What is a Deductible?
Main Points
A deductible is an amount that your patient owes before insurance benefits kick-in
Your patient needs to pay the deductible amount
Explain the deductible in terms of patient responsibility
Let's say you are in-network with an insurance company and you get a patient that fits your ideal client! You decide to check their eligibility to see what they will owe for your sessions and it turns out that they owe a deductible.
You feel stuck because no one told you what a deductible is or how it works. Typically, your patients only owe a copay or coinsurance, so why does this patient owe a deductible instead?
This blog is meant to help you understand what a deductible is and how you can explain a deductible to your patient in the clearest terms possible.
So, what is a deductible?
A deductible is a predetermined amount of money that your patient owes before their insurance pays anything.
Let's break down what we call the Three Tiers of Benefits
Tier 1: Your patient pays 100% of the session
Individual Deductible: This is the amount that your individual patient owes before the insurance benefits pay. This amount is usually $1,000.00 to $5,000.00 dollars. Once your patient meets this, then they can move on to tier 2
Family Deductible: This is the amount that the family as a group needs to meet in order to move on to tier 2. If the family meets this amount, then every member of the family moves on to tier 2, even if the individual deductible has not been met.
Tier 2: Your patient pays PART of the session
Copay: Copays are a fixed amount that your patient pays for services. This number is a nice clean number. Usually, a copay amount is $25.00 or $20.00 per session.
Coinsurance: Coinsurances is a variable amount that your patient pays based on your contracted amounts. This is a little more confusing. Let's say BCBS pays $123.45 for a 60-minute session. Your patient has a 10% coinsurance for that service.
Your patient would then owe $12.34 for each 60-minute session that you have. This requires that you know your contracted rates for each service you provide for each insurance.
Tier 3: Your patients pays 0% of the session
Individual Out of Pocket Maximum: This is the maximum amount that your patient will pay for healthcare services in a given benefit time period. Once your patient meets this figure, then they will owe 0% of covered healthcare expenses for the rest of the benefit period.
Family Out of Pocket Maximum: This is the amount that the family as a group needs to meet in order to be covered at 100%. If the family meets this amount, then every member of the family is covered at 100%.
By now you are probably thinking, "This is convoluted. Does my patient really need to pay that amount in order to see me?"
The answer is a resounding YES!
Your patient needs to pay the deductible amount.
If you are in-network with an insurance company, then you need to collect the deductible amounts and the copay amounts from your patients. It is important that you do that for several reasons:
Collecting from your patients helps with cashflow
Collecting from your patients is a contractual requirement
Collecting from your patients helps to control premiums in your area
Collecting from your patients communicates that your services are valuable
Collecting from your patients is a normal part of providing healthcare services
"Okay, great! But how am I going to explain to my patients that they owe this big amount?"
Great question!
Explaining how healthcare benefits work is the foundation of getting patients to pay for services. If patients understand how their healthcare works and have a clear expectation for what they are going to pay, they will more than likely pay without question.
If patients feel confused about what they owe then they will be frustrated by the process, so the first step in the process is for you to understand how this works so that you can explain it to patients.
Here are some clear tips on how you can explain benefits to patients in a way that helps them understand their benefits and pay for your services:
Have a written explanation of what each term means (psst feel free to steal the content in this blog to help out)
Check eligibility and benefits for each patient that you agree to take on and have a clear understanding of their benefits
Take a few moments at the beginning of the session to review how the claims are processing and what amounts the patient owes
Have a payment method on file for the patient so that you can charge the correct amount
Have written policies and procedures in place that clearly demarcate what the patient's responsibility is for paying for services
In rare cases, have a payment plan in place to help cover the deductible amount
In rare cases, have a financial hardship policy in place to help cover sessions
