Understanding Insurance Deductibles
We are often asked whether our all-inclusive cash prices can count towards meeting an insurance deductible. The answer is always no, and here’s why.
Insurance companies keep track of your medical expenses according to bills that are submitted by health care providers (doctors, hospitals, pharmacies). These charges are then modified according to the contract that the providers have with the insurance company.
For example, if a patient has Blue Cross insurance, a participating physician may submit a bill for an office visit to Blue Cross for $150. The insurance company will modify the charge based on the fee schedule the doctor has agreed to accept for Blue Cross patients. So in this example, the $150 charge may get lowered to $100. Blue Cross then checks the patient’s policy to determine his/her responsibility. If the patient hasn’t met their deductible, an EOB (Explanation of Benefits) statement is sent to both the patient and the physician explaining that the patient owes $100 to the doctor.
The insurance company will then apply the $100 to the patient’s annual deductible. ONLY CHARGES THAT GET SUBMITTED TO THE INSURANCE COMPANY CAN BE APPLIED TO THE DEDUCTIBLE.
When a patient with a high-deductible health insurance policy decides to pay for surgery “out of pocket”, the payment includes the charges for three providers: the surgeon, the anesthesiologist, and the surgery center. So no bills ever get submitted to the insurance company. The money you pay us is like when you buy an over-the-counter medication at the drug store. Although it is a health care expense, since it doesn’t get submitted to the insurance company it can’t be applied to your deductible.
All patients with high deductible insurance policies save money if they use our cash price. But they also take a chance that if they incur a major medical expense later in the year, the amount they have paid us for hernia surgery will not have been applied to their deductible.
THE DECISION ON USING YOUR INSURANCE POLICY OR PAYING CASH UPFRONT MUST BE MADE BEFORE SURGERY. We need to know before your operation whether an insurance policy will be used. Once surgery is done we cannot refund your upfront cash payment and bill insurance. Likewise, if you have instructed us to bill your insurance, we cannot “un-bill” the insurance and accept a cash payment.
Although the cash payment for surgery cannot ever be used against an insurance deductible, it is ALWAYS an allowable expense for a Health Savings Account. This makes it, in effect, tax deductible.