What does “Can I use my health insurance for x?” actually mean?

To “use” your insurance to most people means “will my insurance cover this in-full?” Here are the conditions that must be met for your health insurance to cover things in full:

  • You must have spent your entire deductible
  • You have a plan without co-pays (very, very rare)
  • You have a plan without co-insurance (increasingly rare)
  • The expense happened during a routine annual physical and was a recommended screening test for your age/gender/risk factors (thanks Obama!)
  • Certain forms of contraceptives (thanks Obama!)

The real questions are:

  • What will it cost me to see a doctor or visit an urgent care center or ER?
  • What will it cost me to get tests?
  • What will it cost me to get procedures?

The answer to these 3 questions is, before you’ve spent your entire deductible, you are responsible for paying for the entire cost of these things.

So, now the question becomes “will my health insurance cover this in-full after I’ve spent my deductible?”

The increasingly likely answer is no. In decades past, when we as adults were introduced to the concept of health insurance, insurance used to cover all visits. Then they started introducing co-pays (to visit the doctor, you have to pay $25 at the time of the visit). Then they introduced co-insurance (your health insurance pays, say 80%, of the bill and then you pay the rest after you’ve met your deductible). The real reason people are confused about this is because deductibles, co-pays, and co-insurance are relatively new concepts that were introduced gradually over time. As you can see, these are measures to offload costs from health insurance companies and employers onto you. The days of insurance fronting the costs of all things are over.

To clear things up, until you’ve spent your entire deductible, co-pays and co-insurance do not yet apply. After you’ve spent your entire deductible, you start sharing the cost through co-pays and co-insurance.

So, before you’ve spent your deductible, the smartest thing to do is to be a super savvy healthcare consumer. If you have to spend $4,000 out of your own pocket before insurance even kicks in, it’s important to spend that money wisely in partnership with a doctor who’s looking out for your spend. And that’s what we do at Sherpaa.