The costs of medical care that are not covered by insurance and that you must pay for yourself, or “out of pocket,” are known as out-of-pocket expenses. Some of the common out-of-pocket costs in health insurance include:
Premiums
If you have health insurance, you must pay a monthly premium to keep your coverage active. The monthly premium is usually the first expense you incur to keep your health insurance coverage functional.
If you have a low income, you may be eligible for a subsidy (such as the premium tax credit) to potentially reduce your monthly premium; however, the discounted premium is still an out-of-pocket expense.
Copays
Copayments are pre-determined costs for medical services that are covered. For example, a preventive care visit to your primary care physician or a specialist visit may require a small copay. Depending on the plan and provider, copay rates and what they apply to may vary.
Prescription Drugs
Depending on your health plan, prescription medications are covered differently. Most health insurance plans, however, do not cover the entire cost of drugs. A copay may be required by some insurance plans.
Deductible
This is the minimum amount of money you must spend before your insurer begins to assist you in paying for covered services. If you have an individual plan, your annual deductible for a health plan will range from $500 to a few thousand dollars. You may have to pay more out-of-pocket costs if your plan has a higher deductible.
Furthermore, not all out-of-pocket costs are counted towards the insurance deductible. Monthly premiums, for example, and copays are unlikely to help you meet your deductible. Also, if you have a $1,000 deductible and need to get a $500 surgery, you will be responsible for paying the costs.
Coinsurance
When your insurance kicks in after you’ve met your deductible and starts to pay for medical bills, it may not cover everything. If you need a medical procedure (and have already met your deductible), you may be required to pay a portion of the cost — this is known as coinsurance.
Coinsurance is commonly set at 80/20, which means you’ll be responsible for 20% of the cost while insurance covers the other 80%. Confirm your coinsurance amount when reviewing your insurance policy.
