Insurance 101

Fall 2014 Student Blue Enrollment/Waiver period has now CLOSED! You may appeal before September 24, 2014 or the health insurance premium will be non-refundable!

Please contact the Insurance Department if you have any questions at student-health-insurance@ncsu.edu or 919-515-2563. 

Health Insurance Basics
Health insurance protects you from financial losses due to illness or injury. In exchange for your payments, (known as premiums,) your insurance company promises to pay for some or all of your health care services.

Health Insurance Terms

Benefits – Medical expenses that your health insurance policy covers

Exclusions – Medical and other expenses that your health insurance policy does not cover

Premium – Money you pay your insurance company in exchange for insurance benefits

Claim – Your formal request to your insurance company for their reimbursement of your medical benefits

Co-Insurance – The percentage of covered expenses you share with your insurance company

Co-pay or Co-payment – The dollar amount you must pay toward the cost of a benefit. Usually paid at your doctor’s office visit.

Deductible – The dollar amount of eligible expenses you must pay during each policy year before benefits are payable by the insurance company.

Provider – Any person or entity that provides health care services. A provider could be a doctor, a counselor, a hospital, or a physical therapist, just to name a few. Providers are usually licensed by the state in which they practice medicine.

Network – A group of doctors, hospitals, and other providers with whom a health insurance company contracts to provide discounted services to insured individuals.

In-network – A provider or health care facility that is part of a health insurance plan’s network. In general, insured individuals pay less money out-of-pocket when they see in-network providers.

Out-of-network – Describes a provider or health care facility which is not part of a health plan’s network. In general insured individuals usually pay more money out-of-pocket when they see out-of-network providers.

Allowed amount – The maximum dollar amount an insurance company will pay for a given procedure or service. If a provider has a contract with an insurance company, the provider and the insurance company negotiate an allowed amount for each service or procedure. If a provider has a contract with a health insurance company, then the health insurance company considers the provider in-network and will not charge more than the allowed amount for a given procedure.

Usual, Customary & Reasonable (UCR) – The average charge for a given procedure or service. Typically based on the provider’s local area. If a provider is out-of-network, then there is no contractual agreement on how much he or she can charge for a given procedure. To help manage cost, insurance companies will often process out-of-network claims based on UCR. If the provider’s actual charge exceeds UCR, then the patient could be responsible for the difference between the UCR and actual charge amounts.

Difference Between Co-Insurance and Deductible
If your health insurance company says a covered benefit “applies to deductible and co-insurance,” you must pay the amount of your deductible. Your deductible is a declining balance. You must pay the amount of your deductible before your insurance company begins to reimburse you for medical expenses.

After you have paid your deductible, then you only need to pay co-insurance, or a portion of your medical expenses. Your health insurance company pays the rest. Under most health insurance plans, there is a limit to the amount of co-insurance you have to pay. This is known as an “out-of-pocket maximum.” In general, you pay your deductible and co-insurance directly to the doctor’s office, not to the insurance company.

Co-Pays or Co-Payments
You pay a co-pay (or co-payment) at the doctor’s office. A co-payment is a fixed amount of money that you pay when the doctor delivers (or renders) services to you. Co-pays DO NOT count toward your deductible or co-insurance. Depending on your insurance policy and on the kind of doctor you see, the amount of your co-pay may not always be the same. For example, you might pay a $20 co-pay to see a Family Practitioner, but you might pay a $50 co-pay to see a specialist, such as an Oncologist. In general, if the doctor’s title has “ist” at the end, the doctor is a specialist and not a primary care doctor.

Example In-Network Claim Under UNC System Health Insurance Plan (Deductible Not Yet Met)
If you have not yet met your deductible, the example below illustrates how your claim might break down. The dollar amounts in this example are for illustrative purposes only. Actual dollar amounts will vary depending on the service(s) you receive and the provider(s) you see:

Claim Breakdown Patient Responsibility Insurance Company Responsibility
Total amount of claim = $250 $20 co-pay 0
Deductible Maximum = $200 $200 deductible 0
Co-insurance Maximum = $2000 $6 co-insurance (20% of remaining $30) $24 co-insurance (80% of remaining $30)
Total $226 $24

Explanation of Above Claim
Because you pay a co-pay at your doctor’s office visit, your co-pay is deducted first: $250-$20 = $230. Next, your deductible applies: $230-$200 = $30. Your co-insurance applies next. You are responsible for 20% of $30, or $6. Your insurance company is responsible for 80% of $30, or $24. Therefore your total responsibility is $20 + $200 + $6 or $226.

Example In-Network Claim Under UNC System Health Insurance Plan (Deductible Met)
If you have met your deductible, the example below illustrates how your claim might break down. The dollar amounts in this example are for illustrative purposes only. Actual dollar amounts will vary depending on the service(s) you receive and the provider(s) you see:

Claim Breakdown Patient Responsibility Insurance Company Responsibility
Total amount of claim = $250 $20 co-pay 0
Deductible Maximum = $200 0 0
Co-insurance Maximum = $2000 $46 co-insurance (20% of remaining $230) $184 co-insurance (80% of remaining $230)
Total $66 $184

Explanation of Above Claim
Because you pay a co-pay at your doctor’s office visit, your co-pay is deducted first: $250-$20 = $230. Because you have met your deductible, your remaining balance is $230. Your co-insurance applies next. You are responsible for 20% of $230, or $46. Your insurance company is responsible for 80% of $230, or $184. Therefore your total responsibility is $20 + $46 or $66.

Example Out-of-Network Claim Under UNC System Health Insurance Plan (Deductible Not Yet Met)
If you have not yet met your deductible, the example below illustrates how your claim might break down. The dollar amounts in this example are for illustrative purposes only. Actual dollar amounts will vary depending on the service(s) you receive and the provider(s) you see:

Claim Breakdown Patient Responsibility Insurance Company Responsibility
Total amount of claim = $250 $20 co-pay 0
Deductible Maximum = $200 $200 0
Co-insurance Maximum = $4000 $9 co-insurance (30% of remaining $30) $21 co-insurance (70% of remaining $30)
Total $229 (may be greater if provider’s charges are more than the health insurance company allows) $21

Explanation of Above Claim
Because you pay a co-pay at your doctor’s office visit, your co-pay is deducted first: $250-$20 = $230. Next, your deductible applies: $230-$200 = $30. Your co-insurance applies next. You are responsible for 30% of $30, or $9. Your insurance company is responsible for 70% of $30, or $21. Therefore your total responsibility is $20 + $200 + $9 or $229, but you may owe more money if the doctor charges more for a service than the insurance company allows.

Example Out-of-Network Claim Under University-sponsored Health Insurance Plan (Deductible Met)
If you have met your deductible, the example below illustrates how your claim might break down. The dollar amounts in this example are for illustrative purposes only. Actual dollar amounts will vary depending on the service(s) you receive and the provider(s) you see:

Claim Breakdown Patient Responsibility Insurance Company Responsibility
Total amount of claim = $250 $20 co-pay 0
Deductible Maximum = $200 0 0
Co-insurance Maximum = $4000 $69 co-insurance (30% of remaining $230) $161 co-insurance (70% of remaining $230)
Total $89 (may be greater if provider’s charges are more than the health insurance company allows) $161

Explanation of Above Claim
Because you pay a co-pay at your doctor’s office visit, your co-pay is deducted first: $250-$20 = $230. Because you have met your deductible, your remaining balance is $230. Your co-insurance applies next. You are responsible for 30% of $230, or $69. Your insurance company is responsible for 70% of $230, or $161. Therefore your total responsibility is $20 + $69 or $89.

For questions please contact student-health-insurance@ncsu.edu