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How does out-of-pocket spending work?

Out-of-pocket expenses are the costs of your health care you have to pay yourself. Your insurance doesn’t cover out-of-pocket spending.  These costs typically include the following four categories of expenses.
  1. Your premium, the initial cost of buying your insurance, paid in one lump sum or in installments throughout the year.
  2. Your deductible, the amount of money you agree to pay for medical expenses before your insurance “kicks in” and begins covering those costs. For example, if your plan carries a $2,000 deductible, you are responsible for the first $2,000 of your medical expenses in your plan year; once you have paid that $2,000, your insurance will cover the remaining eligible expenses for that year.
  3. Your coinsurance. Some insurance plans include a cost-sharing agreement that requires you to pay some of the costs of your medical services once you have met your deductible. For example, in some plans, after you have paid your annual deductible, your medical plan will cover 80 percent of costs and you will be responsible for the remaining 20 percent.
  4. Your copayment, the flat fee you pay each time you seek certain medical services. The fee may differ depending on the type of service you are seeking. For example, your plan might require a copayment of $20 for an office visit to your primary care doctor, $50 for a visit to a specialist, and $100 for an emergency room visit. 
Insurance plans typically carry an out-of-pocket maximum or limit, which is the most you would have to pay for your medical expenses in a plan year. After that point, your insurance would cover 100 percent of your medical expenses. Under the Patient Protection and Affordable Care Act (PPACA), the maximum out-of-pocket limit for any individual Marketplace plan for 2016 is $6,850 for an individual plan and $13,700 for a family plan.

Other expenses that can be considered out-of-pocket are those for vision or dental care if not covered by your plan, for non-network non-emergency treatment, for tests or procedures or anesthesia considered non-essential or for over-the-counter drugs and other medical supplies not prescribed by your doctor. These would not be counted under the out-of-pocket limit, but some of these costs may be payable by a flexible spending account or similar program. 

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.