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Health insurance can be complicated, and not knowing the rules can be expensive

Consumers should ask questions about coverage and medications before seeing a doctor. (Jit Lim/iStockphoto)

The new health-care law has improved a lot of things about health insurance: You can’t be turned down or charged extra if you have a preexisting condition, all types of basic health services are covered, plans can’t cap annual or lifetime benefits, and most preventive care is free.

But your insurance can still be complicated, and if you don’t follow the rules, you can run into gotchas that can cost you an arm and a leg.

(Speaking of rules, open enrollment under the Affordable Care Act is due to end March 31; it is scheduled to resume Nov. 15.)

Orly Avitzur, medical adviser to Consumer Reports, lists five questions you need to answer before you see a doctor.

Is he or she in my plan’s network? That seemingly simple question is anything but. Many practices participate in more than a dozen insurance plans. The list on the health plan’s Web site might not be up-to-date, so it’s best to double-check with the doctor’s billing office, using the exact name of your plan.

Orly Avitzur, medical adviser to Consumer Reports, lists five questions you need to answer before you see a doctor.

What are the limitations and exclusions? All plans must cover “essential health benefits,” such as physicians, hospitals, drugs, maternity care, mental health care, tests, emergency care and rehabilitation, but specifics might vary. You’ll find those details in the standardized “Summary of Benefits and Coverage” form that all plans must supply. Look to see if any services have limitations (such as a ceiling on physical therapy visits) or aren’t covered at all (such as acupuncture, dentures or hearing aids).

Do I need a referral or prior authorization? With many HMOs, you need to get approval from your primary-care physician to see other doctors or obtain certain tests or procedures. If you don’t, the plan won’t pay. Don’t wait until the last minute, because offices are inundated with requests.

Will this test be covered? A common reason for a claim denial is that an insurance company deems a service “not medically necessary.” You can save yourself an unwanted bill by checking ahead of time with the insurance company and your doctor’s billing office. Keep detailed notes on whom you spoke with and what they told you.

How will my medication be covered? Every health plan has its own formulary, or list of preferred drugs, typically organized into as many as four tiers in ascending order of price. Tier 1 usually includes generic medication. You’ll probably be required to pay more for a prescription when a higher-tier, brand-name product is dispensed. When starting a new drug, check your plan’s formulary to see what tier it’s in. If it’s expensive, ask your doctor or pharmacist if a similar drug in a lower tier would work as well.

Four payment terms you need to know

You’ll pay your share of health-care costs in the following ways:

Out-of-pocket limit. This is the most you’ll have to spend from your own pocket for medical care in the policy year. Once you hit that limit, your health plan will pick up 100 percent of any additional costs until year’s end. The maximum allowable “OOP” for 2014 is $6,350 for an individual and $12,700 for a household.

Deductible. This is the amount you must pay for covered services each year before your insurance kicks in. Details may vary: One plan might have a single deductible for everything, while another might have a separate one for prescription drugs. With some plans, not all services are subject to the deductible.

Co-payment. This is a flat amount (for example, $20) that you pay for a covered health-care service.

Coinsurance. This is your share of the cost of a covered service. With 20 percent coinsurance, for instance, if a CT scan costs $1,000 and you’ve met your deductible, your share of the cost will be $200.

Copyright 2014. Consumers Union of United States Inc.

For further guidance, go to, where more detailed information, including CR’s ratings of prescription drugs, treatments, hospitals and healthy-living products, is available to subscribers.

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