Charging Deductibles, Copays and Coinsurance in your Private Therapy Practice.

If you started your career working in a community health center, residential facility, medicated assisted treatment, or group practice, you probably were not involved with charging clients for services. I will admit, it is super convenient to not worry about the money aspect of conducting therapy. These businesses have a billing department that does all of this dirty work. However, when you work for yourself as a private practice therapist you have to wear all the hats; you are now the billing department.

What being the billing department means is that you now have to wade through the muddy reality of your clients’ insurance plans. That would be an easy thing if they were all the same, but they are not. Oh how I wish all people shared the same health insurance plan. But honestly, health insurance plans resemble snowflakes more than they do raindrops. They are all unique to the client, and mysterious in their own way.

To bring some clarity to all this, allow me to provide you with a bit of an orientation.

Bronze, Silver, Gold and Platinum insurance plans

Let’s start with the basics. When an employer or individual picks out a health insurance plan from a health insurance provider, there are levels they can choose from. Many insurance companies rate them on a bronze, silver, gold and platinum spectrum.

Bronze leans more into the idea of less monthly premiums, with higher health care costs later if they come up. The client that has a bronze plan doesn’t pay a lot to the health insurance company monthly, but will likely have a deductible, copay and maybe even coinsurance (more on this below).

On the other extreme, the client that has a platinum level plan probably pays high monthly premiums, but doesn’t pay as much, or maybe nothing at all when they need health care services.

What is a health insurance Copay?

If all you need to worry about collecting is a copay, you can take a deep breath of relief. This is the easiest and best case scenario for collecting fees from your client. A copay is an arrangement between the insurance company and the insured individual, which rules that the individual will pay a fixed amount towards the health care service provided, and the health insurance company will pick up the rest. For example, if you charge $130 for an hour long counseling session, and they have a $25 copay, the insurance company will pay you $105. Keep in mind that a client may have a different copay than their card states, depending on the service. You may need to follow up on which copay is owed to you as a Specialist.

What is a health insurance Deductible?

A deductible complicates the situation a little further. This is an agreed upon amount of money that the individual will need to pay out of pocket before insurance will pay anything. If a client has a $2000 deductible, then all health care providers will charge their full fee, until the deductible number is met. That means it is not only you that is charging them; their dermatologist, primary care physician, and any other specialists they see are all charging full price as well. The way the insurance keeps track of this is slightly complicated. Even though the client has paid you, you still need to submit the claim to the insurance company; this shows them what the client has paid. That is very important!

Another very important thing to know about deductibles— the plan might have both an individual deductible AND a family deductible. If the family deductible has been met, but the individual deductible has not, that means that the client’s deductible has actually been met in theory. Let’s look at an example: Roger has an individual deductible of $2000 and a family deductible of $5000. Let’s say Roger has not yet spent $2000 of his own money on services, but the $5000 family deductible has been met, because his spouse and kids have had a number of doctor’s visits this year. Because Roger’s family deductible has been met, you can stop charging him the full amount — because the family deductible supersedes the individual deductible.

We aren’t done with deductible talk yet. There is a very real chance that once a client reaches their deductible, they will still have a copay or coinsurance. So you will still need to collect money from them, just not as much. You will also need to keep track of where they are in their deductible amount by using the health insurance company’s online services page. This can be a hassle as well. If you use Simple Practice, there is a nifty button on your client’s profile page that says “View coverage report”. This will be your best friend, because it instantly gives you up to date numbers on your client’s health insurance status.

What is a health insurance Coinsurance?

We are talking about co-insurance, not coin-surance.

Coinsurance sounds like it would be nice, like there is another insurance company that is working with the client’s insurance company to pay for the services together. WRONG. The “co” in the coinsurance is the client. This means, that the client is responsible for a percentage of the service, not a set amount like a copay. So if you charge $130 for a one hour therapy session, and the client has a coinsurance requirement of 25%, they are responsible for $32.50, and the insurance company picks up the remaining $97.50.

And here is the part that will really get you, get ready for it…sometimes a client will have a deductible, copay and coinsurance! All of it! As I stated above, once they have paid the deductible then the copay and coinsurance requirement will be activated. You need to calculate the percentage of the coinsurance fee, and then the copayment on top of that. It really can get messy. Luckily, having both coinsurance and a copay is pretty rare.

I know what you are thinking, what if I do this wrong? What if I calculate everything incorrectly? Thankfully, there is a safety net that will catch you in the end if you make a mistake. Since you are required to submit a claim for the service (and that claim is for your entire fee, not for the amount you believe the insurance company is responsible for), the insurance company will mail you back the processed claim that breaks down your fee, what the patient is responsible for, and the amount they are responsible for. Worst case scenario is that you will need to go back to your client and charge them more, sometimes you may even owe your client money.

What is the Out of Pocket Maximum

One more thing (the last thing for now, I promise). The Out of Pocket Maximum or Limit is the most a client is responsible for paying in a single year. If a client has a $10,000 out of pocket max, and they hit that number, they no longer have a copay or coinsurance, the insurance company picks up the entire bill. This is one of the main reasons you want to submit your claim to the insurance company, even if the client has paid the fee in full. The insurance company needs to see that they have paid so they can keep track of this number.

Here’s a flow chart to help you work through your billing.

I do want to congratulate you on your new role as head of the billing department. Think of all the new things you will learn! I know this all feels complicated, but I promise it will become second nature with a little bit of time.

TL:DR

Every client will have a different health insurance plan, you will need to familiarize yourself with it to know how to charge your fees.

Health insurance companies rate their plans on a Bronze, Silver, Gold and Platinum level system. Bronze plans will complicate your life the most as a private practice therapist.

A copay is an arrangement between the insurance company and the insured individual, which rules that the individual will pay a fixed amount towards the health care service provided, and the health insurance company will pick up the rest.

A deductible is an agreed upon amount of money that the individual will need to pay out of pocket before insurance will pay anything.

Coinsurance is an arrangement between the insurance company and the insured individual, which rules that the individual will pay a certain percentage towards the health care service provided, and the health insurance company pay the remaining percentage

The Out of Pocket Maximum or Limit is the most a client is responsible for paying in a single year.