Health insurance is something everyone needs. Your plan is designed to help protect you and your family’s health and finances. Even when you’re healthy, health insurance allows for peace of mind.

If you’re new to health insurance, you might be wondering how does insurance work? You might even question what is the purpose of insurance? It is complex. That’s why we’re here to help with this insurance-explained guide.  

The first thing every member should know is that for health insurance to be effective, it’s up to you as the policy holder to understand what your policy covers how to put it to work. In this article, we’ll explain how you can do that and more, including:

• How to select an in-network doctor.
• What to expect from an appointment.
• What to do when a bill has errors or a claim is denied.

By the time you’re done reading, we hope you feel confident using your insurance so that you can make the most of your plan, and protect your health and finances along the way.

Choosing an In-Network Doctor

Your health insurance policy connects you to a selection of healthcare providers, health centers and hospitals that participate in your plan or “network.” The insurance company has negotiated discounts with those in-network providers, which means you may pay lower out-of-pocket costs when you visit someone who is in your network. That’s why it’s important to confirm that the healthcare provider you’re seeing or the facility you’re visiting are indeed in-network before your visit. Here are the steps you can take to do that:

• Log onto your health plan member account. There, you can search for the name of a provider or hospital and see if they’re in-network.
• Call your healthcare provider. Their office can quickly let you know whether or not they’re covered by your plan.  
• Call your health insurance company. Dial the customer service number on your insurance card and ask if the provider or hospital in question is in-network.

What to Do Before Visiting a Doctor

Once you’ve made an appointment with an in-network provider, there are a few steps you can take to prepare for the visit, in hopes that there are no surprises — including surprise bills — down the line.  

• Familiarize yourself with your benefits. Every plan is different, so it’s helpful to know what your plan includes. Your plan’s benefits book outlines how you and your plan share costs for covered healthcare services, and it’s a good place to start.
• Know your copay. This is a set fee that’s listed on your insurance card. It’s what you can expect to pay for your visit (there may be additional fees).
• Ask any questions you have about billing or payments. You have a right to know what your healthcare will cost and how it will be paid. Contact the provider or the hospital’s billing department to learn these details before a procedure or treatment.
• If you’ve scheduled a surgery or procedure, make sure it’s been approved by your insurance company. Usually, your healthcare provider will handle this, but if you have any concerns, call your plan’s customer service line and ask.

Using Your Plan During and After Your Visit to the Doctor

While it can be helpful to know what to expect before an upcoming visit, it’s also important to point out that billing and payment processes will vary by provider and by healthcare facility. Here’s what you might experience and how your interactions around insurance might look.

During the Visit

Often, before you even set foot in a healthcare facility, the office will request your health insurance information. This could happen over the phone, or they may ask you to fill out a form and upload photos of your health insurance card via a patient portal.

When you arrive for a visit, they’ll likely ask to see your health insurance card and a photo ID. They may also hand you forms to fill out regarding your current health, health history, emergency contact information and privacy disclosures. Frequently, they’ll ask you to pay your copay upfront. That’s the amount that’s written on the front of your insurance card.

After the Visit

When your visit is complete, you may be asked to pay your copay as you exit (if you didn’t pay it when you arrived) or you may receive a bill for your copay later, either electronically or by mail. In addition, you may receive a bill for additional fees related to your deductible or coinsurance. That bill can arrive days, weeks or even months following an appointment. Keep an eye out for an Explanation of Benefits (EOB) document in the mail or electronically, as well. There’s more on that in the next section.

Understanding Medical Bills and EOBs

Medical bills and EOBs may look similar, but they’re actually quite different. Boiled down, an EOB lets you know when your claim has been processed, and a bill lets you know when payment is due. Here’s more:  

[Include a link to the “How Long Should You Keep Medical Bills? |BCBS-AL Insurance Tips” article when live.]

• An Explanation of Benefits lists the services that the health plan considered on your behalf. An EOB is not a bill, and no payment is required in response. An EOB generally includes the following:
  • The date you received a service
  • The amount billed
  • The amount covered
  • The amount paid by your plan
  • The balance you’re responsible for paying the provider
  • In addition, the EOB usually includes the amount that’s been credited toward your deductible and out-of-pocket maximum

• A medical bill states the amount you owe a healthcare provider. That fee is calculated after your provider has submitted their bill (known as a claim) for your visit to your health insurance company. After your insurance company has paid the bill, there may still be a balance due. That’s where you come in. The bill will outline what’s been paid and what you owe.  
• Save your statements. It’s important to keep your EOBs and your medical bills to make sure the amounts match. If they don’t, contact your insurance company and/or your provider’s office and ask for clarification.

The Life of a Claim

When you receive services from a healthcare provider, the list of itemized services sent to an insurance company is referred to as a claim. Here’s the path that claim takes as it makes its way to all involved parties — the insurance company, the doctor and you. 

1. After a patient’s appointment, the provider or facility sends the claim to the insurance company.
2. The insurance company accepts or rejects a claim and determines how much of the charges it will consider, based on a member’s benefits, and if there is a negotiated rate with the healthcare provider.
3. The patient receives an explanation of benefits from the insurance company, which details the costs for service, the discounts you received through your plan, the amount the plan covers and the amount you may owe for services rendered.
4. If there are any outstanding fees owed, the patient should receive a bill from the healthcare provider. 

What You Pay When Using Your Insurance

It’s a myth that health insurance covers everything you need when it comes to your health. While your policy will help with healthcare costs, you, as the member, are still responsible for certain payments. Here are some of those costs to keep in mind:  

• Premium. The amount you pay monthly for your health insurance. For some people who have an insurance plan through their employer, the employer may pay a portion of the premium.
• Deductible. The amount you pay for eligible health services in a year before your insurance policy begins to share costs. For example, if your deductible is $1,500, you’ll pay for eligible costs for up to $1,500 before your policy helps pay for covered services.
• Copay. A set fee you pay for a healthcare service, such as a visit to a doctor or hospital, or for a prescribed medication.
• Coinsurance. The portion of the cost for healthcare you’ll pay after you’ve met your deductible. For example, if your coinsurance is 20% and you receive a bill for $100, you’ll pay $20 and your insurance will pay the rest.
• Out-of-pocket maximum. The most an individual will pay in a year for eligible health services. After paying this amount, your insurance policy will pay for all other covered services.

When Do You Need to File a Claim Yourself? 

There may be occasions when a provider — either in-network or out-of-network — doesn’t file a claim on your behalf with your health insurance company. When that happens, the full financial responsibility for the service or procedure falls to you. In some cases, you can submit a claim on your own for eligible expenses, and you may receive some reimbursement. Here are the steps to guide you in that process:

• Locate your health insurance company’s claim form. You should be able to find this through your member account (here’s an example of a medical expense claim form from Blue Cross and Blue Shield of Alabama) or you can call the customer service number listed on your insurance card and ask for help.
• Complete the information required. Be sure to include as many details as you can about your condition and diagnosis.
• Attach the bill to the form. Make sure it includes information such as:
  • Patient’s full name
  • Date of treatment
  • Description of the treatment provided
  • Diagnosis
  • Charge for each treatment
  • Location of treatment
  • Date of accident (if applicable)
  • Medical equipment or supplies purchased
• File the claim promptly after receiving service. Many insurance companies will allow a significant amount of time to file a claim (for Blue Cross and Blue Shield of Alabama, for example, a member typically has 24 months, though this can vary by plan). Still, faster filing will potentially facilitate prompt payment.

Tips for Handling Billing Errors or Denied Claims

Unfortunately, it’s common to encounter a billing or coding error when you’re charged for a healthcare encounter. In some cases, those mistakes may result in a claim denial, meaning that a health insurance company refuses to cover the cost of treatment. A claim could also be denied if you used an out-of-network provider, your service wasn’t authorized or your service was deemed unnecessary. When these things happen there are steps a member can take that may remedy the issue.

Billing Errors

• Compare the bill with the EOB. Look for any discrepancies.
• Contact your insurance company. If the error relates to your insurance coverage, contact your plan and ask if the claim was processed correctly.
• Ask for help from a patient advocate. This is a person who works for your insurance company and can help resolve doctor and hospital billing issues.
• Contact the provider’s billing department. Explain the error and, if needed, request an itemized bill with all billing codes. This may help you pinpoint errors and overcharges.  
• File a dispute. If your outreach doesn’t resolve the issue, write a letter to the provider, the insurance company or both (depending on which made the error) detailing the issue along with a history of your communication and request a resolution.

Claim Denials

• Find out why your claim was denied. There are a number of reasons why a health insurance company might deny a claim, and it’s important to know the reason before seeking approval again. Call your insurance provider and ask for more details. Inquire about the steps you can take to appeal.
• Contact your doctor’s office. Let them know the claim was denied and ask if they can intervene. If there was an error, they may be able to correct it. If the service or procedure was deemed medically unnecessary, they may be able to submit supporting documentation.
• Submit an appeal. There are two different ways to do this. When you submit an internal appeal, you’re requesting your insurance company to review its decision. When you submit an external review, you’re asking an independent third party to intervene. Your EOB will have more information about your external review options and contacts.

Getting the Most Out of Your Health Insurance Plan

People who have health insurance know they’re expected to use it when they’re sick. But it’s just as important to use it when you’re feeling well. That way, your healthcare providers can partner with you to try and help you feel — and stay — your healthiest. Here are some ways to put your health insurance to work:  

• Establish a relationship with an in-network primary care provider (PCP). This will be the point person for your healthcare needs. 
• Book an annual wellness visit. Many health insurance plans will cover the cost of a yearly checkup. Your doctor can check your blood pressure, heart rate, respiration rate and order blood tests that offer meaningful insights into your health. The results of these tests can serve as a baseline for future healthcare encounters. 
• Get the preventive care services your PCP recommends. Many plans cover preventive care services, which are intended to prevent illness. Some examples include tests for high blood pressure, diabetes and cholesterol; screenings for certain types of cancer; vaccinations; well-baby and well-child visits and even counseling aimed at alcohol use, depression, nutrition and quitting smoking. Talk to your PCP about which preventive services you should schedule.
• Learn about your mental health benefits. Read about the mental health coverage your plan offers. Make an appointment with a counselor now, if needed, or file the information away for future use.
• Follow your formulary (and opt for generics). A formulary is a preferred list of medications that your health plan covers. Your doctor can determine if a medication is included in your formulary, or if there’s a suitable generic version available. In the event that the medication isn’t included, your doctor may be able to request an exception from the insurance company.

Learn More About How Health Insurance Works

Purchasing a health insurance policy is an important step. Now, the real work begins: continuing to learn what’s included in that policy — and using it. While this article is a good introduction to how insurance works, there’s still lots to grasp. Follow these links to continue your education and your quest towards good health:  

7 Ways to Make Your Health Insurance Work for You

Do You Qualify for Special Enrollment?

How to Take Advantage of Your Health Insurance before the New Year

Health Insurance Basics (video series)

HMO, PPO, I Don’t Know! Understanding Health Insurance Plans

Insurance Education 101: Deductible vs. Out-of-Pocket Maximum: What’s the Difference?