Insurance is a tricky beast, and it can be hard to get solid answers for lots of questions.
If you live in Philadelphia, you must know insurance costs and benefits are different across every state, therefore understanding mental health insurance in Philadelphia requires some background on how insurance works in general.
We will then dive into the specifics. We hope this series of blogs will help you to know better how to navigate the confusing language and world of mental health benefits. Sometimes knowing the questions to ask are the best first step. Let’s start with defining some common terminology insurance companies use.
Understanding copay, deductible, coinsurance and contracted rates for mental health services
Many commercial health insurance plans (the likes of Blue Cross plans, Aetna, Cigna, Personal Choice and Keystone) rely on a cost share mechanism to offset costs for members to visit with their providers.
How do you know what YOUR copay is? A COPAY is the fixed dollar amount that is due per date of service, per provider for a given service. Did you see more than one provider in your visit? If yes, you may be responsible for more than one copay.
Sometimes a DEDUCTIBLE may apply to your out of pocket cost- what’s that? A DEDUCTIBLE is a fixed dollar amount due from the patient prior to the insurance participating in payment arrangements for services to the provider.
Many plans have both an individual and a family deductible amount; typically, the individual deductible is a smaller number the individual would look to satisfy, and the family deductible would be a larger rate that all members of the policy would be contributing towards simultaneously.
Assuming the patient is the individual in question, one or the other deductible would need to be satisfied before the health plan begins making payments to a provider for services.
But there is more than Copay and Deductible in play when we talk about insurance.
A COINSURANCE is a percentage of the contracted rate the insurance company agrees to split with the patient, so, for example something along the lines of 20% coinsurance would mean the patient will pay 20% of the service cost while the insurance will pay the remaining 80%.
A coinsurance will often tag along with the deductible, so benefits might read as follows: $1000 deductible, then 20% coinsurance applies, meaning the patient needs to pay $1000 in contracted services (that are allowed by the insurance company) as billed by their providers before the insurance company will share costs in a 20%/80% split with the patient.
So you might be asking, what’s a CONTRACTED RATE, and who determines it?
A CONTRACTED RATE is a predetermined rate established by an insurance company based on what they feel a service is valued.
This can be dependent on where you’re located in the country, the type of provider you’re seeing and the length of time you spend doing a service. Huh? Well, if you see a licensed professional counselor for talk therapy for 60 minutes in the Philadelphia region, that will likely get paid at a different rate then if you see a Ph.D. psychologist for talk therapy for 45 min in rural North Dakota.
Because providers sign contracts with insurance companies, the providers agree to the rates the insurance company designates for the services, and these rates can vary greatly from insurance company to insurance company.
To summarize
Here is a list of the most important items that will help you determine the actual cost of a health related event.
- COPAY is the fixed dollar amount that is due per date of service, per provider for a given service.
- DEDUCTIBLE is a fixed dollar amount due from the patient prior to the insurance participating in payment arrangements for services to the provider.
- COINSURANCE is a percentage of the contracted rate the insurance company agrees to split with the patient
- CONTRACTED RATE is a predetermined rate established by an insurance company based on what they feel a service is valued
Our next blog will be on understanding billing codes so we can continue in the journey of understanding when, if and how mental health can be covered by insurance.