Navigating the landscape of health insurance can be a time-consuming, frustrating, and complicated process, especially for people who need ongoing medical help and are not sure how (or even if) a massive and controversial system can help them. The question of how exactly health insurance helps pay for treatment is often asked and rarely answered comprehensively or accurately; but it is a hugely important question to ask. Understanding the answer can make a big difference to someone’s health and finances.
Health Insurance and Prescriptions
How does health insurance help cover a service like filling a prescription?
Every health insurance plan includes coverage for prescription drugs, for which there are hundreds of options. Dozens of different medical conditions – everything from heartburn to back pain, from infection to sleep disorders – have prescriptions that can help a patient manage the worst of the symptoms. However, not every health insurance plan covers every prescription, and if patients do not understand the nuances of this arrangement, they may be in a position where they have to pay out of pocket.
Policygenius explains that it is imperative that patients learn about the drug list offered by their respective healthcare plans; that is, the medications on this list are the medications that your health insurance plan will financially cover. The list is also known as a “formulary” (literally, an official list offering details of the medicines that can be prescribed). Every health insurance plan has its own formulary, and every formulary is vital to knowing which prescription drugs are covered, how much they would cost, and what other restrictions exist around those prescriptions.
The term formulary is also used in hospitals and other healthcare networks to mean much the same thing. All networks and facilities have their own list of drugs that they are approved to prescribe. Your hospital’s formulary may not match your health insurance plan’s formulary.
Complicated as though this may seem, there is a basic idea behind a formulary: giving both the insurance company and the insured party (i.e., you) specific guidelines regarding how the cost of the medication is divided.
In American healthcare, formularies have tiers, which are groups of drugs sorted out by cost. The tiers are the primary way that health insurance companies can articulate how much a specific prescription drug will cost an enrolled member. For a given medication, its tier will determine the specific copayment, which is set by the health insurance company itself. Specialty, rare, or experimental drugs usually have a coinsurance payment of their own.
There is no standard to drug tiers across the formularies of health insurance plans. Not all plans will categorize the same drugs in the same tiers, so moving from one health insurance plan to another might involve working with a very different formulary. In general, however, there are four tiers of drugs.
Tier 1 Drugs: The cheapest prescription drugs that can be made available to patients. These are usually generic drugs, which are as safe and reliable as brand-name drugs. The difference is in the value of a household name and how much money you (as the insured patient) can save. Some health plans put affordable (or cheap) brand-name drugs in Tier 1.
Tier 2 Drugs: Expensive generic drugs and preferred brand-name drugs. Brand-name drugs can be very costly, even with good insurance, so many patients opt to choose a Tier 2 brand-name drug since they’re on the affordable end of the spectrum.
Tier 3 Drugs: In the middle-to-upper range of the spectrum. This is where non-preferred and more expensive brand-name drugs are found. They will likely cost patients significant out-of-pocket expenses.
Tier 4 Drugs: Houses the most expensive drugs that most health insurance plans are willing to cover. Tier 4 drugs are usually only specialty drugs; that is, they are newly approved and have not been fully tested, hence the greater potential for risk/reward and the greater cost. Tier 4 drugs tend to not have a specific copay; patients have to pay a percentage of the total cost.
Working with Formularies
Patients sometimes wonder how they can get coverage for a drug that is not on their formulary. If they’ve switched health insurance plans, and the new plan doesn’t offer coverage of a past prescription, or if the current health insurance plan has changed its formulary, patients might find themselves having to pay full price for a prescription that was once covered. Some patients also want coverage for a drug that was not initially covered, but that drug is the best option (or even the only option) for treating a specific condition.
If a patient wants to get a medication that is not covered by their health plan, they should talk to their doctor about how best to find an alternative. Knowing how formularies work, and which insurers offer which drugs on their formularies, is an important part of this process.
It may be the case that it is not possible to choose a drug that is already listed in the formulary, or the alternative medication option presented on the formulary would not medically advisable. If either of these is true, patients should ask their health insurance companies for exemptions. Every company has its own policies regarding exemptions. If a request is granted, the insurance company will cover the drug, but they usually do so as though the drug was in their highest tier. So, exemptions are possible, but they are expensive.
Patients do have the right to appeal a rejected request; however, this is also time-consuming and expensive. In the event that a health insurance plan does not cover a much-needed medication, some patients turn to prescription discount cards, which are offered by pharmacies, to make such medications affordable. Prescription discount cards (also known as pharmacy discount cards, among other names) were originally intended to make expensive medications affordable to uninsured people. Today, most cardholders already have insurance, and they try to combine their insurance with a discount card to get a lower price. However, prescription discount cards do not work with health insurance plans. Nonetheless, they can be used as an alternate way of paying for a prescription, and patients can ask pharmacists for how much a medication would cost on both the health insurance plan and with the discount card.
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Health Insurance and Doctor Visits
How does health insurance help for paying to go to the doctor? A CBS Boston affiliate explains that patients who are enrolled in a health plan as called for by the Affordable Care Act must select a doctor to coordinate their healthcare. Insurance plans have to cover doctor visits as one of the 10 essential benefits provided by the ACA. Some health plans require patients to select one primary care provider while others allow patients the freedom to visit any doctor within that plan’s network.
Patients are typically advised to get a doctor from within their insurance plan’s network in order to get the most out of the policy. These doctors are under contract with the health insurance company to provide specific services. Many plans will pay for some benefits for services that are provided by a doctor who is out of your network, but you (as the patient) should have reduced out-of-pocket expenses if you go to a doctor who is within your network.
Health insurance providers offer a directory for patients to find an in-network doctor. If a patient has a specific doctor in mind, the insurer can tell the patient whether this doctor is one of theirs. Alternatively, patients can call the doctor directly to find out if they accept the patient’s insurance.
First Appointments and Specialist Visits
Patients should bring their insurance card with them to the first appointment, which establishes them as new patients of this doctor. The doctor might schedule the patient for preventative screenings, such as blood draws, or refer the patient to a specialist for more involved tests, like a mammogram or a colonoscopy. The doctor’s staff is usually responsible for verifying that a patient’s insurance plan covers the specialists who provide these procedures.
Different plans may require patients to make a copayment or pay coinsurance. Under one of the provisions of the Affordable Care Act, some preventative services have to be completely paid for by the insurance company, meaning that patients will not be required to pay out of pocket.
If a patient has a specific health issue that requires the services of a specialist, such as physical therapy or mental health counseling, some plans require that the primary care physician provide a referral. The plans might pay for some of the specialist services, but this is not always guaranteed. Other plans allow for patients to schedule these appointments on their own. There are always exemptions and exceptions, and patients should be well versed in their plan’s documentations, or simply call the health insurance company directly to determine if a referral to a specialist is necessary.
Health Insurance and Emergency Rooms
How does health insurance cover ER visits?
The Affordable Care Act mandated that health insurance companies cover emergency room services, whether the facilities providing these services are inside or outside the patient’s network. This only applies if the patient has an “emergency medical condition,” which the Act’s HealthCare.gov website defines as “an illness, injury, symptom or condition so serious, that a reasonable person would seek care right away to avoid severe harm.” Even if a patient does not have insurance, a hospital cannot turn them away because of the Emergency Medical Treatment and Active Labor Act of 1986, a federal law that requires that emergency departments cannot refuse treatment on the basis of insurance status or ability to pay. Regardless of finances, people needing urgent medical help have the right to be medically stabilized and treated, but they will have to cover the expenses after receiving care.
In case of an emergency, patients should go immediately to the closest hospital. Prior approval from a health insurance company is not needed for emergency treatment. The insurer will cover expenses, except for whatever the patient’s deductible and coinsurance and/or copayments are for in-network treatments.
Public vs. Private Insurance
Is there a difference between private health insurance (provided by a job) and public insurance like that provided by the Affordable Care Act?
The tension that exists between public and private healthcare is behind some of the most bitter arguments in political discourse today, thrusting a term like health insurance exchange into the national conversation. Public and private health exchanges have a surprising amount in common, but their differences account for very different policies and options for patients who need treatment.
In simple terms, a health insurance exchange is a like a shop that specializes in selling health insurance options, such as:
- Two or more options for health insurance
- Recommendations on what health insurance options best fit a given patient’s needs
- Automatic billing and payment for the selected health insurance plan’s premiums
- Ongoing customer service support for selected health insurance plans
The difference between public healthcare and private healthcare (and the exchanges that provide them) is mostly self-explanatory. A private health insurance exchange is one that is run by a private company, like an employer. WebMD explains that some employers offer their workers a choice of health insurance plans while smaller ones may only be able to offer a single plan. If an employee buys health insurance on their own and chooses not to get a plan through their employer, this will likely cost the employee more. The costs of a health insurance plan offered through an employer is split between the employee and the company. A private insurance plan may offer more drugs and more doctors, but employees would have to pay for it out of their own pockets.
Managed Care Plans
Certain insurance plans work with specific healthcare providers and facilities, which are within the plan’s network, to offer more affordable healthcare; this arrangement is known as managed care, of which there are different kinds.
HMOs, or health maintenance organizations: These plans only pay for medical care within the network of healthcare providers, so they tend to cost less than plans that have a wider network of providers.
PPOs, or preferred provider organizations: PPOs cover a greater range of medical costs if patients get their care within the network. They will pay for specific costs for care outside the network, such as for emergencies and specialists.
Point of service: Patients can choose to go with either an HMO or PPO every time they get medical care. Point-of-service plans naturally offer much greater choice for patients.
There are also indemnity plans, also known as fee-for-service plans, which are not the same as managed care plans. Patients are not restricted in their choice of doctors or hospitals for their care, and the healthcare provider is paid a fee every time a patient gets medical treatment that is covered by the indemnity plan. The patient’s out-of-pocket costs on an indemnity plan could be higher than they would be for some managed care plans.
On the other side of the spectrum is a public health insurance exchange, which is run by a government or an entity that is contracted by the government to run the exchange. Since the Affordable Care Act required states to create their own health insurance exchanges in 2014, those exchanges (also known as Marketplaces) are legally considered to be public health insurance exchanges.
Medicaid and Medicare
In the United States, the biggest form of public (government) insurance is Medicaid, a state-run program that helps qualifying people with lower incomes pay for their medical care. Patients may have to pay a small amount for certain forms of treatment, and the Medicaid program pays the healthcare provider.
The other form of public insurance in America is Medicare, which is health insurance provided by the government to people ages 65 and up. Additionally, people who have specific disabilities or health problems, like chronic kidney failure that requires dialysis treatment or a transplant, can also get insurance through Medicare. The program covers some medical costs for people who qualify, but not all costs.
There are four parts to Medicare. Part A is hospital insurance, which helps to cover care in approved medical facilities (e.g., hospitals and nursing facilities, certain treatment centers, etc.). Part B is medical insurance, which pays for staff and key forms of outpatient care. Medicare Part B covers some services that are not offered by Part A, such as some forms of physical therapy and home healthcare.
Part C is the Medicare Advantage Plan, which allows patients to get healthcare coverage for Part A and Part B (and sometimes Part D) through a private plan, like a preferred provider organization or a health maintenance organization. Part D helps patients cover some of their costs for prescription medication. People who have limited incomes might be able to qualify for extra help (via Part D) to get their prescription drugs.
Health Insurance and Medical Detox
Can health insurance be used to pay for medical detox?
Medical detox is an incredibly important part of drug addiction treatment. In many cases, it is the first step of the journey, as getting individuals off their physical dependence on drugs or alcohol paves the way for long-lasting and effective therapy. Medical detox can take place in a hospital, standalone detox facility, or residential treatment facility that has resources for detoxification.
Some people delay starting on detox because they are unsure of how to pay for it or out of fear that the cost of treatment will be prohibitive. To that point, the National Survey on Drug Use and Health found in 2012 that even though there are 22.7 million Americans who need drug treatment services, only 2.5 million actually got it.
Fortunately, there are options for people who need help and insurance to pay for treatment. Specific insurance plans offer different kinds of coverage, some of which can include medical detox. Every health insurance policy has a summary plan description, which advises patients on the terms of coverage. When a patient has selected a rehabilitation center at which to receive medical detox, the onsite benefits coordinator will provide advice on the benefits and limits of the health insurance policy terms with regard to the coverage of medical detox.
For people who do not have the necessary insurance to cover behavioral or substance abuse treatment, they do have the option of public insurance, which can help make inpatient or outpatient treatment affordable. Some treatment facilities are partially or completely subsidized by the government, and they accept either state or federal medical insurance plans to help patients pay for some or all of the treatment they receive. However, there are restrictions based on income that are put in place for these plans, so patients should double-check with their treatment facility and the public insurance agency to see if they qualify to receive coverage.
When rehabilitation options are not feasible or available, nonprofit organizations can provide medical detox services. They offer economical monthly installment plans, which can extend for years after treatment has completed. This gives patients the luxury of making small payments, albeit for years.
Private Insurance to Pay for Medical Detox
Naturally, private insurance plans for medical detox cost more than public insurance. The tradeoff is that the variety of healthcare options made available to patients is much more extensive than what government-funded insurance plans can cover.
Patients who have private insurance might have a wider choice of alcohol or drug treatment facilities, some catering to specific lifestyles or tastes. Private drug treatment insurance plans can pay a sizeable portion of the overall treatment cost as a factor of the deductible; patients will often not have to spend a great deal out of pocket.
Private insurance plans might offer coverage for a wider range of inpatient services, such as allowing patients to use those services for a much longer period of time than what a public insurance plan could offer. Patients who want a more relaxed, customized, secluded, or even luxurious rehab experience will have to pay more out of pocket, but this is a perk that is more likely to be offered with private insurance.
Health insurance can be a complicated and controversial subject, but the reality is that it helps people from all across the economic spectrum get access to treatment that can save their lives. Understanding the ins and outs of how health insurance helps pay for treatment will make a huge difference in ensuring that individuals get the medical care they need.
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