Insurance Terminology 101
Understanding health insurance terms can be challenging, but it is important to know the difference between various concepts in order to make informed decisions about your healthcare. Here is an explanation of some common terms you may encounter:
Copay: A copay is a fixed amount that you pay for a specific service, such as a visit to your primary care physician or specialist.
You may also have a copay for a specific material benefit. For example, a copay to get anti-reflective treatment, and another copay for transitions or photochromic lenses (darkens when outdoors/activated by UV light).
Coinsurance: Coinsurance is a percentage of the cost of a service that you are responsible for paying. For example, if your coinsurance is 20%, you would be responsible for paying 20% of the total cost of the service, while your insurance would cover the remaining 80%.
Deductible: A deductible is the amount you must pay before your insurance starts covering your healthcare expenses. For example, if your deductible is $1,000, you would be responsible for paying the first $1,000 of healthcare expenses before your insurance kicks in.
Allowance Plans: Allowance plans are a type of insurance plan where you are given a set amount of money to spend on healthcare services, such as vision or dental care. Once you have used up your allowance, you are responsible for paying any additional costs.
FSA (Flexible Spending Account): An FSA is a savings account that you can use to pay for healthcare expenses with pre-tax dollars. The money in your FSA must be used within a certain timeframe, typically the calendar year.
HSA (Health Savings Account): An HSA is similar to an FSA, but is only available to individuals with a high-deductible health plan. The money in your HSA is also pre-tax, and can be used to pay for healthcare expenses.
Coordination of Benefits (COB): COB is the process of determining which insurance plan pays for your healthcare expenses when you have more than one insurance plan. This is done to ensure that you are not overpaid or underpaid for your healthcare expenses. Primary Insurance: Your primary insurance is the first insurance plan that pays for your healthcare expenses. Secondary Insurance: Your secondary insurance is the second insurance plan that may cover some of your healthcare expenses after your primary insurance has paid its portion.
Billing Primary Insurance First: We cannot bill the insurance that has a lower copay or has more coverage. Besides that we have to always bill your primary insurance as it is required by law, there is another reason why we do this. If we were to bill your secondary insurance first and they pay, your secondary insurance may take back their payment months or years later, leaving you responsible for the bill. This is known as a "clawback." To avoid this situation, we bill your primary insurance first to ensure that your claims are properly processed and you are not left with unexpected bills later.
How do I determine which insurance is primary vs. secondary?
The determination of which insurance is considered the primary versus secondary insurance is based on a set of rules known as coordination of benefits (COB) guidelines. These guidelines help ensure that the patient's medical bills are paid correctly by the responsible insurance plan.
In general, the primary insurance plan is determined based on the patient's employment status, such as if they have group health insurance through their employer. The secondary insurance is typically a plan that is secondary to the primary plan, such as a spouse's insurance or a Medicare supplemental plan.
If you have more than one insurance plan, it's important to provide both insurance cards and information to us so they can properly bill your claims. Additionally, it's important to keep your insurance information up-to-date and notify us of any changes to your coverage or insurance plans. Again, this will help ensure that your claims are processed correctly and you are not left with unexpected bills later.
We hope this additional information helps you understand health insurance terms and concepts more clearly. If you have any further questions or concerns, please do not hesitate to contact our office.