All health insurance plans include out-of-pocket costs. These are costs that you have to pay for your care, such as copayments and deductibles. The insurance company pays the rest. You need to pay some out-of-pocket costs at the time of your visit. Others may be billed to you after your visit.
Out-of-pocket costs allow health plans to share medical costs with you. They can also help guide you to make good decisions about where and when to get care.
When you choose a health plan, you need to understand what your out-of-pocket costs may be. This way, you can plan ahead for what you may need to spend during the year. You also might be able to look for ways to save money on out-of-pocket costs.
The good news is there is a limit to how much you may have to pay out-of-pocket. Your plan has an "out-of-pocket maximum." Once you reach that amount, you will not have to pay any more out-of-pocket costs for the year.
You will still have to pay a monthly premium, no matter what services are used.
All plans are different. Plans may include all or only some of these ways to share costs with you:
- Copayment. This is the payment you make for certain health care provider visits and prescriptions. It is a set amount, like $15. Your plan may also include different copayment (copay) amounts for preferred vs. non-preferred drugs. This can range from $10 to $60 or more.
- Deductible. This is the total amount you have to pay for medical services before your health insurance will start to pay. For example, you may have a plan with a $1,250 deductible. You will need to pay $1,250 out-of-pocket during the plan year before your insurance company will start to make payments.
- Coinsurance. This is a percentage you pay for each visit or service. For example, 80/20 plans are common. For an 80/20 plan, you pay 20% of the cost for each service you receive. The plan pays the remaining 80% of the cost. Coinsurance may begin after you have paid your deductible. Keep in mind that your plan may have a maximum allowable limit for each cost of service. Sometimes providers charge more, and you may have to pay that extra amount as well as your 20%.
- Out-of-pocket maximum. This is the maximum amount of co-pays, deductible, and coinsurance you will have to pay in a plan year. Once you reach your out-of-pocket maximum, the plan pays 100%. You will no longer have to pay coinsurance, deductibles, or other out-of-pocket costs.
Services With Out-of-Pocket Costs
In general, you do not pay anything for preventive services. These include vaccines, annual well visits, flu shots, and health screening tests.
You may need to pay some form of out-of pocket costs for:
- Emergency care
- Inpatient care
- Provider visits for an illness or injury, such as an ear infection or knee pain
- Specialist care
- Imaging or diagnostic visits, such as x-rays or MRIs
- Rehab, physical or occupational therapy, or chiropractic care
- Mental health, behavioral health, or substance abuse care
- Hospice, home health, skilled nursing, or durable medical equipment
- Prescription drugs
- Dental and eye care (if offered by your plan)
Ways to Save
Choose the right type of health plan based on your location, health, and other preferences. Get to know your benefits, such as how they relate to emergency room visits and network providers.
Choose a primary care provider who helps guide you to only the tests and procedures you need. Also ask about lower-cost facilities and medicines.
Understanding your health care costs can help you save money when managing your care.
Healthcare.gov website. Understanding health insurance costs makes for better decisions. www.healthcare.gov/blog/understanding-health-care-costs/. Updated July 28, 2016. Accessed November 1, 2020.
HealthCare.gov website. Understanding your health coverage. www.healthcare.gov/blog/understanding-your-health-coverage. Updated September 2020. Accessed November 1, 2020.
HealthCare.gov website. Your total costs for health care: premium, deductible & out-of-pocket costs. www.healthcare.gov/choose-a-plan/your-total-costs. Accessed November 1, 2020.
Review Date 8/13/2020
Updated by: Linda J. Vorvick, MD, Clinical Associate Professor, Department of Family Medicine, UW Medicine, School of Medicine, University of Washington, Seattle, WA. Also reviewed by David Zieve, MD, MHA, Medical Director, Brenda Conaway, Editorial Director, and the A.D.A.M. Editorial team.