If you’re with a private insurance carrier, you pay them a premium, generally on a monthly basis. For most Americans, this premium is half paid by the employer, and half paid by the employee, otherwise you pay the entire amount. Employer coverage is generally cheaper as it’s “group coverage” which means the risk can be spread to a larger “pool” of people.
Your insurance provider will usually provide you with a list of “in network” providers, which includes primary care physicians (family doctors), specialists and hospitals. If your provider is not “in network”, your insurance pays nothing.
If your provider is “in network”, they will charge you a fee for the specific service you provide, which has already been negotiated with the insurance company. Let’s say the fee for a typical appointment with your family physician is $200.
Here’s where it gets complicated. The policy will have a “yearly deductible”. That’s typically about $5,000. You pay the first $5,000 of fees you incur in any given calendar year, so for that visit you pay the entire $200.
So let’s say you have a complicated medical problem that requires weekly physician visits. You pay for the first 25, so your insurance pays for the next 27 right? Not so fast. That’s where “co-payment” comes in. Your agreement with your insurance company will usually require you to pay for part of routine health care expenses (things that aren’t emergencies or atypical). Your co-pay on that $200.00 visit may be $50.00, you you pay the doctor $50.00.
So how does your doctor get paid? They fill out a form for the insurance company and submit it to the insurance company, which pays them. The thing is that each insurance company, including the government run ones like Medicare and Medicaid, have their own forms, each of which uses a unique set of codes to describe each procedure.
But let’s say you need something complex. Your family doctor is afraid you’ve got a serious condition, so they send you to a specialist. The specialist wants to perform something extraordinary, like a spinal fusion. Let’s say this procedure costs $50,000.
At that point, unless the procedure is being provided in an emergency, you generally have to get pre-clearance for that procedure from your insurance company. If you’re lucky, they will approve it, but will also tell you there’s a co-pay – let’s say it’s $2,500. In other words, they will pay $47,500 while you pay the rest.
But if you’re unlucky, they will say “no” and direct you to some other medical procedure. Let’s say it’s physiotherapy – That’s about $150 a visit, with you paying $37.50 a visit and them covering the rest.
So:
- If it’s a covered procedure, you pay the entire cost, up to your yearly deductible, then a co-pay.
- If it’s not a covered procedure, you pay the entire cost
- If the health care provider isn’t in your insurer’s approved network, you pay the entire cost
- If it’s an elective procedure, you need pre-clearance before you can have the procedure.
Typically, a family of four will pay about $1,000 a month for insurance, and about $5,000 a year in expenses that insurance won’t pay for. You’re far more likely to pay more in premiums, deductibles and co-pays than your insurance company pays in benefits.
