Understanding health insurance

Health insurance can be confusing but here at Blue Cross and Blue Shield of Kansas we don’t want it to be. We are here to help you understand all the ins and outs of health insurance.

What is health insurance?

The first step is understanding what health insurance really is.

Health insurance is there to help cover your medical expenses. Similar to how auto insurance covers your car if you get into an accident, health insurance covers you if you get sick or injured.

How does it work?

Health insurance helps you pay for healthcare. This starts with you paying a monthly payment (premium) that keeps your policy active.

When you go to the doctor, pharmacy or hospital, you show them your insurance card with your name, policy number and group name. Your doctor or hospital then submits the visit’s bill to your insurance company. This is called a claim. Your insurance company calculates how much you owe based on your specific benefits, including things such as your coinsurance and maximum out-of-pocket expense. Your insurance company covers the rest! Check out this video to learn more about the journey of an insurance claim.

Common terms

We hear these terms every day, but we know you don’t. Here’s a quick explanation of our most commonly used words.

Network – In network refers to your health insurance company’s list of doctors, hospitals, dentists, etc. with which it has negotiated a discount to provide healthcare services.

Maximum out-of-pocket amount – Health insurance doesn’t always cover 100% of your costs. In fact, it’s designed to share costs with you up until a certain point, called the out-of-pocket limit. After you hit the out-of-pocket limit, health insurance will pay 100% of your healthcare costs.

Premium – This is like your monthly bill. Every month, you pay a premium (cost) to your health insurance company. This gives you access to a health insurance plan. In addition to this monthly cost, you may have to pay for healthcare services. Depending on how much you pay a month will determine how much you’ll pay out of pocket. For example, if you have a health insurance plan with low monthly premiums, you will likely have to pay more out of pocket if you need to see a doctor.

Explanation of Benefits (EOB) – This is a statement from your health insurance company providing details on payment for a medical service you received. It explains what portion of services were paid by your insurance plan and what part you’re responsible for paying.

Coinsurance – Coinsurance is another way that health insurers will split costs with you. Unlike a copayment, coinsurance isn’t a fixed cost – it’s a percentage of the cost that you pay for covered services. For example, if your plan has a 20% coinsurance, this means your health insurer will pay 80% of the cost and you will pay the remaining 20%.

Copayment (Copay) – A set amount (for example, $25) you pay for a covered healthcare service or medication, usually paid at the time of service. You will pay copayments until you hit your maximum out-of-pocket amount.

Deductible – The amount you pay for covered healthcare services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. After you pay your deductible, you usually pay only a copayment or coinsurance for covered services.

We hope this helps makes health insurance easier to understand. If not, we are always here to help. If you have any additional questions, please call us at 1-800-432-3990.

2 thoughts on “Understanding health insurance

  1. In alignment with the 35 other independent and locally-operated Blue Cross and Blue Shield companies, BCBSKS will cover the cost of diagnostic testing for COVID-19, increase access to prescription drugs, enhanced telehealth and other clinical support systems. BCBSKS is making these changes to ensure our members can swiftly access the care they need during this outbreak. We are working closely with the Kansas Department of Health and Environment (KDHE) to remain in alignment with activities at the state level.

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