Out-Of-Pocket Costs

8 Health Care Glossary Items #8

Typically, a health insurance policy only covers a portion of the cost of the health care delivered. The two main types of out-of-pocket costs that hit the insured are deductibles, co-payments and co-insurance.

Most insurance plans have a yearly deductible. The deductible is an amount of money an individual must pay out-of-pocket before the health care policy will begin to pay for medical expenses. The amount of deductible varies widely by plan. Individual policies tend to carry higher deductibles than group policies. Most Health Service Accounts have substantially higher deductibles than other types of insurance plans.

After your deductible has been paid for the year, you will begin to receive reimbursement for your health care expenses. On most plans, you are not covered 100% on all services. Many plans will require you to make a flat co-payment for certain types of service. For example, I have to pay ten dollars for every trip I make to the doctor's office. Additionally, through co-insurance, many plans only pay a percentage of certain medical costs. It is common for an insurance policy to pay 80% of services after the deductible has been met for the year. The remaining amount is your co-insurance. Some health insurance companies sell supplemental policies that will cover your co-insurance payments.