Insurance is complicated. I doubt many people in this world would claim otherwise. But, regardless of how complex it is to understand or figure out, the fact is that you are responsible to understand it.
After all, let's envision the following conversation between a customer and an insurance agent.
Customer: I see that you denied my claim.
Insurance company: That's correct, we did. You weren't eligible for coverage on that procedure.
Customer: But I didn't understand the coverage.
Insurance company: Oh, well then in that case, we'll go ahead and approve it.
If it's hard to picture that, it's probably with good reason. It never, ever happens!
Jacob from My Personal Finance Journey recently wrote an article outlining a situation requiring medical attention which took place while he and his family were on vacation. Because he took the time up front to know what his insurance covered in that circumstance, he was able to make choices which provided the best care and did so at basically no cost.
Had he not understood what his insurance offered, the outcome could have been much different. He could have chosen care that might not have been covered, and we all know that situations like that could see costs run into the thousands of dollars.
Instead, he spent a grand total of $8.
So, do you think it might be worth it to understand your insurance.
Example of Understanding Your Insurance Coverage
Here are some personal example of how understanding our coverage in various instances has either led to us changing our coverage, making informed decisions, or working with providers.
- Homeowners insurance coverage defaults – For the first couple of years that we lived in our house, we had default coverage. When I started looking into the line items that went outside of covering our dwelling, I found out that I was uncomfortable with some of the limits pertaining to water backing up in our basement or coverage if someone got injured on our property. I made some adjustments at a small cost that now will give us better coverage in the event of either of those situations.
- Wisdom teeth diagnosis – Several years back, I was having jaw pain, and my dentist diagnosed that I needed my wisdom teeth out. They filed it under an exam charge. Since my coverage allowed for two exams per year, this meant that my second preventative visit of the year wouldn't be covered. I worked with my dentist to re-file the claim under a different code that allowed me to get payment on that claim, as well as get all preventative work that I needed.
- Urgent care vs. ER – Our daughter recently needed stitches, and since I understood the costs involved with an urgent care visit versus and ER visit, I was able to get her good care at a more affordable price, and probably save her the stress that would have come from the ER.
- Current dental coverage understanding – Our current dental coverage is pretty bare bones. It's pretty low cost to us, but the limits and coverage are pretty light compared to any coverage I've had. However, I didn't know some of the specifics as the plan information was pretty vague. I spent five minutes on the phone and now understand things that will let me schedule visits and know what things we can and can't get done in terms of being covered. For example, I've always had coverage which included x-rays at each preventative visit. Our current coverage only allows for those once per year. We'll either have to decline on the second visit or the year or pay out of pocket. Not spending the time to know this could have resulted in a big charge from my dentist that I wouldn't be prepared for
How Do You Figure Out Your Insurance?
- Reading through the insurance materials.
- Talk to your insurance agent (if applicable)
- Talk to the insurance company
- Talk to your HR group (if it's company sponsored insurance)
- Use the internet. Online has a lot of great information. But, since it also has a lot of bad information, you should verify everything you learn using this method.
As you can see, understanding the nuances of your insurance is complicated, but it's a necessary thing that you alone are responsible for. Properly understanding your insurance can save you time, money, and give you peace of mind.
I'd say those are pretty worthwhile things, so understanding your coverage is time well spent.