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Five ways your medical insurance defines deductible

The state health benefit exchange gives Washingtonians a catalog of options for healthcare. What you should know before you buy.

If Merriam-Webster had anything to do with it, the concept of a deductible would be simple — the "amount of money that you have to pay for something (such as having your car fixed after an accident) before an insurance company pays for the remainder of the cost".

With Washington state health insurers though, it turns out things are a lot more complicated. This past year, while making a difficult recovery from knee surgery, I've been encountering these complexities. Here's how the system works:

1) Deductible Double-Standards

Even though the marketing materials for healthcare plans traditionally promote one deductible, there are often actually two deductibles. This year I opted into Lifewise’s $1,000 deductible Gold plan. Here’s the thing though: That $1,000 deductible only applies when I visit medical professionals in the Lifewise network.

When I visit professionals outside the network, even if they are licensed by the State of Washington, I have a fully separate $2,000 deductible. Therefore, my $1,000 deductible plan actually has $3,000 of deductibles. Some plans are worse: The Bridgespan $1,000 deductible plan has $6,000 in combined deductibles. By design, HMOs such as Group Health and Ambetter provide no coverage at all for out-of-network providers; their out-of-network deductible is infinity.

Side note: Even Lifewise itself can't keep track of which doctors are in- or out-of- its network. Though their Explanation of Benefits (EoB) says that the UW Medical Center is in-network, when I visited a doctor there, my payment was applied to my out-of-network deductible. A follow-up phone call revealed that the UW Medical Center is, actually, out-of-network.

One downside of the Affordable Care Act (ACA) is that insurers are now even more restrictive of who they allow into their networks. A handful of providers have told me that insurers purposely limit entry to their network in order to reduce expenses. Seattle's Children's Hospital is even suing the state Office of the Insurance Commisioner because only two of seven plans on the state exchange include it in their network.

When it comes to auto insurance, Washington state law requires insurers allow you to repair your car at the vehicle repair shop of your choice. There's no such freedom with health insurance.

2) Limits on the Number of Visits that Override Your Deductible

Amazingly, even once you’ve met your deductible, insurers can completely set aside your coverage if you exceed visit limits in certain categories of treatment. For example, my current plan provides no coverage for physical therapy after 25 visits — even if my in-network deductible is satisfied.

In other words, if you're hit by an uninsured driver, you get 25 visits of physical therapy and then nothing until you’ve hit the new ACA out-of-pocket limit of $6,350. For those keeping track, that’s $5,350 you’ll have to pay yourself — in addition to the $1,000 deductible you already paid. And, as I'll describe below, many costs you would incur wouldn't count towards the limit, they'll be paid completely out-of-pocket.

Washington state's interpretation of the ACA set a minimum number of physical therapy appointments insurers are required to provide (which actually increased my insurer's visit limit by five). Still, the free marketplace hasn't yet unearthed any insurers that offer a more competitive plan without visit limits. (Don't worry, I'm sure Libertarians are right about other things.)

3) Copays Don't Count Towards Your Deductible

Most Washington insurers require a copay for some provider visits as well as prescription drugs. For example, my plan often requires a $30 per visit copay — 25 percent of a typical $120 medical visit. Copays don't count towards your deductible at all. Don't ask me to explain which visits require copays and how much they are. No matter who I ask, it remains one of life's little mysteries.


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Comments:

Posted Mon, Jul 21, 9:59 a.m. Inappropriate

I'm not understanding why you need to go out-of-network so much. Maybe the Premera plan would have been better for you. I'm thinking that Premera doesn't have a "network" but I could be wrong.

You also don't mention maximum out-of-pocket. I don't know what yours is, but it should help you for at least in-network charges.

lacquer

Posted Mon, Jul 21, 11:29 a.m. Inappropriate

You raise an excellent point about the maximum out of pocket. Thanks. I looked and on my plan it's $4,500 subject to all of the same math described in the article - so yes, for me, it's $1,850 lower than the ACA. However, my understanding is that the visit limits still apply - so no physical therapy coverage after the 25 visit limit regardless. It would be interesting to challenge that after the $6,350 ACA limit where visit limits might by contestable.

A few things we cut from the piece for length included more on the out of network piece. I had an MRI last year which was in network, this year, a followup MRI on the same exact machine was now out of network. Two specialists I saw who have years of residencies at UW are out of network, whereas one used to be in network.

The networks have been narrowed by the insurers to limit expenses.

btw - Lifewise is Premera. Several plans are offered under these brands by the same umbrella insurance group.

Posted Mon, Jul 21, 11:29 a.m. Inappropriate

Some Group Health plans DO provide coverage for out-of-network providers, though at a lower rate than for Group Health providers. They cost more, of course... the plans that only cover care in the Group Health system (or at, e.g., Virginia Mason, if Group Health doesn't provide the particular service) are cheaper.

Posted Mon, Jul 21, 2:51 p.m. Inappropriate

A couple of points:

* As noted by someone else, deductibles, coinsurance, and copays contribute to the max out-of-pocket, though you should always clarify your plan specifics
* In some plans the in-network deductible will contribute to the out-of-network deductible, and you should check your policy
* You should always check the in-network status of a service
* Regarding the limits on your plan, you might discuss this with the insurer and see if they will raise the limit for you because of your special circumstances. Insurers will sometimes provide some flexibility on these issues.

We have worked with - and sometimes battled - insurers regarding the coverage of a daughter for years. This is in the area of mental health care, which is a world unto its own when it comes to coverage and costs. Litigation because of insurer discrimination is not uncommon, largely thanks to state and federal parity laws. However, along the way we have often been able to get the insurer to provide some flexibility. For example, our daughter's entire treatment team of specialists is out-of-network, but they receive in-network status because of the difficulty of finding qualified people in-network (not uncommon in mental health). The insurer did not volunteer this, but we were able to get them to come around.

Good luck.

Posted Mon, Jul 21, 4:56 p.m. Inappropriate

Thanks James. I'm not certain that the insurers include these in the out of pocket maximum. A brief look at it's calculation online for mine seems to indicate the opposite. Also given my research and discussions for this essay, only the portions that apply to the deductible would seem to apply to the out of pocket maximum.

Posted Tue, Jul 22, 9:17 a.m. Inappropriate

I believe your plan is here:

https://www.lifewisewa.com/documents/027829.pdf

You'll note in the upper right-hand corner, for Out-of-Pocket Maximum, it states, "Includes deductible, coinsurance, and copays." Curiously, they write here:

https://www.lifewisewa.com/visitor/our-most-frequently-asked-questions/

"Copays apply toward deductible and out-of-pocket maximum"

which is not correct (it contributes only to the second, except in unusual circumstances), of course.

Regarding this,

"Even after I pay my copay and meet my in-network deductible, Lifewise only pays 80 percent of medical bills.

You'll pay the copay for providers/services that require it until you've reached your out-of-pocket max of $4500. The plan will pickup the rest (so, if the service is $120, the copay $12, the plan pays $108; once the max is met, the copay is $0). The deductible is connected to coinsurance, whereby once you've paid your deductible - which, as you've pointed out, the copay does not contribute to - you're responsible for 20% of the contracted fee until the out-of-pocket max is satisfied.

Insurance coverage is far too convoluted (eg, for emergency services: "$200 copay, then deductible, then 20%). I suspect few consumers understand their plans.

These plans would require extra scrutiny for the quality of their mental health care coverage, especially with regard to network adequacy and higher levels of care.

Posted Tue, Jul 22, 1:57 p.m. Inappropriate

James, please excuse me as I need to sit down as I'm now dizzy - and I understand the terminology :) Thanks for "making sense" of this for me. :)

My discussions with OIC demonstrated that no one really knew how these calculations work or how they're supposed to work - at least with regard to the ACA maximum.

Your comment just illustrates how ridiculous the system is for consumers - and how the Legislature has dropped the ball and again raised the question of who they are working for.

Posted Tue, Jul 22, 11:19 a.m. Inappropriate

"Complexity is the last refuge of the scoundrel" indeed. No wonder we're in a place of such institutionalized nonsense. At root in this is how evidently our cognitive elite and technocrats are unable or unwilling to recognize something basic which relates to what the state cannot control or quantify, viz. a "free marketplace."

SNIP: "Washington state's interpretation of the ACA set a minimum number of physical therapy appointments insurers are required to provide (which actually increased my insurer's visit limit by five). Still, the free marketplace hasn't yet unearthed any insurers that offer a more competitive plan without visit limits. (Don't worry, I'm sure Libertarians are right about other things.)"

The author's swipe at the bogeyman and strawman is undone by everything else that he describes and decries in the article of statist controls over free exchange. How can he not recognize that worsening of choice, quality of care, and costs have come not as a result of a free marketplace but as the logical result of system where entities have operated under rules, subsidies and crony practices that have effectively incentivized such behavior?

To his credit, there is a lot of info and insight in the piece with useful examples that illustrate his later point: "Unfortunately, Washington's health insurance market has had limited competition for much of the last decade — it has essentially been an oligopoly — so none of the plans were very consumer friendly."

That is what's frustrating. Recognizing that reality (and acknowledging that it makes complete rubbish of the earlier statement) is a good place to start with beginning to fix it.

That is, admitting we have a problem that is based in a decidedly un-free market.

YaelLopez

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