Hi, Dr. McCarthy here. What I’m going to be explaining today is insurance billing. We typically get questions about billing once a month by multiple people. They’re a little unsure about deductibles, premiums, co-insurance and co-pays. I am going to be breaking these things down in the most basic form that I can.
If you have a car insurance, it works similar to that. In order to have insurance, you have to pay for it unless you get it from your employer. So, typically you are paying for it monthly or every three months. For example, we’ll say your premium, your monthly bill to have insurance, is $100. That $100 allows you to be in your insurance plan, that’s it. From that point, there are other stipulations that may apply. For some people, they will pay their premium and never get a bill in the mail because they have a great insurance plan where the premium covers everything. For others, they’ll have a premium and typically a deductible. The best way I can describe a deductible is they are like vegetables. You have to eat your vegetables before you get your dessert. For example, we’ll say your deductible is $100. Let’s say you have to go to the doctor and each time you go it’s $25. You would have to go to the doctor four times and pay $25 each time out of pocket to eat up your deductible, the vegetables, of $100 before receiving the benefits, the dessert, from your insurance. So, most insurance companies will have a co-pay, for the example we’ll go with $25, or a co-insurance and for that we’ll say 25%. Keep in mind some insurance companies will have both. After your deductible, you get your dessert which is that co-pay/ co-insurance and will be your only patient responsibility. Now, you can go see the doctor and a lot of times they will collect your co-pay upfront and the doctor will bill you your patient responsibility from the deductible later, this is after they’ve sent it to the insurance company and they let the doctor know what you owe. What they send over is an EOB, an explanation of benefits. It’ll have a break down of services and patient responsibility.
Patient responsibility is always what the patient is going to owe. Hypothetically, let’s say you come to our office and our services cost $50 each time you come through the door so your first two visits will cost you $100. Yes, you are paying your premium of $100 monthly to just have your insurance, but you have a deductible of $100. Your first two visits to our office will be 100% your patient responsibility. Now let’s say you have a $25 co-pay in this scenario and you have met zero of your $100 deductible. We could initially collect your $25 co-pay on your first and second visit over the counter but you will still have a $25 patient responsibility remaining due to your deductible not being met. Now let’s say you come in and have met your deductible, now you can have your dessert. That $50 visit is now a $25 visit because your co-pay is $25 which is now your only patient responsibility after meeting your deductible, the vegetables.
Co-insurance works a little differently, it’s a percentage of the cost of the visit that day. To keep the example simple, we’ll say the bill is $100, your deductible has been met, so you just have a 25% co-insurance patient responsibility. So, you will just have to pay 25% of that $100 bill which comes out to $25. There are also out of pocket deductibles, that means if you spend X amount of dollars, the amount of that deductible, within the year, your insurance says you no longer owe anything. That happens in situations where someone in the family had a heart attack, cancer or just something like these examples that cost you a lot of money through that year and that limit has been met. The insurance company will recognizes that and decide to give you a break and allow you to have no more patient responsibility.
In all, this is how billing works, there’s a lot that goes with it. Every time you come in for the year, you will bring in your insurance and we will verify your benefits for the year. If you change your insurance company throughout the year, more than likely your deductibles, co-pays and so on will change. Even if you don’t change insurance companies or plan, your insurance benefits can still change from year to year. That is why we verify benefits every single year. Hopefully this helps you get a better understanding of how insurance billing works.
