Using Insurance
Did anyone ever teach out about insurance and how to use it?
No? Same here. That’s why we put together this guide, so you can make the most of the benefits you already have.
Let’s start at the beginning. Your employer offers healthcare coverage and you’re enrolled. What the heck does that even mean?
You and/or your employer pay the insurance premium in order to have coverage. This is paid monthly and probably taken out of your wages automatically, if you contribute towards it.
Insurance plans typically cover services in two ways:
Deductible plus co-insurance, or
Co-pay
Your deductible is how much you pay towards services before insurance starts to pay. This resets yearly. What you pay is going to be the insurance-negotiated rate for a service, not what the provider charges.
For example, an in-network provider might say that they charge $200 per session, but if insurance has a rate of $150, then that is what you would pay for each session that goes towards your deductible. the provider cannot charge you for the difference between the insurance rate and their rate.
Co-insurance is a percentage of the insurance rate that you would pay, and insurance would cover the rest. This tends to be around 10-30% for in-network providers, and 30-50% for out-of-network.
Co-pay is a flat fee that you pay for that service, and insurance would cover the rest. Copays can typically range from $10-50.
Okay, time to add on a little more. Here are a few more terms you’ll see.
It’s often helpful to know the following, though they come into play less often:
Pre-authorization: This is sometimes required for services that insurance wants to verify are medically necessary. This typically involves calling insurance to confirm, and a visit to the doctor to get the service “prescribed.” You might encounter this for assessment services.
Out-of-pocket limit: This amount is the maximum that you would pay for services in a year. This includes your deductible. After you’ve reached this limit, insurance will then cover any additional services in full. No more copays or co-insurance! This is helpful if you know you’ve got a year of high medical expenses, so you can get multiple procedures done and potentially have some of them fully paid by insurance.
HSA/FSA funds: A tax-advantaged account that can be used for medical/mental health services. You and your employer can contribute to this pre-tax and invest the money, then use it as needed for your medical expenses. You typically get a debit card that you can use at doctor’s offices.
Great! Now let’s put it together in examples.
Example 1: You start therapy
Your benefits:
Deductible: $1500
Co-insurance: 10%
Therapist’s status:
in-network
Session fee: $200
Insurance negotiated rate: $150
If you start seeing this therapist, you would pay $150 (the negotiated rate) for each session until you had met your deductible ($1500).
This would happen after 10 sessions ($150 * 10 = $1500).
After that, you would pay your co-insurance only, which would be $15 ($150 * 10%).
This would apply for sessions for the rest of the year.
You can see that because this therapist is in-network, you only pay the negotiated rate, not the therapist session fee.
Example 2: You start assessment
Your benefits:
Deductible: $1000
Co-insurance: 20%
Provider’s status:
in-network
Session fee: $200/hr for 10 hours
Insurance negotiated rate: average of $120/hr
If you complete an assessment with this provider, you would pay $120 for each billed hour until you’d met your deductible ($1000).
This would be after 8 hours ($1000/$120).
The remaining two hours billed would be $24 for each hour ($120 * 20%).
While the therapist bills insurance $2000 for 10 hours of services, you would be responsible for $1048.
Please note that these numbers are all for the examples only and aren’t accurate to your situation. To get your specific numbers, you’d need to look up your benefits online or over the phone. The insurance negotiated rate for services is also not public information. It is best confirmed after a claim has been processed by insurance.
Okay, so how is this different if the provider is out-of-network?
Out-of-network benefits aren’t so different from in-network. They also have their own deductible, copay, and co-insurance. Some insurance plans have a shared deductible between in-network and out-of-network services. Some have separate deductibles. The same is true for out-of-pocket maximums— some plans have one limit for all services, and some plans have different limits for in- or out-of-network services.
The most notable difference is that providers who are out-of-network are not held to the insurance company’s negotiated rate. That means that they CAN charge you for whatever insurance does not pay.
For example, if a therapist charges $200, and insurance pays $100, you would be responsible for the remaining $100.
HANG TIGHT, this part gets confusing.
While providers are not limited to accepting the insurance rate for services, your insurance may still only process their “Allowable rate” to count towards your deductible, copay, or co-insurance. An “Allowable rate” is the amount that insurance has determined qualifies for coverage.
That means that knowing when you’ve met your deductible is a little more confusing than just dividing the deductible by the session rate.
What you need to pay (called the client responsibility) is then what insurance has determined according to your plan, as well as whatever is remaining between the full fee and the Allowable rate.
Some providers offer a superbill. This is essentially a “receipt” of services provided, their codes, the charged amounts, and what you paid. This can be shared with insurance so that they can process the claim for your out-of-network benefits. Insurance then reimburses you, the client, for whatever they cover. You would pay for services upfront with the provider, then get reimbursed from insurance later.
How do the examples look if it were out-of-network?
Example 1: You start therapy
Your benefits:
Out-of-network Deductible: $2000
Out-of-network Co-insurance: 30%
Therapist’s status:
out-of-network
Session fee: $200
Insurance Allowable Rate: $150
If you start seeing this therapist, you would pay $200 (the full rate) for each session until you met your deductible ($2000). Insurance would process $150 of each session as counting towards your deductible.
That means that you would meet your deductible after 13 sessions ($2000/$150 = 13.3)
After those 13 sessions, insurance would consider your client responsibility to be the co-insurance percentage of the Allowable rate (30% of $150). You would also be responsible for the difference between the Session fee and the Allowable Rate ($200-$150).
This sum would be $45 (30% of $150) and $50 ($200-$150). You would pay $95 for each session remaining.
Example 2: You start assessment
Your benefits:
Out-of-network Deductible: $2000
Out-of-network Co-insurance: 30%
Provider’s status:
out-of-network
Session fee: $200/hr for 10 hours
Insurance Allowable Rate: average of $150/hr
If you complete an assessment with this provider, you would pay $200 for each billed hour until you met your deductible ($2000).
Insurance would process $150 of each of those hours towards your deductible.
There are 10 hours billed to insurance. That would mean that the amount going towards your deductible is $150 * 10 = $1500.
In this case, the co-insurance does not apply because the deductible has not been met yet.
That’s all of it! Clear as mud, right?
Don’t worry if this doesn’t make sense. The most straightforward path is to get your insurance coverage information, and we can work together to estimate what services might cost.
Reach out using the form below and we can figure it out!