How You Pay for Healthcare
Paying for healthcare can be confusing. It’s one of the few things we purchase without knowing what we’re going to pay until days, weeks or even months after we receive it. However, you can take some of the mystery out of the process by knowing the provisions of your healthcare benefits.
Here are some key points to consider:
Basic plan provisions. It helps to have a general understanding of your plan. Is it a high-deductible plan? Or do you pay higher monthly premiums to get a lower deductible? Are your preferred providers in-network? Knowing such basics will help you anticipate costs.
Price checks. This can be a particularly tricky point. While providers seldom offer concrete price quotes before a visit, they are expected to be able to give you an estimate if you ask. And hospitals are – in theory – expected to list their prices in places where you can find them. Even if providers fulfill those expectations, though, getting to the bottom line can still be difficult. Nonetheless, you should be able to get some idea of what you’ll be spending if you ask enough questions.
Co-pay. A co-pay is a set fee you pay every time you receive care, products or services, regardless of overall cost. Not all plans include a co-pay.
Negotiated rate. This is the discounted price of your service or product based on rates agreed upon by your healthcare provider and benefits provider.
Health care deductible. This is the amount you pay out of your pocket before your insurance provider pays anything.
Co-insurance. This is what you pay after you’ve met your deductible. It’s usually a percentage of the final cost.
Out-of-pocket maximum. This is the maximum you will be required to pay in a plan year. This will include co-pays (if you pay them), deductibles and co-insurance. Once you hit your out-of-pocket maximum, all healthcare services will be covered in full.
Your “EOB” (Explanation of Benefits). Your Explanation of Benefits is a key to the cost puzzle. It’s the document you receive from your insurer after a covered healthcare service. It shows the original cost of the service, the negotiated rate, the cost you are charged under your insurance plan, deductibles and co-payments, the total benefit you will receive, and other pertinent information.
Your medical bill. While a bill for your healthcare services might come before your EOB arrives, you shouldn’t pay it until you receive your EOB and know that your coverage has been applied appropriately. It also pays to look closely at your bill – some research suggests that as many as 8 out o f 10 medical bills contain errors.
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