Putting The Pieces Together:

Your Step-by-Step Guide

to Using Health Insurance

Review your card

and documents.

■ Your insurance card provides information about

certain cost-sharing responsibilities as well as the

number to call if you have questions.

■ Your insurance documents provide the details of your

insurance coverage, including the do’s and don’ts of

using services.

Understand the meaning of an

in-network vs. out-of-network provider.

■ Not all providers participate in an insurance com-

pany’s network. If a provider is not in the insurance

company’s network, you may be responsible for

additional charges.

■ When choosing a provider always check to see if they

are in-network.

Identify the services

that must be pre-approved by your

insurance company, may be excluded

from your coverage or

may have limits.

■ Insurance companies often require certain services to

be preauthorized or pre-approved, such as thera-

py services, MRIs, etc. This means the insurance

company veriﬁes that the service is required and

appropriate.

■ Not every service is covered under an insurance plan.

A service may be excluded for various reasons.

■ Some services may have limits on the number of

times you can receive them. For example, therapy

visits often have a limit.

Know what to expect

after receiving care.

■ You will be billed for a different amount if you choose

an out-of-network provider instead of an in-network

provider.

■ Your insurance company will send an Explanation of

Beneﬁts – this is not a bill!

■ If you don’t agree with your insurance company, you

have options, including an appeals process.

hen you signed up for your insurance plan, you agreed to its rules, but what does that mean? How do you use your insur-

ance? Let’s go over insurance rules to help you understand each piece and put them together.

First, you received a summary of beneﬁts and policy documents when you signed up. These are the initial key pieces –

keep these documents and make sure you read them. The documents should help answer many of the questions you will have as

you navigate using your insurance within the healthcare system. And if you have speciﬁc questions about your coverage call your

insurance company. The number is on your insurance card.

Understanding Your Coverage At A Glance

Look at your insurance card.

Your insurance card can provide a lot of information before

you even read your documents. It is also often a source of in-

formation about the type of insurance plan you have. You may

ﬁnd an abbreviation on the identiﬁcation card that tells you

what type of insurance you have. Or you can call the member

services number on the card to ask. Additionally, your card will

probably list how much you will pay (co-payment) for doctors’

appointments and emergency department visits.

TYPES OF PLANS

Below are the main types of plans. It is important to under-

stand that different plans have different rules. Health insur-

ance companies will only pay when you follow all of the health

insurance company’s rules, such as get pre-approval for cer-

tain services and receive care by a provider who is part of

your insurance company’s network, also known as an in-net-

work or participating provider.

Providers can be doctors, specialists, hospitals or any place or

anyone who provides care.

n HEALTH MAINTENANCE ORGANIZATION (HMO)

• Members are required to choose a primary care

provider (PCP)

• Members must get referrals from the PCP for

specialty care

• Members must use in-network providers

HMOs generally will not cover out-of-network care except in

an emergency. An HMO may require you to live or work in its

service area to be covered.

n PREFERRED PROVIDER ORGANIZATION (PPO)

• Members are encouraged, not required, to choose

a PCP

• Members pay less when using in-network providers,

but can go out-of-network

• Members usually do not need a referral before

receiving a service

With a PPO plan, you can choose not to be treated by an

in-network provider, but then you will have to pay higher

deductibles and co-payments (also called cost-share) than

if you used an in-network provider.

n POINT-OF-SERVICE PLAN (POS)

• Members are not required to choose a PCP

• Members pay less when using in-network providers,

but can go out-of-network

• Members usually must get referral from the PCP for

any other service you need

n EXCLUSIVE PROVIDER ORGANIZATION (EPO)

• Members are not required to have a PCP

• Members typically do not need referrals for in-net-

work services

• Members are required to use in-network providers

If you choose to seek care outside of the network, the EPO

will not pay the bill.

Co-payment

Paying a set upfront fee for a speciﬁc service (such

as $20 for an ofﬁce visit or $10 for each prescription

drug). It is required to be paid each time you receive

the healthcare service or supply.

You know what kind of insurance you

have and now you need to ﬁnd a doctor.

What do you need to know?

• In-network or out-of-network?

• Do I need a referral?

• Do I need to be preauthorized?

• Is it a covered beneﬁt?

• Are there exclusions or limitations?

n IN-NETWORK VS. OUT-OF-NETWORK

Most insurance companies sign contracts with certain doc-

tors and hospitals to be in the plan’s network, and these

in-network providers agree to accept a certain payment rate,

called the contracted amount, from the insurance company.

You should know that not all doctors will be part of the same

insurance plans as the hospital. Your insurer keeps a list of

in-network doctors and facilities. These lists are required to

be posted on the insurance company’s website, or you can

call the member phone number on your insurance card to

ask for information or a copy.

Out-of-network providers are those that are not contracted

with the health insurance company. Since the insurance

company doesn’t have an established rate with these pro-

viders, the providers will bill the insurance company the full

cost of the healthcare service. Your insurance company may

not pay for you to go to a provider who is not in-network.

In that case, you will be responsible for the whole bill. If the

insurance company pays for you to use an out-of-network

provider, the amount the insurance company pays may be

less than what it would pay for an in-network provider. You

will likely have to pay the difference between the amount

the insurance company pays and the amount of the bill.

n MY DOCTOR THINKS I NEED TO SEE A SPECIALIST.

CAN I PICK WHOEVER I CHOOSE?

Many insurance plans won’t pay for you to see a special-

ist unless your PCP (usually your family doctor) thinks it

is necessary and provides you with a referral. If you see

a specialist like a cardiologist or a dermatologist, without

a referral, you will likely have to pay more for the care

you receive.

Also, don’t forget to make sure the specialist you see is

in-network, or you could be responsible to pay the entire

bill for the visit. Double check with your health insurance

company to ensure that the specialist your PCP refers

you to is in-network.

n MY DOCTOR THINKS I NEED A CERTAIN HEALTH-

CARE SERVICE. CAN I JUST GO GET IT?

If your doctor decides that you need to go to the hospital,

have surgery or have certain tests, your insurance com-

pany may refuse to pay unless the service is preautho-

rized. Preauthorization means calling the insurance com-

pany ahead of time to have them authorize the service.

Sometimes your doctor will do this for you, but make

sure you conﬁrm this in advance.

Out-of-pocket maximum

Once you meet your deductible, you’ll be responsible

to pay for a portion of the rest of your healthcare

costs for the rest of the year. But many insurance

plans have an out-of-pocket maximum, and once you

spend up to that amount in deductibles plus coin-

surance and copays, insurance will pay 100 percent

of any other health costs during the policy year. This

only applies to covered services. Monthly premiums

do not count toward the out-of-pocket maximum.

Contracted amount

The amount that insurance will pay to

healthcare providers in their networks for services.

These rates are negotiated and established

in contracts with in-network

providers.

Do I need pre-approval? Know before

you go.

n PREAUTHORIZATION/PRIOR AUTHORIZATION

You may need preauthorization (or pre-approval or prior

authorization) from your health insurance company before

you receive certain healthcare services. Preauthorization for

emergency care is never required.

The preauthorization process veriﬁes medical necessity—in

other words, that the service is required and appropriate.

Examples of healthcare services that typically require pre-

authorization include MRIs, home healthcare, therapy ser-

vices and many more. If you receive the healthcare service

without ﬁrst checking if you are preauthorized, you may

be responsible for the entire bill for the service. Careful-

ly review your insurance documents to identify healthcare

services that may require preauthorization. If a healthcare

service is not listed, check with your health insurance com-

pany in advance.

y I have preauthorization for my service. Am I set?

There are many times when your doctor may recommend

a particular service or treatment and the service may

even be preauthorized by your health insurance compa-

ny, but the health insurance company still may not pay

for it. Below are some of the ways that you could receive

a service and be responsible to pay for it out-of-pocket.

■ COVERED BENEFITS VS. MEDICALLY NECESSARY

y My doctor thinks I need a shingles vaccine. I have

insurance so it’s automatically covered right?

No, insurance companies establish rules to decide what

beneﬁts they will cover. Your doctor may think that a

shingles vaccine might be medically necessary for many

reasons, for example, family history. However, your

insurance company may have rules that it won’t cover

a shingles vaccine until a person is at least 50 years of

age. Because of these rules, if you get the vaccine before

you turn 50 it will not be covered. This means you will be

responsible to pay for the vaccine yourself.

Also, non-covered services don’t count toward the annu-

al out-of-pocket maximum under your health plan.

WHAT TO ASK YOUR INSURANCE COMPANY: Don’t

just accept the pre-approval as an indicator that

payment will be made. ASK: “Is this a covered

beneﬁt under my beneﬁts package?”

n LIMITATIONS

y My doctor recommended 25 therapy visits.

Therapy services are a covered beneﬁt. I can

schedule all 25 visits, correct?

No, in some instances, your health insurance will have

limitations to covered services or supplies. Usually this

refers to the number of times or the circumstances of

use for a particular service or treatment. Limits can be

a visit limit or a speciﬁed number of days allowed per

calendar year. Some of the services that commonly have

limitations include physical therapy visits, home health

visits and skilled nursing facility visits.

Similar to the non-covered beneﬁt, if you go over the ser-

vice limits you will be responsible for the whole bill and

the amount you pay will not apply to your out-of-pocket

maximum. Read your insurance documents carefully to

identify what limitations may exist.

WHAT TO ASK YOUR INSURANCE COMPANY: Don’t

just accept the pre-approval and the fact that it is

a covered beneﬁt as an indicator that payment will

be made. ASK: “Are there any limitations on the

number or amount of this service?”

n EXCLUSIONS

y My doctor has recommended speech therapy

visits for my child. I have pre-approval and know

the limit on visits. I won’t have any concerns when

scheduling the appointments, correct?

Health insurance companies are not required to cover

all services. That is why, when reviewing your insurance

documents, pay special attention to the exclusions list-

ing. Some of the more common exclusions include cer-

tain ambulance trips, acupuncture, cosmetic surgery and

experimental or investigational care.

Less common exclusions can include particular services

if another condition exists. For example, certain therapies

may be excluded for children with autism. Or when a

person is receiving hospice care, therapies for healing

the terminal illness are not covered because hospice

care is intended to be palliative – meaning it is focused

on the comfort of the patient – usually because the pa-

tient’s condition is incurable. Other therapies for issues

not related to the terminal illness may be covered.

If you receive a service that is excluded you will be

responsible for the whole bill.

WHAT TO ASK YOUR INSURANCE COMPANY: Explain

any other conditions you may have. Ask: “Are there

any conditions or services that would exclude me

from getting this service?”

There are many chances to be exposed to costs that you

may not be aware of, which is why it is critical that prior

to using your health insurance you look at your policy

documents. It will save you money in the long run.

Can’t ﬁnd any of this information? Refer back to the be-

ginning and check your insurance documents.

n HOW OUT-OF-NETWORK WORKS

Here is an example of how much you could be charged if you go

out-of-network. Remember, if your insurance plan does not

have an out-of-network beneﬁt, you will be responsible

for the entire bill! If you do have an out-of-network beneﬁt, the

charges can still be more than you might realize.

Example: You go to the hospital to have a baby. We assume

that the price is the same, $10,000, at both an in-network

and out-of-network hospital. See the chart at right for an

example of what you might pay if you used an out-of-network

beneﬁt (if you have it).

{ PATH 1 - IN-NETWORK }

Hospital Charge $10,000

The Insurance Company Pays

Its Contracted Rate $6,000

You Pay Deductible $700

You Pay Copayments $100

You Pay Coinsurance $950

YOUR TOTAL IS: $1,750

{ PATH 2 - OUT-OF-NETWORK }

Hospital Charge $10,000

Insurance Company Allowed Amount $8,000

Insurance Company Pays

80% of Allowed Amount $6,400

You Pay 20% of Allowed Amount $1,600

You Pay Balance of $10,000 – $8,000 $2,000

YOUR TOTAL IS: $3,600

When in doubt,

call your insurance

company!

Coinsurance

You and the health insurance

company share the covered charges in a

speciﬁed ratio (like 80 percent by the insurer and

20 percent by the enrollee).

Deductible

The amount an insured person must pay for health-

care services before the health insurance company

starts sharing costs. For example, if your deductible

is $1,000, your plan won’t pay anything until you pay

for $1,000 of healthcare services or supplies.

Financial risk

Financial risk is the cost of paying medical

claims for healthcare services provided to

people covered under the insurance plan.

Your ﬁnancial risk is the amount you

may need to pay once insurance

covers its portion.

What happens after my care?

• How much of the cost am I responsible for?

• I received an “EOB” – is it a bill?

• What if I disagree with how my insurance company

paid my claim?

n EXPLANATION OF BENEFITS AND APPEALS

y I received in the mail an “Explanation of Beneﬁts”

– is this a bill?

No, an Explanation of Beneﬁts (EOB) is a letter from your

insurance company that tells you how much the services

cost, how much the insurance company paid and how

much you might be responsible to pay to your doctor

or hospital, and why. The services you received will be

grouped, either by who provided the services or the day

your received them. These groups of services are called

claims, and each claim will have a number. If you have

questions about your EOB when it arrives, having the

claim number will help you get answers more quickly.

When you receive your bill from your healthcare pro-

vider, check it against the EOB. If the provider and the

insurance company are telling you to pay two different

amounts, call your insurance company before you pay

the bill - there may have been an error.

y I don’t agree with my health insurance compa-

ny’s decision about the cost to me. What can I do?

All health insurance companies are required to have

an appeal process. The process varies based on rules

for how your health insurance plan is set up. Below are

some common examples of how plans are set up and

where to go for help.

n SELF-FUNDED (AKA ERISA) PLANS

Some employers choose to self-fund employees’ health

insurance. With this type of insurance, your employer as-

sumes the ﬁnancial risk associated with providing health-

care beneﬁts to employees. In this way, your employer is

also your health insurance company.

Sometimes employees do not even realize that their plan is

self-funded, because even though the employer pays all the

claims, the plan is often administered by a health insurance

company. This means most people with self-funded health

insurance have insurance identiﬁcation cards from a well-

known health insurance company.

Self-funded plans follow federal requirements, under the

Employee Retirement Income Security Act (ERISA). That is

why they are also known as ERISA plans.

WHERE DO I GO FOR HELP? If you receive your insur-

ance through an employer and are unsure of the type

of product you have, ask your employer, “Is our health

insurance self-funded?” If you have a self-funded plan

you should contact your human resource department to

learn more about the process to ﬁle an appeal.

n FULLY INSURED PLANS

A fully-insured health plan is one where the insurance com-

pany assumes all of the risk. This can either be done by

an individual purchasing a policy independently or when an

employer purchases the insurance from the health insur-

ance company and pays all or a portion of the premiums.

The health insurance company assumes the ﬁnancial risk

and pays for medical claims with the premiums collected.

Fully insured health plans must follow all applicable state

and federal regulations.

WHERE DO I GO FOR HELP? If you have a fully insured

product, you can contact your insurance company or the

state Department of Banking and Insurance to learn more

about how to ﬁle an appeal. In New Jersey, the Ofﬁce of

the Insurance Ombudsman is available to assist con-

sumers. The Ombudsman can be reached at www.state.

nj.us/dobi/ins_ombudsman/ombudsfaq.html or by calling

1-800-446-7467.

n HEALTHCARE SHARING MINISTRY PLANS

Healthcare sharing ministry plans are not insurance plans.

They are a cost-sharing mechanism in which people pay a

monthly fee, similar to a premium, which is then deposited

in an account overseen by the ministry. The ministry then

disburses payments for eligible medical bills. If you are part

of a healthcare sharing ministry, you are considered a self-

pay patient when using healthcare services.

WHERE DO I GO FOR HELP? Because healthcare min-

istry plans are not actually insurance, whether or not you

have any rights is dependent upon the ministry.

PUTTING IT ALL TOGETHER

t’s important to be informed about your health insurance.

If you have other questions or concerns, call the customer

service phone number on your insurance card.