Key Takeaways
- A deductible is what a client pays before insurance kicks in. You must still submit claims during this period.
- Coinsurance is the percentage a client pays after their deductible is met. A copay is a flat fee paid at every visit regardless.
- As an in-network provider, you can only collect your contracted rate, not your full fee.
- Never routinely waive copays or coinsurance without documented financial hardship. It can violate your insurance contract.
- Submitting claims promptly is required for visits to count toward a client's deductible.
Health insurance terms can make anyone’s head spin—clients and providers alike. But as a mental health professional, understanding these terms is key to getting paid correctly and explaining costs clearly to your clients.Below is a plain-language breakdown of common terms you’ll come across and how they affect billing and collections in your practice.
What is a deductible?
A deductible is the amount a patient must pay out of pocket each year before their insurance begins to cover services.
Deductibles typically reset on January 1, though some plans reset mid-year. Until the deductible is met, insurance does not pay for services, but you must still submit claims so each visit counts toward it. If you are in-network, you may only collect your contracted rate, not your full fee.
Example: Your client has a $1,500 unmet deductible. Your full fee is $180 per session, but your contracted rate is $120.
- Client pays: $120 (contracted rate)
- That $120 is applied toward their deductible
- Once the deductible is met, insurance begins covering a portion or all of the cost
What is coinsurance?
Coinsurance is the percentage of a covered service the client pays after their deductible is met. It is a percentage, not a flat fee, and only applies once the deductible has been satisfied.
Example: Your contracted rate is $120 and the client's coinsurance is 20%.
- Client pays: $24 (20% of $120)
- Insurance pays: $96 (80%)
- You receive: $120 total
What is a copay?
A copay is the flat fee a patient's insurance requires them to pay at the time of service, regardless of whether their deductible has been met.
Copays and coinsurance are not the same thing and client frequently confuse them. A copay is always a fixed dollar amount; coinsurance is always a percentage.
Example: Your client has a $30 copay. They pay $30 at check-in, every visit.
What is a contracted rate?
A contracted rate is the maximum amount an insurance company will reimburse for a covered service when you are in-network. It is the rate you agreed to when you joined the insurance panel and applies regardless of what you charge.
Example: You charge $175 for a 90837, but your contracted rate is $120. The $55 difference is written off as an adjustment. Always heck your contract or call provider relations to confirm your rate.
Important billing reminders for private practice therapists
- Don't routinely waive copays or coinsurance. Most insurance contracts require you to collect them and waiving without documented financial hardship can be a contract violation.
- Always review your Explanation of Benefits (EOB) after each claim to confirm what insurance paid and what the client owes.
- Submit claims even when a deductible is unmet. Visits only count toward the deductible if a claim is filed.
- Be ready to explain the difference between copays and coinsurance to clients. Most have never had to think about it before starting therapy.
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