Health insurance is a complicated topic. It seems to always be going through changes and the terms are confusing. Sometimes I even wonder if insurance agents and educators understand health insurance! For many people, it’s a topic best ignored as often as possible.
But if you are dealing with breast reconstruction, discussions about health insurance become unavoidable.
The terminology and details of health insurance can be confusing. Since this month’s theme at ITC is breast reconstruction and insurance rights, we’re doing an article about some health insurance basics.
We’ll start with a few basic terms relating to health insurance. You’ll likely come across these terms many times when you’re dealing with your own insurance, and we’ll use many of these terms in this article. We want to make sure you can understand what we are talking about. Otherwise, this article becomes kind of pointless.
- Allowable charge: also referred to as “maximum allowable” and “allowed amount.” the allowable charge is a dollar amount that an insurance company believes is reasonable for medical services. This amount varies depending on your location.
- Balance billing: a fee requested by your breast reconstruction surgeons. Certain breast reconstruction surgeons set their fee and request that you pay any amount that your insurance company does not cover. This amount results from a difference between your insurance company’s allowable charge and your physician’s fee. Balance billing is not part of your insurance coverage. Therefore, it is not a part of your out-of-pocket expenses.
- Benefit: this refers to the amount that the insurance company pays to you for medical costs.
- Catastrophic coverage: catastrophic coverage is a bare-bones type of insurance plan. It covers medical and hospital expenses after you pass a certain deductible. This deductible is normally high.
- Claim: claims are requests for an insurance company to pay for medical services. Either you or your healthcare provider make these requests.
- Coinsurance: the cost shared by you and your insurance plan. Coinsurance is the percentage that you must pay after meeting your deductible. For example, if you have a 20 percent coinsurance, you must pay 20 percent of your medical bills. But this amount will not exceed your out-of-pocket maximum. Your insurance company covers the rest. Not every plan requires coinsurance. And some plans have higher coinsurance rates depending on whether you see an in-network provider.
- Copay: a fixed dollar amount that you pay when you receive medical services. Most copays are for such things as office visits, hospitalizations, or prescriptions. They are also not a part of every insurance plan.
- Deductible: the amount you pay before your insurance starts paying. Most deductibles are annual amounts, so you are reset to zero at the end of each year. Once your deductible for the year is reached, your plan will pay for either a part or all your health costs.
- Explanation of benefits (EOB): a receipt for your health care. EOBs detail the health services you received. They also include the amount that your insurance has paid and the amount you must pay toward those fees. It’s a good idea to always check an EOB for billing errors.
- Global Period: a specific period of time during which you receive post-operative visits and follow-up care without billing your insurance company. Most global periods last for 90 days following a breast reconstruction surgery. It is also common that you must finish your global period before moving onto the next stage of your breast reconstruction. The government decided on these periods, so changing them is not an option.
- In-network provider: providers and physicians that your insurance company has approved. Most companies negotiate lower costs with in-network providers. When you see one of these in-network providers or hospitals, you pay less.
- Out-of-network provider: any physician or hospital that is not approved by your insurance company. Since there are no negotiated prices for out-of-network providers, your health care costs are often higher.
- Out-of-pocket maximum: the maximum amount you pay towards health care for a year. Out-of-pocket maximums include all copayments, deductibles, and coinsurance. However, they do not include regular premiums. Once you have reached your out-of-pocket maximum, your healthcare insurance company pays for 100 percent of remaining costs.
- Pre-existing condition: a diagnosed or treated health problem that you had before you purchased your insurance plan.
- Premium: the regular payments you make to your health insurance company. These are most commonly monthly payments. However, they can also be quarterly payments depending on your insurance plan.
How Health Insurance Works
Most of us have limited knowledge of how health insurance works. We send in monthly payments and we are able to see a physician without paying high fees. Seems simple enough.
In reality, those monthly payments are going toward a type of shared healthcare. You and others share the cost of staying healthy by paying specific amounts each month. But you are only paying for the benefits and plan you are receiving. Depending on the benefits you want, your monthly payments will be different from someone else’s.
Your monthly payments are your premium. Higher premiums often grant you lower co-payments, out-of-pocket costs, and deductibles. Sometimes higher premiums each month are difficult to pay. To ease their monthly financial burden, individuals opt for lower premiums and higher deductibles.
Co-payments, out-of-pocket costs, and other fees do not come into play until you visit a physician. This is part of the reason why individuals who rarely go to a physician prefer lower premiums. If you are dealing with breast cancer or breast reconstruction, you will be seeing different physicians often. This may result in you becoming overburdened with deductible and out-of-pocket costs.
Types of Health Insurance
There are two basic types of health insurance coverage: managed care and fee-for-service plans.
Fee-for-service plans, also called indemnity plans, are traditional. They allow you to visit almost any medical provider. Once you go to your appointment, your insurance company received a claim. A percentage of your bill is then paid for as long as you have met your annual deductible. Most fee-for-service plans cover 80 percent of your health insurance costs. This means you must cover 20 percent. This 20 percent is coinsurance. Although fee-for-service plans are simple, they are some of the most expensive plans out there.
Managed care plans offer health services at a lower cost. But members must follow certain rules to get these lower costs. There are several types of managed care available: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Point of Service (POS).
- HMO: with HMO plans, you receive various health benefits for a specific fee. Most HMO plans do not have deductibles, but you will have a copay. You select primary care physicians from a plan’s list. They will refer you to specialists and providers within the HMO network. If you see an out-of-network provider for anything other than emergency care, you will not receive benefits.
- PPO: with a PPO, you are free to see providers both in and out of an approved network. Yet your share of the bill is higher when you see an out-of-network provider. In most cases, you will pay a copay when seeing an in-network or out-of-network provider. You will also have a deductible and set coinsurance amount.
- POS: a type of hybrid of PPO and HMO plans. Like HMOs, your primary care physician refers you to physicians within the plan’s network. You also have the added flexibility of a PPO plan and can see a physician outside of the network. In this case, the PPO pays a predetermined amount of your health bill. You are responsible for any remaining costs. Your share will also be higher when visiting an out-of-network provider. Due to this added flexibility, PPO premiums are higher than regular HMOs.
Is Breast Reconstruction Covered by Medical Insurance?
The exact specifics of what your health insurance covers will vary. In most cases health insurance does cover breast reconstruction.
This is thanks to the 1998 Women’s Health and Cancer Rights Act (WHCRA). This law states that all health insurance companies and groups that cover mastectomy procedures must also cover breast reconstructive surgery. Further, these plans must cover surgeries that treat complications and achieve breast symmetry.
In short, as long as your insurance covers your mastectomy, it should cover the cost of breast reconstruction and revisions.
The WHCRA does not guarantee that the procedure will be covered in full. As with other procedures, you may still pay a copay when you go in for your appointment. Your plan may also expect you to pay coinsurance. The coinsurance and copay amounts should not be more than other surgical procedures. They should also not exist only for breast reconstruction procedures.
If you are ever unclear about what your insurance covers, always talk to your insurance provider.