One of the biggest and most common shocks for many Vietnamese people when living in the US is the bewildered question: “Oh, I already bought health insurance, but why do I still have to pay extra to go to the doctor?”
The core reason is because health insurance in the US is absolutely not like a completely free passport.
Its nature is a civil contract to share costs between you and the health insurance company.
- You are responsible for partial payment.
- The insurance company is responsible for partial payment.
However, the story of how much you have to pay, when to pay, and which specific service category to pay… depends entirely on many strict terms in the insurance package you own.
If you choose not to learn these basic terms, you will easily fall into a passive position and be extremely surprised when you continuously receive bills demanding money after going to the doctor, taking blood tests, taking pictures, buying medicine, or performing medical procedures.
In the American healthcare system, the final cost of a visit is not always clear the moment you walk out of the clinic. It is a comprehensive problem that depends on: what your insurance plan is, how much is this year’s remaining deductible limit, whether the service is covered, whether the medical facility you go to is in the in-network network, whether prior authorization is required, and how the claim is then handled by the insurance.
Therefore, you should take some quiet time to read and clearly understand the basic terms below to always be in control of your family’s financial decisions and plans.
1. 12 American health insurance terms you must know before going to the doctor
1. Premium – Monthly payment for insurance package
Premium is a fixed amount of money you are required to pay out of pocket regularly to the insurance company to maintain the validity of the contract. You can understand simply: this is the cost to buy and own an insurance package. However, completing the monthly premium payment does not necessarily mean that all subsequent medical services will be free.
2. Deductible – The amount of deductible you must pay yourself in advance
Deductible is the minimum out-of-pocket amount you must pay out-of-pocket for eligible medical services up front before the insurance company initiates contractual cost-sharing.
Practical example: If your deductible is set at $2,000/year. This means that during that year, you must pay all of your medical bills yourself until the total amount reaches $2,000. From the 2,001st dollar onwards, insurance will begin to pay you.
This is the reason why there are people who clearly have insurance cards in hand, go to the doctor, get tested or get an MRI and still receive extremely high bills. This situation occurs not at all because your insurance is “ineffective”, but simply because you have not yet paid the deductible limit for that year (have not yet met the deductible).
3. Copay – Fixed cash amount for each service use
Copay is a fixed fee in cash that you are obliged to pay at the counter every time you use a specific medical service. You can imagine copay as a mandatory “entrance ticket” fee.
The normal copay fee will fluctuate depending on the specific regulations of each insurance company, for example:
- See your family doctor (PCP): $25
- See a specialist: $50
- Visit an emergency care center (Urgent Care): $75
- Hospital emergency room (ER) walk-in: $300
Important note: In many clinical cases, after you have completed paying the copay at the counter, you may still have to receive an additional bill to pay other costs later, especially if during that examination the doctor prescribes additional tests, imaging, or specialized procedures outside the covered list of the basic copay fee.
4. Coinsurance – Cost sharing percentage
Coinsurance is completely different from copay. If copay is a fixed cash figure, coinsurance is calculated as a percentage of service costs.
Practical example: Your insurance package stipulates a coinsurance level of 20%, meaning the insurance company will pay 80% of the bill, and you are responsible for paying the remaining 20% yourself. If the total cost of medical services that day is valued at $1,000, then the coinsurance portion you have to pay yourself will be $200.
5. Out-of-pocket maximum – Maximum payment ceiling during the year
Out-of-pocket maximum is the maximum out-of-pocket limit that you must pay out of pocket within a year for all eligible medical services according to the regulations of the insurance package.
Practical example: If the plan’s out-of-pocket maximum is $6,000. Once you have accumulated and paid the full $6,000 in expenses for the year, the insurance company will be responsible for paying 100% for all of your remaining eligible medical services for the remainder of that year.
Some strategic notes: There are categories of costs that absolutely do not count toward this maximum out-of-pocket number, including:
- Premium monthly payment.
- Medical services not eligible according to package terms (For example: cosmetic surgery according to individual needs…).
- Some costs arise when you go out-of-network.
Therefore, when reading an insurance contract, don’t just look at the out-of-pocket maximum number, but need to clearly understand which expenses are included and which are excluded.
6. In-network – The system is in a linked network
In-network is a term that refers to a collection of doctors, hospitals, laboratories, imaging centers or pharmacies that have signed a contract binding service prices with your insurance company. Choosing to use in-network services always brings cheaper prices and is much better covered by insurance than going out of network.
Before making an appointment for a medical examination, blood test (lab), MRI scan, surgery or using any non-emergency medical service, always proactively ask the counter staff a common question: “Is this in-network with my insurance?” (Is this facility/Doctor in my insurance network?)
7. Out-of-network – The system is outside the linked network
Out-of-network means that the medical facility or doctor does not have any affiliated contract with your insurance company. Choosing to go for an out-of-network examination can be extremely expensive. In many cases, the insurance company will only pay a very small percentage, or outright refuse to pay completely.
Many Vietnamese people in the US have to endure horribly high medical bills not because they used any special services, but simply because they mistakenly went to facilities outside the insurance network.
8. PCP (Primary Care Provider) – Primary care doctor
A PCP is a doctor responsible for your overall health care and management. A PCP can be a family doctor (Family Medicine), a general internist (Internal Medicine), a pediatrician (Pediatrics) for young children, or can be a Nurse Practitioner or Physician Assistant.
Some types of health insurance in the US (such as HMO) require you to register for a fixed PCP. And all your health problems have to go through this primary care doctor first.
9. Referral – Referral letter for specialized referral
A referral is a medical document approved and sent by your primary care physician (PCP) to refer you to a specialist – such as cardiology, gastroenterology, dermatology, neurology… when the condition is beyond general treatment.
Many strictly managed insurance packages require this referral document to be considered valid and pay for specialist examinations. If your insurance package requires a referral and you arbitrarily schedule a visit to a specialist, the insurance will refuse to pay and you will have to pay the entire bill yourself at a very expensive price. Therefore, before going to see a specialist, always check to see if your package requires a referral procedure or not.
10. Prior authorization – Prior approval process from insurance
Prior authorization (also known as pre-authorization) means that the insurance company requires a prior application approval process before they agree to pay for a specific drug, an in-depth test, or indications for MRI, CT, or surgical procedures.
This is the reason why in clinical practice, there are many situations where the treating doctor has clearly prescribed a medication or indicated a procedure, but the pharmacy or clinic still cannot carry out the procedure immediately for the patient, because everyone has to wait in line for the insurance board to review the medical records and issue an approval code.
11. Formulary – List of drugs covered by insurance
Formulary is a list of all drugs corresponding to each group of diseases that are prioritized by insurance companies for payment.
Treating the same disease, but maybe drug A is on the priority list and will be covered very well by insurance (cheap price), drug B is only supported a small part, and drug C is completely refused or requires complicated prior authorization procedures.
Therefore, when you go to the pharmacy to get medicine and are told the price is too high, do not rush to think that the doctor deliberately prescribed expensive medicine to profit. In fact, it may be because the drug is not on the formulary list of the insurance plan you are using.
At this time, you or the pharmacist can proactively call the insurance company to ask clearly: “My medication is too expensive. Is there a covered alternative?” (My medication is too expensive. Are there other equivalent drugs that are better covered by insurance?) to notify the doctor to change the appropriate prescription.
12. Prescription drug coverage – Prescription drug coverage benefits
Benefits paid for prescription drugs are completely different between drug lines. The insurance system often classifies drugs into tiers: drugs with low copays, drugs with expensive prices, drugs that require prior approval, or drugs that require you to go through a step therapy process (meaning you are required to try conventional drugs first, if clinical evidence proves ineffective, the insurance will allow you to switch to stronger and more expensive drugs).
At the same time, some insurance plans only pay if you go to the correct pharmacy within their affiliated network. If you are a person who must use medication for long-term treatment, carefully read the prescription benefits section in your contract.
You can also ask your pharmacy or insurance directly two strategic questions:
- “Is this medication covered?” (Is this medication covered?)
- “Is there a preferred alternative?” (Is there an alternative that is better covered by preferred insurance?)
2. Analyze real-life examples: Cost problem when going to Urgent Care
To help you easily connect and visualize how the above terms operate, let’s analyze a specific hypothetical scenario below:
You have a severe sore throat and decide to go to an in-network Urgent Care clinic for a checkup. Your current insurance package structure has the following financial parameters:
- Premium (Monthly fee): $400/month
- Deductible (Annual deduction): $2,000
- Copay Urgent Care (Over the counter fee): $75
- Coinsurance (Share rate): 20%
- Out-of-pocket maximum (Year ceiling): $6,000
When entering the clinic, your actual expenses will be analyzed and processed according to the following cases:
- Fixed amount: You must immediately pay $75 copay at the counter to see the doctor.
- Case 1 (If you have NOT paid the full $2,000 deductible for that year): After the examination, the doctor orders an additional throat swab test to look for bacteria. Because you have not yet met the deductible, you will have to pay the entire cost of that test yourself according to the insurance’s negotiated price.
- Scenario 2 (If you HAVE paid the full $2,000 deductible for that year): You will no longer have to pay for the full testing package. Instead, you only have to pay the exact 20% coinsurance rate of that test fee (For example, if the test fee is priced at $100, you pay $20 yourself, insurance pays $80).
- Case 3 (If you HAVE reached the $6,000 out-of-pocket maximum for that year): You can completely rest assured because the insurance system will automatically pay 100% of the entire cost of the Urgent Care examination and testing that day, you do not have to pay any additional money out of pocket.
3. Action roadmap today to protect your health and wallet
To never have to fall into a passive position or be confused by medical bills, the most practical thing you should start doing today is to find insurance card or log in to your insurance account to clearly check the following 5 strategic items:
- What exactly is my Deductible limit, and how much have I paid out of pocket so far this year?
- What is the specific Copay fee for each route: family doctor (PCP), specialist, urgent care, and emergency room (ER)?
- What percentage of Coinsurance do I have to bear?
- What is the maximum Out-of-pocket limit for the whole family this year?
- Which list of doctor systems, hospitals, testing labs and imaging centers in the area you live in is in the In-network category?
Firmly grasping these indicators is the golden key to help you reduce surprises, eliminate confusion and always make the smartest medical and financial decisions when going for medical examinations, tests or treatment procedures in the US.
The American medical system is very modern, but owning an insurance card here does not mean you are entitled to free health care. Thoroughly understanding how health insurance operates is the best and most proactive way for you to fully protect both your physical health and the safety of your family’s wallet.
What do you think about these health insurance facts and terms in the US? Has your current insurance plan ever surprised you with a bill? Please leave a comment below to share your perspective with me.
If you feel this article brings practical and useful knowledge to the community, please share it widely with your friends and relatives!
Dr. Christina Nguyen
The Phoenix Medical Academy
