that is perfect for yourself and your family. The internet makes it easy to do this kind of research from home. However, if you are having trouble finding the information that you need, there are some steps you can take.
For example, it is important to make sure that your doctor accepts the type of health insurance plan that you are considering. This will save you a lot of time and money in the future. Also, find out if the deductible or copayment is one you can afford. If not, look for a different plan with a deductible or copayment that fits your budget.

2. Talk to Your Doctor

It would help if you also talked to your doctor about the insurance plans available in your area. They may have experience with certain companies and their plans and may be able to give you their opinion on the types of health insurance they have worked with before. In addition, if you are old enough, this is a good time to enroll in Medicare as well, which takes care of many medical expenses people deal with as they age.

3. Get Quotes from Different Companies

Lastly, it is important to get quotes from different companies that offer medical insurance. This step is very important because if you research one type of plan, for example, an HMO, and find one quote for this plan, you could go back to the search engine and get another quote for a PPO plan instead. If you are having trouble finding affordable health insurance quotes online, here are some tips:
Find out which carriers in your area cover which doctors, hospitals, or specialists. You will also need to know what percentage of medical bills each carrier covers. Once you have this information, contact the carriers individually with your questions about specific plans available in your area.

4. Make a List of the Plans You are Interested in

Once you have done your research, it is time to compile a list of all the plans that interest you. This will help you compare all the different types of health insurance available in your area so that when you contact them for quotes, you are prepared. If you are researching the different types of medical insurance available in your area, here is a list of what you should be looking for:
· Availability to everyone in your family – Children, adults, and senior citizens.
· Deductibles – Choose a plan covering 80% or more of medical expenses. Also, choose a deductible that you can afford.
· Copayment – Survey different plans for a doctor’s visit and hospital stay to see the copayment. Choose a plan with a low or no copayment or a very affordable plan.
· Coverage for prescription drugs – Each plan covers different prescription drugs, so compare the coverage on different plans.

Other Factors to Consider

You should consider other factors when looking at affordable insurance quotes besides just price and coverage for medical expenses. These include:
· Number of visits to doctors each year – Each plan has a limit on how many times you can see a doctor each year. Some plans allow two visits per year, while others only allow one.
· Out-of-pocket expenses – Also known as co-insurance, out-of-pocket expenses are what you have to pay if your insurance does not cover any medical bills. Most plans cover 80% of medical bills but check with each carrier to see what they offer.

Conclusion

When considering affordable health insurance quotes, make sure to complete your research, as this will save you a lot of time and money. In addition to comparing different types of plans available in your area, please make a list of all the plans that interest you. When it comes time to contact carriers for quotes, you can easily compare each plan side-by-side.