Claim Confusion: Common Reasons Why Your Benefits Claim May Leave You "Out-of-Pocket"
Uncovering why you may be left ‘out-of-pocket’ when claiming under your benefits program
Wondering why you’re left ‘out-of-pocket’ despite having a robust benefits program? There is nothing more frustrating than submitting your claim, only to find it’s not covered, or not covered up to the level you expected.
Here are some common scenarios that explain why your reimbursement might fall short of your expectations.
Is it just the plan design?
Of course, benefits programs differ significantly from employer to employer. Often, the reason for a decline is simply the plan design selected by your employer. While a previous employer may have included certain items, your current employer may have opted to exclude the item.
Largely speaking, while insurance companies have varying default plan provisions, most can customize coverage to meet the employer’s preferences. For example, there is a broad range of paramedical practitioners that can be included, beyond the standard practitioners that most people expect to see. Less common practitioners such as Dieticians, Athletic Therapists, Kinesiologists, and Clinical Counsellors can often be included, but may not be standard for the provider.
While the blame is typically placed on the insurance carrier, more often than not, a decline has nothing to do with the carrier’s ability to cover something, but rather to do with the plan design implemented by the employer, based on a range of factors such as benchmarking information, budget, employee feedback, coverage availability for the industry etc. That said, there are many common rules and plan parameters, as outlined below, that are often the reason for a decline.
Is it the timing?
Many items have frequency limits attached to them, or a certain duration of time that must pass before you can claim the item again.
Understanding how the limits are applied is especially important. For example, does the benefit period apply to the calendar year (i.e. 2 calendar years apart), or at the 24-month mark from when the service was last claimed?
Routine Dental Visits
The most commonly known frequency limitation is the ‘6-month recall’ often attached to routine dental visits. In short, this means that a routine exam and cleaning will only be covered every six months. If you book an exam too soon, your coverage will likely be declined. To clarify, if it is determined during a routine visit that you require follow-up procedures such as a filling, this does not mean you need to wait 6 months for the filling. It is only the routine exam that falls under the 6-month recall frequency limitation.
Some programs use a 9-month recall in order to help reduce costs. If this is not communicated, you may find yourself un-insured if your recall exam takes place too soon.
Vision Care Cycles
Vision care is commonly run on a 2-year or 24-month cycle, and the distinction is important. For example, your plan might provide vision care coverage defined as one of the following:
- $200 per 24 months- this means you cannot make a second claim until 24 months from the date of the first claim.
- $200 per 2 years- this means you could claim in 2022 and then again in 2024, even if your claims were as little as 13 months apart, so long as they fall two calendar years apart.
Frequency limits apply to many other common items including procedures for teeth, hearing aids, medical equipment, and medical supplies. Understanding and carefully reading the wording is important.
Does your coverage reset for the calendar year, or for the benefits year?
While it’s becoming less common, some programs have their benefits reset to match the ‘benefits year’, which is often the anniversary date of the program, or the renewal date (and yes, these can be different!). This could be at any month of the year. This is in contrast to the benefits resetting for the calendar year, which is the more common plan structure.
For example, a plan may indicate a Benefits Year of May 1st– April 30th. If the program offers $500 per practitioner per benefits year, this means you will have the full amount available to you every May 1st.
The norm, and our preference, is to have benefits reset for the calendar year. This is easier for everyone to understand and aligns with the tax year.
Reasonable and customary limits
If you haven’t heard this phrase before, it’s simply the dollar amount of reimbursement that the insurance company will provide, for a particular item. These amounts adjust periodically, and they differ based on location and insurance carrier.
So, in contrast to naming a dollar value in the benefits booklet, it would indicate that the R&C limit applies:
- Eye Exams once per year to $100 vs.
- Eye Exams once per year to R&C limit
Often, the R&C limit is higher than a defined dollar limit. When a program has not been updated in a long time, the defined dollar limit can become very outdated and not representative of the average cost of the service in the area. The choice the employer makes in this regard has an impact; implementing fixed dollar amounts can assist in containing claim costs.
Charging above the dental fee guides
Here’s the scenario: you have 100% basic dental insurance. You go for a regular cleaning, and nothing unusual occurs. When the dental office submits your claim to your insurance provider, you owe a portion of the total. Why would this be? Why is 100% not actually 100%?
In short, most insurance carriers reimburse based on the current dental fee guide in your province of residence. Dental offices, however, can charge beyond these guidelines.
Did you know?
You can address out-of-pocket expenses effectively with a Health Spending Account (HSA). Many individuals wonder if HSAs can be used to cover uninsured expenses or supplement coverage for partially covered or capped items and the answer is yes!
Learn how a Health Spending Account can enhance your benefits program and provide additional financial support where needed.
In higher-cost areas, this is particularly common (downtown Vancouver or Toronto, for example). So, when the insurer reimburses at 100%, the fine print is that they reimburse 100% of the applicable provincial fee guide.
In some instances, a plan will provide a percentage in excess of the fee guide or will allow for excess reimbursement for specialists (i.e. Endodontist, Periodontist). Again, this differs from carrier to carrier.
Dental fee guides adjust each year. As we have written about and discussed with our clients extensively, 2022 and 2023 saw much higher than usual increases, whereas 2024 saw a return to more moderate adjustments.
Claiming under two plans
Remember earlier when we discussed R&C limits? Well, this comes into play when you are claiming under two plans.
If you are covered under two plans, you claim through your own employer-sponsored plan first, then claim second under your spouse’s plan for any unpaid balance. Many people assume that the result should be $0 left out-of-pocket. However, this is not always the case.
Consider this scenario: You go for a physiotherapy visit, the charge is $160, and you claim under your employer’s plan. In your province with your provider, the Reasonable & Customary limit is $120, which is paid out. This leaves you $40 out-of-pocket.
You then claim the $40 to your spouse’s plan, which covers $0 of the remainder. But why? The reason is that the second provider has an R&C limit that is equal to or lower than your own plan’s limit. The plans have coordinated to the R&C limit.
Unfortunately, having two plans does not always mean you will be reimbursed for a higher dollar amount than under one plan.
Please note: R&C limits can differ quite significantly between carriers and by location; for example, with Manulife Financial, the R&C for physiotherapy ranges from $80 (PEI) to $165 (NWT and Nvt) for a regular visit.
Outdated, but standard, coverage limits
Within a program, there are certain extended health care items that have a defined dollar limit of reimbursement, in contrast to others, which do not (i.e. the full cost is covered, at the coinsurance of the program).
These defined dollar limits tend to be quite similar, carrier to carrier. Unfortunately, reimbursement falls short of the actual cost of an item, simply because the industry standard has not kept pace with the actual retail cost of the item. Two examples are:
- Eyeglasses (especially progressive lenses); while Vision Care amounts can be customized by the Employer, it’s quite common to see $200 per 24 months, which is below the typical cost for certain glasses.
- Hearing Aids; notably, hearing aid coverage is often at $500 per 5 years, which is far below the typical retail cost for hearing aids which can be thousands of dollars.
In these instances, the employer can request for these plan provisions to be increased beyond the standard insurer provisions. However, these increased coverage limits typically come with a cost.
Errors happen, by providers and members
Quite simply, people make mistakes. Most of the time, when we dig into a denied claim, we learn that the provider or member has made an error when entering the claim. A common issue is claiming for the wrong practitioner (i.e. Acupressure instead of Acupuncture), claiming for the wrong duration of the visit (i.e. a physio receipt says subsequent visit and the member claims for initial visit), or simply keying in the wrong numbers from the member ID card.
In one instance, a claim was repeatedly denied, and we learned the child had been entered by the pharmacist as ‘male’ rather than ‘female’ and the system was therefore not aligning the enrolled dependent to the claimant. A simple error, but frustrating nonetheless for the member standing at the pharmacy watching the claim get repeatedly denied!
Periodically, we come across a denied claim for a very uncommon item (often, a medication). In many instances, the item is simply not coded into the insurer’s system, and with a special request, we can often have the item included.
Understanding the details, matters
As we have outlined, there are many reasons why your extended health or dental claim may be unexpectedly denied or cut back.
We know that the number one indicator of employee satisfaction with a benefits plan is smooth and understandable claims reimbursement. Denied claims are frustrating and at the Immix Group, we want our clients to reach out to us when they encounter issues with their claims.
Even better, proactively, our goal with our clients is to ensure they understand the structure of their plan, and the various rules and procedures surrounding claims.
Employee education sessions where members can delve into the details of their program and ask questions are very useful and can prevent unneeded frustration for members.
At the Immix Group, we are here to help you make the most of your benefits program and ensure a smooth claims experience.
If you encounter issues with claims or need assistance understanding your coverage, don’t hesitate to reach out at info@immixgroup.ca or (604) 688-5559 – we love to hear from you!
Key Takeaways
- Many benefits claims are denied because of the plan design implemented by the employer- they may have chosen not to cover certain items or have implemented specific timelines for cost-saving purposes. It’s important to be aware of these limitations to avoid unexpected out-of-pocket expenses.
- If in doubt, always ensure you obtain pre-approval for any benefits services or items before proceeding with treatment. Pre-approval helps prevent claim denials and ensures you understand what is covered under your plan.
- Familiarize yourself with any timing limitations in place for your plan. For example, some services may have frequency limitations or waiting periods between claims. If you’re unsure about any details, reach out to your benefits provider for clarification.
- Understand the Reasonable & Customary (R&C) limits for services covered under your plan. These limits determine the maximum amount your insurer will reimburse for specific services and usually differ by region.
- Check with your dentist to understand how they bill for services. Some dentists may charge in excess of fee guides, which could impact your out-of-pocket costs depending on your benefits coverage.
- Navigating benefits claims can be complex, but understanding the ins and outs of your benefits program is essential for maximizing coverage and minimizing out-of-pocket expenses. Take proactive steps to educate yourself about your benefits plan—review your plan documents, ask questions, and seek clarification from your benefits provider or advisor.
FAQ
Longer durations, such as a 9-month dental recall, are often implemented as a cost containment strategy to reduce claims expenditures within a 12-month period, thereby helping to manage overall program costs.
You or your healthcare practitioner can submit a request for pre-approval. This process is common for dental procedures and other more costly healthcare services, ensuring clarity on coverage and reimbursement amounts before proceeding with treatment.
Not necessarily. While flexibility in coverage can increase with larger employers, insurers must work within provincial health coverage guidelines and adhere to CRA rules/Canadian tax laws. Underwriters may also limit plan designs to avoid excessive claims that could jeopardize the financial stability of the program.
For instance, a smaller group might not have the capacity to offer non-standard coverage like 80% coverage for Major Dental services with an unlimited annual limit. The financial risk associated with such extensive coverage could be prohibitive, especially considering that non-refund insured plans can be terminated without any deficit obligations.
Refer to your benefits booklet or contact your benefits administrator for a detailed list of covered services and items. As well, details are generally available online or through your providers mobile app. Understanding your plan’s coverage terms will help you make informed decisions about healthcare expenses.
Pre-existing condition limitations may apply to certain health conditions that existed before your benefits coverage started. These limitations can impact coverage eligibility for related treatments or services; this is more typically applicable for disability claims or travel claims.
Reasonable and customary charges apply to practitioner services such as these. Coverage for practitioners varies by province and provider and are generally updated annually. Check your benefits booklet or contact your benefits provider to confirm eligibility and coverage details for these services.
- If your claim is denied, request an explanation from your benefits provider (an EOB or Explanation of Benefits is usually produced automatically). Sometimes, claims are denied due to incomplete information or misunderstandings. Your benefits advisor can assist in resolving claim issues.
Yes, coordination of benefits (COB) allows you to maximize coverage if you are covered under more than one insurance plan. You’ll first send the claim to the plan you are a member of (primary coverage) for adjudication and payment. Then you can submit any eligible outstanding amount to your other (secondary) coverage. Coordinate with both insurers to ensure you receive the maximum allowable reimbursement for eligible expenses.
Further Reading
Lindsay Byrka BA, BEd, CFP
Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca
