Key Terms for Navigating Insurance Benefits

In part three of our Navigating Insurance for Mental Health Services, Imani walks us through important terms when it comes to navigating your insurance benefits. View the video or see the transcript below!

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Video transcript:

Once you have an understanding of the cost of your therapy and you are ready to receive care, you will then need to have an understanding of paying for your therapy with health insurance. To understand your health insurance coverage better, there are some essential terms to know when navigating this complex system.

To start, you should understand your plan year, a 12-month period of benefits coverage under a group health plan. This 12-month period may not be the same as the calendar year. To find out when your plan year begins, you can check your plan documents or ask your employer. (Note: For individual health insurance policies this 12-month period is called a “policy year”). These factors vary from plan to plan so it is essential to be mindful of those variables, such as deductibles, co-payments, and co-insurance. A deductible is an amount you pay for covered health care services before your insurance plan starts to pay. After you pay your deductible, typically there is a copay, a fixed amount ($20, for example) you pay for a covered health care service. This may also be a co-insurance, the percentage of costs of a covered health care service you pay (20%, for example) after you've paid your deductible.

What we will mostly focus on here is how your deductible, copay, and co-insurance work together to determine YOUR cost for a service. Coinsurance and copay are basically interchangeable, but it depends on your insurance plan. It's important to note that your therapy services are not the only billed services that go towards meeting your deductible. Any health care procedures that you use your health care plan to pay for also contribute to your deductible. Oftentimes people are not dependent on their therapy services to meet their deductible, but for our examples today note that the individuals in these fictional cases are individuals who have not yet met their deductible, and are seeing a therapist to meet their deductible.

Consider the following example.

Julie’s health plan has a deductible of $1000. She has not yet met her deductible for the year. The therapist she found is in-network with her health insurance. When she called her insurance company, they told her the amount she was responsible for each session was $100 until she reaches her deductible, then she will only be responsible for her copay of $20.

You’ll notice a few of the terms we’ve just defined in the above example. Let’s look at the cost breakdown for Julie’s therapy. 

Session 1: $100

Session 2: $100 

Session 3: $100

Session 4: $100

Session 5: $100

Session 6: $100

Session 7:$100

Session 8: $100

Session 9: $100

Session 10: $100 ($1000 deductible has been met)

Session 11: end of plan year: $20 for each session

We see that for sessions 1-10, Julie has to pay a $100 copay for each session. Once she gets to her 11th session, once her deductible has been met she now only has to pay a $20 copay per session until the end of her plan year when her deductible resets. As you can see, once Julie met her deductible- her insurance kicked in and started paying for a larger percentage of her services, making her copay much cheaper. 

Let’s take a look at another example. 

Jane’s health plan has a deductible of $5000. She has met her deductible for the year. The therapist she found is in-network with her health insurance. When she called her insurance company, they told her she would only be responsible for her copay of $35 each session until her deductible resets at the end of her plan year. Once her deductible resets, she will be responsible for $100 for each session until she meets her deductible. 

Jane’s plan year ended on December 31st. She meets with her therapist on January 5th but is confused when she is billed for $100 instead of the usual $35 copay.

This is a pretty straightforward example, here she has already met her deductible with other healthcare services and she is nearing the end of her plan year. Currently, she only has to pay $35 per session because her deductible is already met. Once Jane reaches the end of her plan year on December 31- her deductible will reset and she will be responsible for $100 each session from then on until she meets her deductible again. Her new cost breakdown after the plan year ends will be as follows.

Session 1-50: $100 per session

Session 50-end of plan year: $35 per session

Given that there are only 52 weeks in the year, Jane will have to be very proactive in meeting her deductible in time so she can meet her deductible in time before the plan year ends. She will have to meet her deductible by using various other health services besides therapy.