How Health Insurance Claims Work

If you're covered by a medical benefits policy, the health insurance company pays a portion of your treatment costs based on the provisions of your specific plan. Each policy type contains different criteria for determining when and how much the carrier pays, and many of these aspects are customizable, allowing you to create a plan better suited to your individual needs and budget.

Co-pays

• Every time you visit a physician, you are required to contribute toward the cost of that appointment. The nominal fee, called a co-pay, typically ranges from $10 to $50. Your contribution gets deducted from the total cost of the visit, and a claim for the remaining balance is submitted to the insurance carrier by the doctor. Once the company reviews the physician's claim information and deems it valid, payment for that visit is rendered to the doctor. This process requires no assistance or involvement on your part, other than payment of the co-pay at the time of your appointment.

Deductibles

• Many health insurance policies contain deductibles, which are fixed dollar amounts you must pay before the plan benefits become active. Typical deductible amounts range from $500 to $2,500. Only after your deductible has been satisfied will the carrier begin contributing toward the cost of your future treatment. It is usually your responsibility to maintain accurate records and proof of payment for medical services, and to alert the insurance carrier when you have fulfilled your deductible. Most physicians and facilities will submit claims for payment of services rendered regardless of your progress fulfilling the deductible, and those claims get denied by the carriers. This serves to further validate your demonstration of achieving the deductible amount, as the insurance company will maintain a record of submitted claims even if they are unpaid.

Co-insurance

• An increasing number of health insurance plans contain co-insurance figures, which are specific percentage splits with you for the cost of your treatment. After you receive medical services, physicians submit claims to the insurance company, for which they receive payment of the carrier's portion based on your medical policy's provisions. Responsibility for the remaining balance falls on your shoulders, and the doctor's office must arrange to collect that money from you.

Prescriptions

• The majority of health insurance policies contain a three-tiered prescription coverage benefit. Your cost for generic medications is the lowest, higher for brand-name drugs, and highest for non-formulary prescriptions. Those medications considered non-formulary vary from one insurance carrier to the next, and may even change within the same carrier. Typically, less utilized, unpopular, or extremely expensive drugs comprise the non-formulary list. When you visit the pharmacy to get medication, you must pay the cost associated with the category into which your prescription falls. The pharmacy later submits a claim for the remaining balance, and the insurance carrier pays its portion.

Maximum Out-of-Pocket

• To prevent financial devastation due to exorbitant medical bills, health insurance plans contain maximum out-of-pocket figures, which represent the highest dollar amount you will be required to pay in a given policy year. Once the aggregate total of your payments for medical services reaches this ceiling, any and all subsequent claims become the entire responsibility of the insurance carrier. However, many policies exclude certain expenses from these calculations, making it essential that you understand exactly how your own policy works to avoid confusion or complications. Your monthly premium payments are never included in maximum out-of-pocket calculations.