3 Essential Tips for Avoiding Surprise Medical Costs (Even When You Have Health Insurance)
National health care expenditures have been steadily increasing since 1970, with costs doubling between 2000 and 2017 to $3.5 trillion. According to a 2018 report by the Peterson Center on Healthcare, the trend includes out-of-pocket expenses — the money real people spend even when they have health insurance.
No matter how you slice it or dice it, health care is expensive — even if you have health insurance. And health insurance can be so complicated. You may think you know what to expect before a routine visit only to later receive a bill for charges you weren’t expecting to see. In this post, we explore some tips and tricks for avoiding unexpected health care costs, even if you have health insurance.
1. Understand your health insurance coverage
Yes, this is easier said than done. It requires you to have a good understanding of your health insurance plan; it may also require you to put in some legwork.
Gail Trauco, a nurse, career patient advocate, and CEO and founder of Medical Bill 911, recommends you start by requesting a full copy of your policy from your insurance company, or if you get your insurance through your employer, from the human resources department. Most insurance companies summarize coverage on their online portals, but it can be difficult to get the full picture from there, since there are a myriad of reasons why insurance companies will deny a claim.
Additionally, there are a few bits of general information that are essential to understand no matter what. With so many nuances and variations from policy to policy, service to service, make sure you understand how these four aspects of your policy work before every medical visit or procedure.
Out-of-pocket maximums: Trauco recommends gaining a clear understanding of your maximum out-of-pocket expenditures for yourself as an individual, and the total annual out-of-pocket for your policy. This is, supposedly, the total amount you will ever have to pay in a given coverage year, but that’s not always the case. For example, you may have separate in-network and out-of-network maximums, or your out-of-pocket maximum may be different than the plan’s out-of-pocket maximum, especially if family members are on your plan.
Additionally, not all health care expenses count toward your out-of-pocket maximum, so be sure to ask what does.
Deductible: A deductible is how much you must pay before your insurance starts sharing costs. Deductible costs vary greatly, and they usually don’t count toward your out-of-pocket maximum. For example, some plans make you pay for everything until you reach your deductible, while others make you pay only a certain amount via coinsurance or a copayment. To make things even more confusing, coinsurance and copayments usually do not count toward your deductible. Once you meet your deductible, you only have to pay coinsurance, a copayment, or a flat fee, depending on your plan.
The phrase “meeting your deductible” can mean different things, too. For example, if you have a family plan, you may have to reach the family’s deductible before certain benefits kick in, as opposed to your individual deductible.
Premium: Your premium is what you pay each month for your health insurance. These almost never count toward your deductible or out-of-pocket maximum.
Copay: A copay is an upfront set fee you pay every time you receive a service. Copays vary based on the service in question. For example, seeing your primary care physician may cost $20 upfront, while seeing a specialist may cost $30. This doesn’t necessarily mean this is the only cost you will pay for a service, though. For a specialist visit, for example, that is just the cost of the office visit. Any blood work, imaging, etc. will be set on its own coverage schedule.
Coinsurance: Like a copay, coinsurance is the amount you pay for a service, but it’s calculated differently, usually as a percentage of the full expense. For example, you may pay 10% of the cost for out-patient surgery while your insurance covers the other 90%. Most plans use a mix of copayments and coinsurance, depending on the service.
2. Estimate your costs before you schedule a service
When you know you need to go to the doctor, make sure to estimate your costs before you make your appointment. The first step?
“Find out if the health care provider is part of your insurance network,” Trauco says. Often, if you do not pick an “in-network” provider, your insurance will cover less than if you did stay in-network. Sometimes, they won’t pay anything. Verifying this information seems simple, but it’s not always. For example, don’t rely on “accepted insurance” information on provider websites. They are not always up to date, and the plan names are sometimes ambiguous.
Instead, start with the provider look-up tool in your provider’s online portal. Once you find someone that fits the bill, call and verify with a representative that the provider is in network. Since the look-up tools can be out of date, and partnerships change all the time, if you call and confirm with an insurance representative, you at least have proof that you did your due diligence, should an unexpected bill arrive.
You also need to make sure that every other provider in your line of care is in network. For example, the lab your doctor uses to complete blood tests may or may not be in network. If the lab isn’t, you might be able to request they send it to one that is.
Once you have your provider nailed down, make sure you understand exactly what service(s) you need to receive, and any factors that may make a service ineligible for coverage. This may include:
Pre-existing conditions: Sometimes, health insurance can deny coverage for services related to certain pre-existing conditions. Ask about these before scheduling care.
Routine/preventative versus diagnostic: Thanks to Obamacare, many routine/preventative annual doctor’s visits and tests are covered at 100%by insurance plans as long as the provider is in network. However, that doesn’t mean all tests are considered “routine” or “preventative,” even if they are being used that way by your doctor.
For example, many annual wellness exams include routine blood work. While requesting tests, many doctors throw vitamin D deficiency testing into the mix, but it’s sometimes not covered by insurance. Similarly, services that are used to diagnose an issue are referred to as “diagnostic,” and aren’t typically covered the same way as “routine” or “preventative” services — even if it’s the exact same service.
Preauthorization or referrals: Sometimes, especially if you are seeing a specialist or need screenings that don’t align with federal standards, you need preauthorization from your insurance company before making appointments, or you need a referral from your primary care physician. If your plan requires this and you do not do it, your insurance may charge you an extra fee or even deny coverage — and then you are suddenly on the hook for the full bill.
For example, most insurance plans cover preventative breast cancer screenings at 100% for women 40 and over. However, if you are younger than 40 and your doctor recommends screenings due to family history, you may need preauthorization before you can schedule an appointment and receive coverage. Sometimes, certain screenings may not be covered at all, simply because the technology is not yet considered standard.
Ask your doctor for an estimate in advance
Once you have an understanding of these factors, you will be better able to estimate your costs. You can start by asking your provider for an estimate of patient costs upfront before you even reach the office. Let’s use a wellness exam as an example:
After verifying with your insurance that you provider is in-network and annual wellness exams are covered at 100%, you schedule an appointment. In the office, the doctor recommends blood work and that they clear away some impacted earwax. She says they can do both in the office right now so you don’t have to come back again. Do not assume these procedures are covered, even if they seem like they are in the moment. Ask the doctor if the earwax removal is part of a routine annual exam. If she says it will be billed separately, ask for an estimate of costs. Also ask for a list of the blood work tests, so you can verify that they are covered (or how much they will cost) later.
You can then square those costs with what you know about your insurance coverage. Trauco recommends using FAIR Health, a national nonprofit focused on health care cost transparency to estimate medical and dental costs. If you find discrepancies between your estimate and the FAIR estimate, you may be able to “negotiate a lower medical or dental cost or payment plan,” Trauco says.