Under ObamaCare, one of the good things is that it caps an individual out of pocket amount at a preset maximum, and you have a bad year, you know your worst-case scenario up front.  While plans with out-of-network coverage are harder to find, some people  still have them, and they mask a nasty surprise…

As long as you are in-network, your maximum out of pocket is set.  But if you go out of network, you have to look closely at how the plan pays.  Lets take as an example a plan that pays 60% for out of network coverage, after a deductible, and has a $10,000 maximum out-of-pocket cap.  What exactly is the 60% reimbursement based on?  There are a number of ways companies do this, but most common are two twists based on the Medicare Reimbursement Rate.  So if the plan pays based on 150% of Medicare, are you really getting 60%?   Probably not.

Looking at national averages, I looked at one common surgical event, where the MD and facility charges were $10,000.  Medicares allowable rate of reimbursement is $3530 for the same procedure, so the 150% rate would be $5,295.  The plan would pay 60% of THAT number, or $3,177 – 31%.  “For example, we know that if the individual enrolled in single coverage incurs a $75,000 inpatient out-of-network retail bill, the individual could easily end up owing the hospital and providers an amount vastly exceeding $10,000 (even after the insurer or administrator attempts retrospective negotiation).”

Remember that when you buy out-of-network coverage, you are paying (a lot) extra, for the right to go out of network and spend (a lot) more money.

Given that 85% of all employees have claims under $2000 per year, does paying a lot of extra premium make sense given all the facts?  Not usually.