Out-of-pocket costs

Out-of-pocket costs (pronunciation: /ˌaʊt əv ˈpɒkɪt kɒsts/) refer to the direct expenses that an individual pays for healthcare services, which are not covered by insurance. The term is believed to have originated from the phrase "out of one's own pocket," indicating a personal expense.

Definition

Out-of-pocket costs include deductibles, co-payments, and coinsurance, as well as any healthcare services not covered by an individual's insurance plan. These costs are paid directly by the patient to the healthcare provider.

Types of Out-of-pocket costs

Deductible: This is the amount that the insured must pay before the insurance company starts to pay for services.

Co-payment: This is a fixed amount that the insured pays for a covered healthcare service after paying their deductible.

Coinsurance: This is the percentage of costs of a covered healthcare service the insured pays after they've paid their deductible.

Impact of Out-of-pocket costs

Out-of-pocket costs can significantly impact an individual's ability to afford necessary healthcare services. High out-of-pocket costs can lead to medical debt and can deter individuals from seeking necessary medical care.

Related Terms

Premium: The amount that must be paid for your health insurance or plan.

Health Savings Account (HSA): A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.

High-Deductible Health Plan (HDHP): A health insurance plan with a high minimum deductible that the insurance policy holder must pay before the insurance coverage kicks in.