Health Insurance FAQ

Q. What is the difference between a deductible and a co-pay?

A. A deductible is a dollar amount that the covered member must pay out before the health insurance will begin benefits for services subject to the deductible. The provider submits the claims to the insurance carrier and the insurance carrier discounts are applied. The member only pays the contracted rates and will receive an invoice for the patient responsibility from the provider as well as an explanation of benefits from the health insurance carrier. A co-pay is a fixed dollar amount a member is expected to pay at the time of service.

Q. What is the difference between a calendar year deductible and a plan year deductible?

A. A calendar year is when the deductible and/or other benefits accumulate on a calendar year basis which is January 1 – December 31 of each year. An employer’s renewal date may not coincide with a calendar year deductible; it may differ. A plan year is when the deductible and/or other benefits accumulate on the employer’s renewal date, for example, May 1 – April 30.

Q. What is an ‘explanation of benefits’ from the insurance carrier?

A. An explanation of benefits (EOB) is a written explanation from the health insurance carriers of how your benefits will be paid for a specific date of service. This applies to deductible expenses only. The EOB will indicate the patient responsibility for that specific claim; it is not a bill. The invoice for the patient responsibility will come from the provider. The amount due on the invoice and the patient responsibility amount on the EOB should match. If it does not; contact your provider.

Q. What is Coinsurance?

A. Coinsurance is a percentage of health care cost the member is responsible for after the deductible has been met. It is common for health plans with out-of-network benefits.

Q. How does a Flexible Spending Account (FSA) work?

A. This program is offered through the employer. A FSA is a pre-tax savings vehicle where employees set aside monies through payroll deduction on a pre-tax basis for IRS eligible medical, dental and vision expenses. Effective January 1, 2011, over-the-counter medications are not covered unless prescribed by a physician.

Q. What are the differences between and a Health Reimbursement Account (HRA) and a Health Savings Account (HSA)?

A. A HRA is an employer sponsored plan, where the employer elects a high deductible health plan (HDHP) and sets aside monies in an account for employees to use for out-of-pocket expenses that are not covered under the health insurance plan. This is employer money and is only a ‘promise to pay’ if employees need it. A HSA is an employee medical savings account that an employer may elect to contribute to, but is not obligated. The employee can set aside monies on a pre-tax basis to use for IRS eligible medical, dental and vision expenses as well as COBRA payments if applicable. This is the employees account. You must have a HSA compatible health plan to be eligible for a HSA; which are benefits subject to the deductible, including Rx benefits but excludes preventive care visits.

Q. What is ‘step-therapy’ when referred to for a medication?

A. Step-therapy is a cost effective measure an insurance company may take to keep costs down. If a drug is considered ‘high-end,’ and less expensive alternative drugs are available, you may be required to try those drugs first. In the event those medications do not treat the condition or have side effects, your physician can submit a form to your insurance carrier to request the ‘high-end’ drug allowed to be dispensed for medical purposes. They must indicate that alternative medications have been tried.