Also, find out how to save money on your out-of-pocket costs.
Health insurance in the United States can be a bit confusing. You pay a monthly fee for your insurance plan, but this doesn’t necessarily mean that you get to access health care for free. For many services, it means you and the insurer will split the expense. The health insurance company will provide its coverage, and you will pay out-of-pocket costs.
What Are Out-of-Pocket Costs for Health Insurance?
Your out-of-pocket costs are expenses that you pay for healthcare services that are not reimbursed by your health insurance. For example, when you go in for a basic doctor visit, you will likely need to pull your wallet “out of your pocket” (or purse) and pay a small fee, such as $20. The visit actually costs more than that, but your insurance pays the rest.
Out-of-pocket costs include:
- Deductibles, which is the amount you have to pay before the rest of insurance kicks in. For example, if you have a $500 deductible, you may have to pay full price for certain services until you have spent $500 in a policy year. After that, you may only pay a small fee or percentage of the bill for those services. Learn more about how deductibles work here.
- Copays (copayments), which are set fees for healthcare services. After you reach your deductible, you may only have to pay a copay for certain services.
- Coinsurances, which are set percentages for healthcare services. After you reach your deductible, you may only have to pay a coinsurance for certain services, such as 40 percent of an emergency room visit.
Is It Possible to Lower These Costs?
Remember, health insurance plans are varied, and there are pros and cons to each of them. It’s important to choose the plan that works best for you and your family. Sometimes, it’s tempting to pick the plan with the lowest monthly fee (known as a premium). However, if you know you’ll be visiting the doctor or using healthcare services often, the plan with the lowest premium isn’t always the best option.
Certain types of plans tend to result in lower out-of-pocket costs. However, they often come with higher premiums. (You get what you pay for, right?) These plans include:
- Low-deductible plans: This means insurance will start paying their share of costs sooner. As a result, you’ll only be paying copays and coinsurances instead of the full price for certain services. High-deductible plans often require you to spend a lot of your own money for certain services before benefits kick in.
- Plans with low copays and coinsurances: When picking a plan, it should give you a breakdown of what the copays and coinsurances are for a variety of services. For example, some plans may charge a $50 copay for a basic doctor visit, while others only charge $20. If you and your family visit the doctor often, those $50 copays can add up.
- Plans with lower out-of-pocket maximums: This is the total amount you’d have to pay for health care in a policy year. These can be quite high and many families don’t reach them. However, if you are having a health crisis, these maximums can make sure your out-of-pocket costs don’t get too out of control.
If you’re confused about your out-of-pocket costs or how to lower them, talk to an insurance representative. They can go over your plan, or even help you compare different plans. That way, you’ll have a better idea of what to expect every time you see a healthcare provider.
- How to choose a health plan. Washington, DC: MedlinePlus, U.S. National Library of Medicine. (Accessed on August 10, 2021)
- Out-of-pocket costs. Washington, DC: HealthCare.gov. (Accessed on August 10, 2021)
- Saving money on health insurance: cost-sharing reductions. Washington, DC: HealthCare.gov. (Accessed on August 10, 2021)