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Protecting Your Future, Today                          

The Benefit Basics

January 2008
 
In This Issue
When to File an Appeal
What is an Out-of-Pocket Maximum?
What is a Contracted Amount?

When to File an Appeal

By Yvette Akins

If a health care treatment or service was denied, reduced, or terminated by your health plan, you may have the right to request an external review as long as ALL of the following apply:

  1. You have received a letter from your health plan advising you of its decision not to provide coverage because the treatment or service is NOT MEDICALLY NECESSARY
  2. It has not been more than 60 DAYS since you received the letter of denial from your health plan
  3. You have completed the health plan's INTERNAL REVIEW PROCESS
  4. Without coverage by the plan, the disputed treatment or service (plus all related services) would cost you MORE THAN $500

If all of the above apply, immediately advise your health insurance plan that you wish to exercise your rights for an EXTERNAL REVIEW of your denied, reduced, or terminated health benefits. Your health plan will advise you of the specific steps that will be followed in this process.
What is an Out-of-Pocket Maximum?
By Nathan Decker
 

doctor

An out-of-pocket maximum is a cap on how much an individual or family will have to pay for covered medical services in a calendar year.  Once the maximum is reached, the plan pays 100% of all remaining covered expenses for that year.  Office visit and prescription co-payments do not go towards the maximum.

 

Example:

Jim has a $1000 deductible, a $2000 out-of-pocket-maximum, and a 80/20 co-insurance rate.  Once Jim reaches his deductible he is responsible for 20% of covered expenses until he reaches his out-of-pocket maximum.

 

If Jim has a $30,000 surgery; he will pay the first $1000 to meet his deductible.  Then, Jim will begin paying 20% of the remaining $29,000 in bills, until he reaches his maximum of $2000.  Once he has reached the maximum, his remaining bills are covered 100%.
What is a Contracted Amount?
By Jennifer Johnson
 

Each time you receive a medical service from a network provider, your financial responsibility will be based on the contracted amount for the physician or facility utilized.  The contracted amount is the amount that your insurance carrier has negotiated with the service provider.

 

Every medical provider charges a fee based on the service performed.  Insurance carriers have the ability to negotiate these fees based on quality of care a facility or physician provides and average fees for a geographical area.  These negotiated fees help to keep your insurance premiums and out of pocket expenses reduced.  Contracted amounts assist in keeping your cost down by restricting your provider's ability to charge excessive fees for their services.  In contrast, if you did not have insurance and received treatment from a provider there would be no contracted amount.  The provider would then be able to charge any amount they see fit for the services they provide. 

 

Allowed amounts are communicated to you by an Explanation of Benefits (EOB) from your insurance carrier.  The EOB will show the actual fee your provider charges for a service and the contracted amount.  The difference between the provider charge and the contracted amount is the discount the contracted amount provides.  This discount is the amount you and/or the insurance carrier have saved on your specific service.  Due to this savings, your premium and out of pocket cost has been lowered.

 
QUESTIONS OR COMMENTS?
 
Do you have a question you would like addressed in our next issue?
Please email Laura Lauber at laural@horanassoc.com or call (513) 745-0707

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This eNewsletter is a digest of information published by a variety of web-based sources and is published as a service to our users. Horan Associates, Inc | Horan Securities, Inc. is not the author of the material unless specifically noted. We review each article to ensure that it is related to the interests of our subscribers. Horan Associates, Inc | Horan Securities, Inc. does not endorse the individual authors of these articles, although Horan Associates, Inc | Horan Securities, Inc. has reviewed these articles, for accuracy and completeness and your independent review for personal relevance should be undertaken. Reliance on this material should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. All articles are copyrighted to their publishers. This publication is intended for general information only and not as legal advice. You should discuss specific details with your advisor.

 

 

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