Crash Course in Health Insurance. Part 2

What do you really know about the system that pays you?  If you’re like me, not much.  I can’t tell you if my services are in-network, out-of-network and I certainly don’t know how much your insurance company will pay towards your visit.  I don’t even know what the standard cash prices are for the services I render much less their cost after being run through the conditions of a health insurance plan.  To at least partially remedy my health insurance ignorance, let’s take a look at a few must-know concepts.

Yesterday I discussed health insurance basics– deductibles, copays, coinsurance and out-of-pocket maximums.  Most of us are at least somewhat familiar with these terms.  Today let’s do a bit more in depth in our exploration of the medical billing system.  Here are a few terms that will help you better understand the world of health insurance:

• Preventive Care– Yeah, yeah, I know you already know all about preventive care.  It’s probably a major part of your job.  But, I bring up this concept because under health care reform, all preventive care will be covered 100% before a patient’s deductible is reached.  Preventive care qualifies as measures taken to prevent disease rather than diagnosing and treating disease.  For example, annual physicals and vaccines must be paid in full by insurance plans under new health care reform law.
• Balance Billing– Balance Billing is the practice of a health care provider billing the patient for the difference between the amount a health insurance company chooses to reimburse and what the provider chooses to charge.  For example, if you charge $75 for an office visit and a patient’s plan pays only $50 towards office visits, you would send the patient a bill for $25 to cover the difference.  Critics of this practice say it reduces the transparency of healthcare pricing and passes extra costs on to patients.  Advocates argue it allows providers to be fairly compensated for services they provide.
• Health Reimbursement Account– Health Reimbursement Accounts (HRA’s) are set up and funded directly by employers to help employees cover medical expenses.  They provide tax advantages to both employees and employers.  Individuals cannot contribute personal funds to these accounts, HRA’s are funded only by the employer.  Typically, HRA funds are used to pay expenses such as deductibles, copays and cost of prescriptions.  When the employee leaves the employer, the money in the HRA does not follow the employee to new employment.
• Flexible Spending Account– Unlike HRA’s, Flexible Spending Accounts (FSA’s) are funded directly by the employee.  Through an FSA, employees can set aside a portion of their earnings tax free to help pay for medical expenses.  One major disadvantage of FSA’s is that they follow a “use it or lose it” rule; money not spent by the end of the year is lost.  FSA’s are usually offered in conjunction with a more traditional health plan.
• Health Savings Account– Health Savings Accounts are available to individuals enrolled in high deductible health plans.  Both employees and employers may contribute to the account.  Funds contributed to an HSA are not subject to income taxes providing an advantage to both the employer and employee.  Unlike HRA’s, HSA’s are owned by the individual and therefore follow the person from job to job and are even accessible after retirement.  Unlike FSA’s, funds in an HSA accumulate or roll over from year to year and are never lost.

I hope this information will help prepare you for the next time a patient asks you a health insurance related question.  Or, at least that it helps you navigate your benefits package the next time you receive a job offer.

What kinds of health insurance questions do your patients ask? 

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