Understanding Insurance- Basics

I play MANY parts but my actual physical job is a Coder/ Biller. That's what I was hired for at least, but I wear many hats. The insurance information listed is not all-inclusive and I don't know everything.

Insurance basics.

There are two main forms of insurance out there:

• Public Health
• Third Party

Public Health includes Medicaid (MCD) and Medicare (MCR). To qualify for Medicare, you must be 65 or over, be a U.S. citizen, have paid into MCR during some point in your life (for 10 years, I believe), or have been on disability for 2 years. Each state has different criteria for MCD. In Montana you have to fall below a certain percentage of the federal poverty level to qualify.

Third Party Insurance (TPI) includes but is not limited to Blue Cross/ Blue Shield (BCBS), Cigna, Allegiance, New West, and Tricare. You can obtain TPI through your employer (or spouse's employer), the Affordable Care Act (ACA), or by contacting the insurance company yourself. Did you notice how I have Tricare listed? It's considered TPI because the soldier's employer provides it.

Each insurance has different types of coverage. Medicare has different "Parts (A,B, C & D), Montana Medicaid has a couple different plans and they are even handled by different companies, and all of the TPI's have quite a range of coverage plans.

When it comes to picking a TPI plan that works best for you, you'll see these words thrown around: coinsurance, copayment, deductible, and premium. What's the difference, you ask?!

Can you guess what is wrong with this?!

• Premium is the amount you pay each month/ year to have your coverage.
• Co-pay/ment is a fixed rate you pay when you receive services. For example: $20 for every doctors office visit.
• Coinsurance is like a co-pay in that it's a form of cost sharing. Soinsurance is not a flat fee- it's a certain percentage of your fee. For example: your doctor's office visit will cost $300 and your coinsurance is 20% so you have to pay $60.
• Deductible is a specified amount of money that the insured must pay before an insurance company will pay a claim. If you have a $2,000 deductible, you must pay this before your insurance will pay any costs. Once your deductible has been met, that's when the co-insurance will kick in.

Example of all of the Above:

John Doe must pay his monthly premium of $300 to BCBS to have insurance. If he does not pay, he does not have coverage and will have to pay 100% of every doctor visit out of pocket. But because John pays his insurance premium, he doesn't have to pay as much out of pocket.

John has his monthly diabetic check-up with his doctor today. He's got a $40 co-pay for every visit, so when he checks in for his appointment, he writes a check for $40. His appointment went great and no other services were needed. His appointment that day came to a total of $250. Thankfully John has paid his $2,000 deductible for the year so when his bill comes, he will only have to pay 20% ($50) of his visit and his insurance will pay the other 80% ($200). Thankfully John already paid his co-pay of $40 when he checked in for his appointment so now he only has to pay $10. Yay for insurance!

^ That's the basic jist of how it all works. Yes, it's a little more complicated than that and I will get into that a little more down the road. But when it comes to picking out an insurance plan, you NEED to know these terms and how they affect your wallet.