By Martine G. Brousse
"The Medical Bill Whisperer... and insurance stuff too"
Patient Advocate, Certified Mediator
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“Share of cost”
Patients often hear the term, usually when told you have not met it so you need to pay up front. Having to rely on information from the office or hospital financial counselor may not be to your advantage - they don't work for you now, do they?
So let's look at what mean exactly, how it is calculated, and why you should care.
A. What is it?
In a nutshell, your "share of cost" is:
the total amount that your insurance policy says is your responsibility on a yearly basis.
the total amount your insurance does not pay but that remains due to a medical provider (by you)
The "share of cost" usually has 3 parts:
This is what you must pay first, before your insurance even thinks of using their checkbook.
You can find the amount online, or listed on your policy.
Example: your insurance calculates that the medical provider is owed $ 500.00.
Your deductible is $ 800.00
Your insurance will pay nothing, but credit $ 500.00 toward your deductible.
You are responsible for paying $ 500.00 to the Dr.
Your unmet deductible is now lowered to $ 300.00.
The "individual" deductible is assigned to each member under the policy.
The "family" deductible adds up all members' numbers.
Usually, the family deductible is considered "met" once 2 members have reached their limit.
Most policies have an In Network deductible and a "Out of Network" deductible.
The latter will likely be higher. More on this below.
2. "Co insurance" or "out of pocket"
Once the deductible is met your insurance starts paying a % of what is owed to the medical provider, often 80/20. This means your insurance pays 80%, you pay 20%, up to the limit for "co-insurance" as per your policy.
Check online or on your policy to see what the % is for you.
In the above example:
You have met your $ 800.00 deductible.
Your Dr is owed $ 500.00 for his next bill.
The insurance pays $ 400.00 (80%) and you pay $ 100.00 (20%).
If your your co-insurance was $ 1,000.00, it is now down to $ 900.00
Once both deductible and co-insurance have been met, your plan pays 100%. Yeah!
You have met your deductible and your co-insurance.
The Dr is owed $ 500.00.
Your insurance pays $ 500.00. You owe nothing.
Copays are annoying things your Dr will ask every time you walk through the office door. It often is listed on your insurance card.
Specialists’ visit copays are usually higher than a regular Primary Care Physician.
Copays mostly affect Drs’ and ER visits, sometimes imaging (X-rays, Ct Scans, MRIs etc) or even ambulance rides.
B. How is it calculated?
Here things get a bit more complicated, so hang on as we must consider both In Network and Out of Network cases.
1. “In network”
This means that the medical provider has signed a contract with your plan/insurance.
In exchange for an adjustment by the provider, the insurance guarantees a set fee as payment for the service.
That fee is called “allowance”.
This is usually less than the amount billed, but you don't care as the difference between the "amount billed and the "allowance" is a discount to you that you don't need to pay.
Provider's Bill is $ 800.00
Allowance is $ 500.00
Contractual adjustment or discount is $ 300.00. You will not be charged for this.
The provider has agreed to accept $ 500.00 as "payment in full" and to write off $ 300.00.
This "allowance" is either applied toward your deductible, your co-insurance or both.
The good news is that once those have been met, the allowance is paid in full by the plan
2. Out of network
Those providers have signed no contract, give no discount and expect 100% of their bill to be paid by someone.
Without a set agreed upon fee, the insurance can determine whatever amount they want as the “allowance”.
It is often a very small portion of the amount billed, sometimes a figure seemingly taken out of a hat.
That small allowance is what is credited toward your yearly share of cost NOT the amount billed.
Provider bills $ 500.00.
In network rate would be $ 400.00 if there was a contract.
With no contract, the allowance is deemed to be $ 150.00
You are liable for the difference between what the insurance may pay (up to $ 150.00 at best) and the $ 500.00 billed.
Chances are you will be liable for $ 500.00 as only $ 150.00 would be credited toward your out of network yearly share of cost NOT $ 500.00
C. What to expect
The In Network share of cost is lower and is met faster.
The OON separate share of cost is higher, often double, but because only the tiny allowance is credited toward it, you may never meet it.
Therefore you are likely to be liable for most if not all out of network claims @ 100% of the amount billed. And that will hurt.
But let me offer some tips:
Always pick In Network providers whenever possible. Find a list on your online portal.
Know what your yearly liability is and keep track of how much has been met. If you have met it in October, it makes sense to get as many medical services as needed before the end of that year, and before it all resets to zero in January.
Depending on the circumstances, especially emergency, some state and federal laws may force your insurance to pay out of network claims at a higher rate, and for providers to be forced to accept lower fees, even without a contract.
When in doubt, a patient advocate like myself can help you determine if your claims were processed correctly, or if there is any way to reduce your final liability.
Martine Brousse was a long-time Billing Manager for Physicians before switching to the side of patients in 2013. The move has allowed her to apply her deep expertise and vast experience of the intricacies of resolving all types of medical bill and claim payment issues in ways that directly and positively impact her clientsʻ finances.
(424) 999 4705 - F (424) 226 1330
@martine brousse 2023
@ the medical bill whisperer 2023