Information Resources

Definitions

Deductible is the amount of covered expenses you must pay out of your pocket each calendar year before the plan begins to pay benefits.  Most plans have different deductibles for in-network and out-of-network providers.

Coinsurance is the percentage of covered expenses you must pay when you receive medical care. For example, in some health plans, you may pay 15 percent of the cost for most procedures and the plan covers the remaining 85 percent.  The coinsurance amount you pay is after you have met your deductible for the calendar year. 

Out-of-pocket maximum is the most you pay out-of-pocket in a calendar year for eligible medical expenses.  Both your coinsurance and your deductible expenses count toward your out-of-pocket maximum.  If you reach the out-of-pocket maximum, the plan pays 100 percent for most additional eligible expenses for the rest of the calendar year.  Most plans have separate out-of-pocket maximums for in-network and out-of-network charges. 

Copayment is the fixed dollar amount you must pay for care.  For example, in some health plans, you may pay a small copayment of $10 to $20 for an office visit to an in-network provider. Copayments are usually  collected at the time you receive services. 

Network providers have agreed to charge fees that are at or below your medical plan's allowable amounts.  Therefore, if you visit network doctors and hospitals, you will not have to worry about being billed for amounts above allowable limits. 

Out-of-network providers have not agreed to keep their charges within your plan's allowable amount and may charge any amount for services or supplies.  If you visit an out-of-network provider, you are responsible for paying any amount above your plan's allowable amount for the services or supplies you receive.  In addition, you'll pay your normal copayment or coinsurance.  Charges above your plan's allowable amount do not count toward your deductible or out of pocket maximum. 

Understanding Deductibles: The First Step in the Formula

Individual and Family Deductible

Purdue’s medical plans have both individual and family deductibles. As each covered member in a family has medical charges, the expenses are credited to both the person’s individual deductible and the family’s combined deductible. If a family member satisfies his or her individual deductible before the family deductible is met, the plan will start paying benefits for that family member. When the rest of the family then has enough combined additional expenses to meet the remaining portion of the family deductible, the plan will begin paying benefits for the rest of the family. Here’s an example based on the Incentive PPO in-network deductible.
 

When Expense Occurred:	Who/Charge:	Individual Deductible Equals:	Family Combined Deductible Equals:
January	Jim — $100	Jim’s = $100	$100
February	Mary — $50	Mary’s = $50	$150
March	Kathy — $400	Kathy’s = $400 *	$550
April	Bobby — $50	Bobby’s = $50	$600
May	Mary — $200	Mary’s = $250	$800 **

*In March, Kathy meets her $400 in-network individual deductible, so the plan begins paying on her future in-network charges, even though the family deductible has only reached $550—well below the $800 needed.

**By May, the rest of the family has added enough expense to meet the $800 family deductible, so the plan begins paying benefits on future in-network charges for the entire family.

Note that one person cannot satisfy the entire family deductible on his or her own, and here’s why: The plan will begin paying benefits on the person’s future expenses once the person reaches the individual deductible. If benefits are paid on an expense, it cannot count toward the deductible.

In the example above, one family member meets her individual deductible before the family deductible is satisfied. However, the family deductible can be met without anyone satisfying an individual deductible. For example, under the Incentive PPO’s $800 in-network family deductible, the family could meet the deductible through the following combination of expenses:

Jim	$350
Mary	$100
Kathy	$250
Bobby	$100
Total	$800

None of the family members has reached the individual deductible of $400, but the plan will now begin paying benefits on the whole family’s future in-network charges because together they have met the family deductible.

In-Network and Out-of-Network Deductible

The deductible is the amount of doctor bills, hospital bills, and bills for other covered medical services that you will pay before the medical plan begins to pay benefits. The Incentive PPO has a lower deductible for in-network charges and a higher one for out-of-network charges. The in-network annual deductible is $400 per individual or $800 per family. The deductible doubles to $800 per individual or $1,600 per family for out-of-network charges.

So, does this mean you really have to satisfy a $1,200 individual deductible if you use both in- and out-of-network providers? Certainly not! The two deductibles coordinate. To better understand this two-deductible arrangement, let’s take a closer look, using the individual deductible as our model. Under the arrangement, covered expenses from both in-network and out-of-network providers count toward your individual deductible until you reach $400. Once you reach this level, the plan begins paying benefits on your future in-network charges.

Future out-of-network charges, however, continue to go toward satisfying the rest of your out-of-network deductible. Benefits for out-of-network charges are paid only when you accumulate another $400 in eligible out-of-network expense, thus meeting your $800 out-of-network deductible.

You can see that when you reach $400 in deductible, using an in-network provider is to your advantage because the Incentive PPO plan will pay a benefit on the charges.

Making Your Health Care Decision

When deciding which plan best meets the needs of you and your family, you have several things to consider.  Think about the following questions as you decide which plan is best for you.  

Cost

• How much premium will be taken from your paycheck?
• What do you have to pay for a primary care office visit?
• How much do you anticipate paying out of your pocket under each medical plan after benefits are  paid?
• Will you have the potential of being charged more than your medical plan's maximum allowable charge (MAC)?  

Providers

• Are your doctor and your hospital in the medical plan’s network?
• If not, are you willing to change to a doctor or hospital that is in the network?
• If your provider is not in the network, are you willing to accept a lower benefit to continue using the provider if he or she does not agree to join the network

Flexibility

• Does the medical plan let you go in- and out-of-network?
• Do you need a referral to go to a specialist?
• Do you have to choose a primary care physician (PCP) to manage all your care?
• Is the network nationwide? 
  (This is helpful if you travel or have covered dependent children going to school out of the area.)
• How much paperwork are you willing to do?  

Primary Care Physicians - Who Needs One?

Incentive PPO gives you a special benefit for in-network office visits with a primary care physician (PCP).  Purdue 500 gives an incentive for office visits with a PCP in UnitedHealthcare Options (West Lafayette, Calumet, North Central only) or Signature Care or Encore (Fort Wayne only).

But even if your benefits are not affected, you should consider having a PCP.  Contacting or seeing a primary care physician before you see a specialist can usually help you get the right type of care without wasting time or money.  If you're having a problem that you think requires a specialist, your primary care doctor can confirm if a specialist is needed and which kind of specialist with your medical history and other background.

Primary care physicians typically include family practitioners, internists, pediatricians, and OB/GYNs.  Their training prepares them to focus on a patient's overall health, as opposed to the health of only a specific part of the patient. Because of this training, your primary care physician can develop a broad understanding of your whole medical history and help guide you through the complex maze of medical services.

By developing a relationship with a primary care physician, you will have a partner familiar with your background, needs, and personality should you ever have a serious illness or injury.  Primary care physicians can help identify the most appropriate specialist for a particular condition, help coordinate care among multiple specialists, watch for potential harmful drug interactions, and provide appropriate follow-up care.

In-Network or Out? It's Your Responsibility to Know.

All of Purdue's medical options include provider networks, making it important for everyone to be aware of which doctors are in their medical plan's network and which are not.

If your doctor is in your network and needs to refer you, in most cases he or she should refer you to specialists or hospitals that are in your network so that you'll receive higher benefits.  However, a referral from an in-network doctor is no guarantee that the specialist belongs to your plan's network.  And networks change throughout the year with providers joining and dropping out.  It is your responsibility to confirm whether a doctor belongs to the network serving your plan. 

Generic vs. Brand Name Drugs

You probably know by now that brand name drugs usually cost much more than their generic equivalents. In fact, brand name drugs can cost three to ten times as much as generic drugs. 

The question most people have is, “Are generic drugs comparable to brand name drugs?” The answer is, “yes.” Generics are simply drugs that have previously been marketed under brand names, but the manufacturer’s patent has expired. These patents typically expire after 17 years. This means that the drug has at least 17 years of clinical data behind it. The expiration of the patent allows other manufacturers to make and market the drug, without the expense of development and advertising costs.

The U.S. Food and Drug Administration (FDA) requires that each generic drug contain the same key active ingredients, strength, and dosage form as the brand name version. Generic drugs must also pass the same FDA standards for quality and clinical effectiveness. A critical factor in evaluating a drug’s therapeutic value is the rate at which it’s absorbed into the blood stream. A generic drug must absorb as quickly as the brand name drug and must act the same way in the body and have the same effect as the brand name version.

Need to Find a Doctor?

Everybody wants a doctor whose services are convenient, not too expensive, and of top medical quality.  But how do you find one?

Step One

Select the kind of doctor you want.  If you want a generalist who can be a “family doctor” for you and your family, look for someone who is certified in family practice, general practice (GP), or internal medicine (internist).  Other logical choices for different family members are OB/GYNs for women and pediatricians for children, or a particular specialist for patients with major chronic illnesses.  Your primary care physician can help you with finding an appropriate specialist.

Step Two

Find a few to choose from.  Managed care networks can actually make finding a doctor easier because they provide lists of doctors in your area.  The lists are usually divided by specialty.  These doctors have also agreed to offer their services at negotiated rates so, if you are enrolled in their network, you know you’ll get cost-effective care.  You can narrow the list by location, by asking friends for recommendations, or by asking doctors or nurses that you know.  Most provider directories are now available over the Web, which makes narrowing your search much easier.

Step Three

Call the office of the doctors you are interested in and ask the staff about the doctor’s qualifications and the convenience and costs of the care.  Tell the receptionist that you are trying to find a new regular doctor.  Ask if the doctor is accepting new patients.  If so, then ask a few questions:

• Ask qualifications questions to help you learn about the doctor’s specialty, medical education, residency, years of experience, board certification, and hospital admitting privileges.
• Ask convenience questions to determine office hours, average wait time for an appointment, how coverage is arranged for evenings, weekends, and holidays, and if the doctor will discuss problems over the phone.
• Ask cost questions to ensure that your doctor is still participating in your network plan and, if you require a specific procedure, ask the cost of that procedure.

Step Four

Talk with the doctor.  Ask if you can schedule a “get acquainted” appointment and if there is a charge for it.  Use the visit or phone call to ask questions, share your medical history, and get to know the doctor’s personality and bedside manner.  Take a list of questions with you so you’ll be sure to cover all the points that are important to you.