How private health insurance reimbursement works

To make the best use of your private health insurance, you must first understand the process -and learn how reimbursements work!

Although Canada boasts a robust, publicly-funded healthcare system, two-thirds of Canadians still use private health insurance, according to the Organization for Economic Co-operation and Development (OECD). These private insurance plans reimburse some or all of outpatient medications and cover other medical expenditures, such as optometrist and dental services.

How private health insurance reimbursement works

How prescription reimbursement works

Firstly, you need to know if your medication is covered by the insurance plan. To find out, check your medication's drug identification number (DIN) and call your insurance carrier. You should also ask the extent of your coverage, as some plans have caps or deductibles on their coverage or require a copay.

If the prescribed medication is covered, you can claim reimbursement from your insurance, which is typically done in either of two ways. First, some insurance plans may issue pay direct cards, so the cost of the medications will be billed directly to the insurance company. Other insurance plans, however, require you to pay upfront for the medication and file a claim form to the insurance company for reimbursement.

Common problems with insurance reimbursement

Though the reimbursement process is usually pretty simple, there are a few situations where problems may arise. To prevent a delay with your reimbursement, contact your insurance company about any special requirements before you pick up your prescription.

Generic drug substitution

There may be a situation where you are prescribed a brand name medication for which there is a generic alternative available. Many insurance companies only provide full coverage for brand name drugs when generics aren't available as substitutes. But don't worry; if your treatment is compromised by the use of generic drugs, your attending physician can specify "no substitution" on the prescription. In this case, the insurance company will usually cover the brand name medication.

Special authorization

Insurance companies may have specific requirements that must be met before certain medications are covered. In this instance, you will be required to ask for a letter of special authorization from your attending physician to claim coverage for the medication. The letter should contain information about your medical condition and an explanation of why you need the medication. Some insurance companies may require additional clinical information to process claims.

Claims rejection

If your insurance company does not cover the cost of your medication or a special authorization claim is rejected, you can try to resolve the issue by doing the following:

  • If this insurance plan is purchased through your employer, let the human resources manager know the situation, so he or she can contact the insurance company directly.
  • Have your attending physician write an appeal letter to the insurance company, detailing the reasons why you need that specific medication.

Private health insurance reimbursement can be a smooth process if you know the full extent of your coverage beforehand. It's an excellent way to offset any medical expenses that Canada's primary healthcare system does not cover.

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