What Does a ‘Covered’ Healthcare Service Mean?

You’ve probably heard the phrase “I’ve got you covered” before. It means someone is looking out for you, providing support, and even protecting you.

You can use this as a baseline for understanding what health insurance coverage is. Generally, it means that your health plan provides support to help you pay for healthcare and protects you from big medical bills. But when we say a medical service, prescription, or treatment is “covered” – what does that mean exactly?

Common misconception

Many believe that having something “covered” by health insurance means it’s completely free – but that is not the case. It does not always mean that the service will be paid for 100%.

What does covered healthcare REALLY mean?

Covered healthcare services mean that insurance will pay for some of it (you’ll pay a reduced price) – or all of it. There could be some cost-sharing involved or, in other words, out-of-pocket expenses like your deductible. But keep in mind that you pay less for covered, in-network healthcare even before you meet your deductible because insurance companies negotiate lower rates with in-network providers.

Generally, negotiated rates are below full price for medical fees and reduce what you have to pay out-of-pocket when you are treated by in-network doctors and hospitals. Think of health insurance companies as your advocates, ensuring you get care for a lower cost and that unnecessary price increases are kept in check.

Coverage examples:

Scenarios will vary based on your plan type.

• Scenario 1: Urgent care is covered under your health plan, but a copay still applies. A copay is an out-of-pocket expense. If the copay is $75, you have to pay this amount – usually at the time of service.
• Scenario 2: Your foot x-ray is covered under your health plan, but you haven’t met your deductible yet – or paid anything toward it this year. A deductible is an out-of-pocket expense. If your annual deductible in this case is $1,000, and the cost of this covered X-ray is $200, you will need to pay $200. What makes this service covered is that you are paying the lower rate negotiated by your insurance company ($200), and the cost counts toward the annual deductible. Now $800 would remain to be paid by you for future services before insurance starts to pay its share.
• Scenario 3: Hospital stays are covered under your health plan. You were unexpectedly in the hospital for three days after a car accident. The average cost of a three-day hospital stay is around $30,000 dollars. If your plan has a $3,000 dollar out-of-pocket maximum, then once you pay $3,000 toward your care including deductibles, coinsurance, and copays – your health insurance pays for the rest of your hospital stay. This protects you from about $27,000 dollars in medical bills.

It’s important to note that most health plans are required to cover preventive care without any cost-sharing. This means even if you haven’t met your annual deductible, you can still receive preventive care services at no cost to you. Preventive care includes things like vaccines, screenings, and some check-ups.

How to figure out what your health insurance plan covers

• Your Summary of Benefits and Coverage (SBC): If you don’t already have one, ask your insurance company for a copy of your plan’s Summary of Benefits and Coverage which all plans are required to have. It will also be available on your online member portal. It’s a helpful tool that breaks down what your plan covers and cost-sharing amounts.
• Call your insurance provider: If you have questions about what your plan covers, you can contact your insurance company’s customer or member services department – that’s what they are there for! Blue Cross Blue Shield of Arizona members can call the number on the back of their insurance card.

We understand that health insurance can be complicated. To learn more cost-sharing terminology, visit: Breaking Down How Health Insurance Works (azblue.com).