Deductibles may be the most confusing, annoying, and disruptive part of working with any client who seeks reimbursement from their insurance. So even if you have never signed a contract with an insurance plan, this is stuff EVERY therapist should know.
What’s a deductible? This is the amount that a client with insurance has to pay out-of-pocket before the plan pays a dime.
Do all plans have deductibles? Thankfully, no. This is more common if a client sees an out-of-network therapist (one who has NOT signed a contract with the health plan), but many plans have a deductible for all providers.
What’s changed? When I started in practice, deductibles were usually $100, maybe $250 at the most. But lately I have seen clients with $1000, $3000, even an $8000 deductible. This coverage is great if you get hit by a bus, but not so great if you have a garden-variety mental or physical illness.
Why the increase? As health care costs have risen, and more Americans now have insurance coverage thanks to the Affordable Care Act, insurance plans have developed this way to shift the cost of health care to their members. Coupled with ever-increasing premiums and larger copayments (sometimes $50 or $60), therapy is becoming much more expensive for clients with insurance.
Why are deductibles so important? Let’s look at an example. Let’s say that you are a network provider with the client’s health plan, which pays you $100 per session. Your client pays her $20 copayment at each session. At the end of the month, you submit a claim for four sessions. When the Explanation of Benefits (EOB) arrives two weeks later, you get no payment because it has all gone toward the client’s deductible. After a bit of research, you find out her deductible is $1500. This means thatt the first 15 sessions are not going to be covered by insurance at all, a fact you would have known had you contacted the insurance before the start of therapy.
Now six weeks into treatment, you turn to your client to pay the $480 balance for the 6 sessions you’ve had by now ($100 x 6 sessions minus the $20 copay she paid at each session). Plus she tell her that she will have to pay out of pocket for the next nine sessions.
At the very least your client may be ticked off to get this big bill. Even worse, your client may not be able to pay you — at all. The client may be forced to drop out of treatment. Or your client may have already ended treatment, making it harder to collect.
There’s more. As a network provider, the plan will only count your $100 contracted rate toward the deductible – you cannot charge the client your usual rate for any session you have with this client. And you still have to submit claims, even though you won’t be paid — this is because submitting claims is the only way to reduce the client’s deductible so that eventually future claims will be paid.
What if my client is out-of-network, and pays in full when she comes? Let’s say she submits the bill to her insurance plan, and finds out when the claim is processed that the plan won’t reimburse her for 10 sessions because of the deductible. She may have counted on this reimbursement when choosing to see you. So she might be annoyed that you didn’t give her a heads up about this important information ahead of time. And if she isn’t going to be reimbursed, she may be unable to continue treatment.
And to make it more complicated, if your client is seeing other healthcare providers, their bills are being credited to the deductible at the same time. So sometimes the deductible is used up by other providers before you expect it, and suddenly, the health plan may surprise you by paying your claims. In this situation, be prepared to give refunds to your client, as needed.
Just to make this more annoying, remember that clients typically have separate in-network and out-of-network deductibles. So even if they have gone to a lot of medical visits during the year, they may have been charged to the other deductible bucket, depending if they saw in-network or out-of-network providers.
One final complication: The deductible usually starts again at the end of the calendar year. This means when your client finally uses up her deductible, and will need to start paying out of pocket again in the New Year.
The good news? Sometimes when other members of a family have a lot of health visits, the shared family decidable may have used up, and your client may not be required to meet their individual deductible.
Have I completely confused you yet?
My advice? Remember that even if you’ve never signed a contract with an insurance plan, this deductible stuff applies to your clients, too. This is one reason I STRONGLY advise ALL therapists to check coverage BEFORE the first session. I advise getting insurance information on the first phone call, and always told my clienst that I wanted to be sure there were no surprises for them down the line. After this call, I was then able to inform a client if there would be no reimbursement for the first session(s). Then your client can decide if they can afford treatment – and you won’t be stuck trying to collect for an unpaid session.
When you call the health plan, you will need to ask numerous questions, including whether the client has a deductible, how much it is, whether the deductible varies by diagnosis, how much of the year’s deductible has been used, etc.. In my book, Navigating the Insurance Maze, I’ve included a helpful worksheet outlining 6 questions you should ask clients about their plan, and 13 essential questions to ask the plan when checking coverage. This Checking Coverage handout is also part of my Practice Forms Packet..
To learn more about handling insurance issues like this that EVERY therapist should know, check out my book Navigating the Insurance Maze: A Therapist’s Complete Guide to Working with Insurance – And Whether You Should.
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