Understanding Insurance

Understanding Your Health Care Costs

Understanding Your Health Care Costs Brochure

Insurance companies share the cost of  healthcare with you,  but only after you  first spend a specified  amount each year. The  dollar amount you will  spend for healthcare  begins with the medical  insurance policy you  agree to.  It’s important to know what healthcare  services and providers your policy does and  does NOT cover because you will have to  pay for all non-covered services and all out  of network providers out of your own pocket.  It’s also important that you know what your  policy says about how much you agree to pay  every year out of pocket for your care. This  will allow you to set this money aside when  you need it.

What is a Deductible?

A deductible is a specific amount of money  you have agreed to pay for your medical  expenses before your health insurance plan  begins to pay for covered medical expenses.  Insurance companies typically offer   deductible  options in the range of $1,000 to $10,000.  For example, if you have chosen a $5,000  deductible, you will need to pay the first  $5,000 of your medical expenses before your  insurance will start helping   you to pay the  remaining costs.  

What is Coinsurance?

Coinsurance is the shared cost between you  and your insurance company once you’ve  paid your deductible. Over a plan year, your  insurance company keeps track of how much  you pay toward hospital and clinic   bills. Once  you’ve paid enough to reach your deductible  amount, your insurance company will help by  paying for a certain percentage of the costs.  For example, once your deductible is met, you  may pay 20% and your insurance company  may pay 80% of the charges.

What is an Out-of-Pocket Maximum?

An out of pocket maximum is the most  money you will have to pay for covered  medical expenses in a year. Once your  deductible and coinsurance payments reach  this amount, your insurance company pays  100% of the remaining charges for covered  services. For example, if your out of pocket  maximum is $6,000 and you’ve paid $6,000  worth of medical expenses, the insurance  company will pay 100% of all remaining  covered charges.  

How Billing Works

The hospital / clinic adds up the charges for  all the services you received during a specific  hospital stay, emergency department visit or  clinic visit over a specified period of time and  sends this electronically to  your insurance  company. This is called a “claim.”  Your insurance company reviews:  

  • What your policy lists as your yearly  deductible amount
  • What your policy lists as your coinsurance  percentage
  • What your out of pocket maximum is  
  • How much you have already paid this year  in health care costs

Your insurance company then determines how  much of the bill you will pay and how much  they will pay. If you have not yet spent your  out of pocket maximum amount:  

  •  You pay your deductible amount  remaining for the year
  • If this doesn’t pay for all of the charges,  you also pay your coinsurance amount

The insurance company sends you an  “Explanation of Benefits” statement, which  tells you what you can expect to owe when  you receive the bill from the hospital/clinic.  If you have reached your deductible   amount,  the insurance company sends a payment to  the hospital/clinic for the amount they owe  and tells them the amount you owe.  The hospital / clinic sends you a bill for this  amount.

Note: You may also receive a bill from other  physicians/medical providers who provide  services to patients at Northfield Hospital.  These may include a pathologist, radiologist,  anesthesiologist, surgeon or other   specialty  physician such as a cardiologist. These  providers bill for their services separately  through their own billing offices.

Other Resources

Our Patient Financial Services staff are happy  to help you with questions. You may contact  them at 507-646-1399 during normal business  hours.