Health insurance pays for some medical costs but not all of them. Out-of-pocket medical expenses are the costs not covered by the insurance company. You will have to pay these costs yourself.
Out-of-pocket expenses include medical costs that are not fully covered by your insurance. They also include deductibles, co-payments, and co-insurance.
You can prepare for out-of-pocket medical expenses by planning ahead and knowing how insurance works. Learning about insurance terms, saving money, and asking for help can make it easier to manage these costs.
Types of insurance plans
If you have an insurance plan, it is important that you know what type you have. This information will help you choose the right network. Choosing the right network can help you reduce your out-of-pocket expenses.
Health maintenance organizations (HMOs): This health insurance plan requires that you use doctors, hospitals, and other health care providers that are part of the HMO network.
Preferred provider organizations (PPOs): This health insurance plan gives you more options than an HMO when choosing treatment. It lets you see any health care provider you want. You save money if you choose health care that is in the PPO network.
Indemnity plans: This health insurance gives you the most options when choosing treatment. It lets you choose any doctor or hospital you want. The insurance company pays a set portion of your total costs. You pay the rest. The out-of-pocket costs with this plan are usually the highest of the insurance plans listed here.
Types of out-of-pocket expenses
When you have health insurance, you might need to pay different kinds of out-of-pocket expenses. The most common expenses include:
Deductible: This is what you must pay before your insurance begins to pay for care. For example, if your deductible amount is $2,000, you must pay the first $2,000 of your medical costs. Insurance will start to cover some of the costs after you have met your deductible.
Co-payment (co-pay): This is the set amount that you pay for certain services or medicines. For example, you might pay $20 each time you visit your doctor.
Co-insurance: After you pay your deductible, you and your insurance share the rest of the costs. For example, if your insurance covers 80% of a bill, you must pay the remaining 20%.
Non-covered services: Sometimes, your insurance will not pay for certain treatments or services. This means you must pay the full amount yourself.
Out-of-Pocket Maximum: This amount is the most you have to pay per year for covered healthcare services. This amount includes deductibles, copayments, and coinsurance for in-network care and services. Once you have paid this amount in your health plan, your health insurer will pay 100% of your health care services for the calendar year.
How to manage out-of-pocket expenses
Managing your health insurance and medical expenses can be difficult and confusing. The following tips may help:
Review your insurance plan: Look at what is covered, including deductibles, co-pays, co-insurance rates, and exclusions. Knowing this information helps you plan.
Budget and save: Save money that is just for medical expenses. You might use:
A health savings account (HSA): This is a special bank account where you can save money to pay for medical expenses. You do not have to pay taxes on the money you take out of an HSA to pay for medical expenses.
A flexible spending account (FSA): This is a special bank account where you can save money to pay for medical expenses. You do not have to pay taxes on the money you take out of an FSA to pay for medical expenses. You usually need to use the money in your FSA within 1 year. If you do not use the money in that time, you might lose it.
Look for in-network providers: Insurance plans often have negotiated discounts with certain doctors and hospitals. Using these in-network providers can lower your out-of-pocket costs. In-network providers charge less than out-of-network providers.
Use preventive services: Many insurance plans cover preventive services at no cost. These services include things like vaccinations and health screenings. Using these services can help you avoid more expensive medical issues later.
Negotiate payment plans: If you get a big medical bill, ask your health care provider about a payment plan. Some health insurance companies and hospital systems have advocates available to you. Be sure and ask about them when you call for help with a bill.
Look for assistance programs: Some hospitals and clinics offer financial assistance programs for people who qualify. These programs may offer discounted services or free care based on how much money you make.
Look for free or reduced-cost care: Some hospitals provide free or reduced-cost care to patients who have limited or no health care. To learn more, visit Get Affordable Care from the Health Resources and Services Administration (HRSA).
Appeal coverage decisions: Sometimes an insurance company may deny a claim. That means they refuse to pay for part or all of the amount due. In these cases, you can appeal the insurance company’s decision. The company may overturn their decision if you give them more documentation or if you ask your health care provider to contact the company on your behalf.
Where to go for help with out-of-pocket expenses
There are different ways to get help with health care costs. Here are some options:
Government programs: Several government programs in the United States offer health coverage for individuals and families based on their income or other factors:
Medicaid helps low-income individuals and families with health care costs.
Medicare helps senior citizens and some disabled people.
Non-profit organizations: Many non-profit groups have programs that help with specific medical needs for certain groups of people. These organizations might provide financial aid or lower-cost medical services.
Patient advocacy groups: These groups focus on specific health conditions. They help patients to manage medical costs and insurance.
Community health centers: These centers provide affordable health care services based on what you can pay. They make it easier for people with limited money to get the care they need.
The health care system can be complicated and a source of stress for families. Working with the insurance provider can help families understand their medical plan, what it covers, and where care is available.
The financial elements of medical care can be overwhelming. Learn ways to navigate the health care system, manage insurance and costs, and access resources.
Navigating health insurance and financial aspects of the healthcare system can be challenging. Learn how to find answers about insurance and paying for care.
