Out-of-pocket costs are the expenses associated with your medical care that you must pay yourself. These costs may include a variety of things such as co-payments, deductibles, and payments for out-of-network care. They are not covered by your insurance and you must pay these in many instances before your insurance coverage begins.
How Out-of-Pocket Maximums Work
An out-of-pocket maximum is a spending limit that applies to your health insurance plan. This is the most money that you can spend during the year on your medical expenses. After you reach your out-of-pocket maximum, the insurance covers 100% of your eligible medical costs. For example:
If you have a healthcare plan that has a $2,000 deductible, coinsurance of 20%, and out of pocket maximum of $5,000, here is how an upcoming surgery may be billed. The cost of the surgery is $25,000. First, you must pay the $2,000 deductible, which leaves a balance of $23,000. This amount is split between you and the insurance provider, so you will have to pay 20%, or $4,600. That means that you would be responsible for paying $6,600, the total of your deductible and billed amount. However, you will only have to pay $5,000 because you have an out-of-pocket maximum of $5,000.
What Is Not Covered in the Calculation of Out-of-Pocket Maximums
There are some charges that are typically not included in the calculation of out-of-pocket maximums. For instance, your monthly or annual premium payments do not count towards your out-of-pocket expenses. Often, the costs of out-of-network services are not included. Every policy is different, so you need to review your plan to determine the limits that are in place.
Your policy should clearly list the costs that do not count towards the calculation of your out-of-pocket limits. In general, if a cost is excluded from the calculation of out-of-pocket expenses, it is generally not part of the annual maximum. Often, that means that if you seek medical care out of your own network, you could end up paying all of the extra costs associated with treatment. Therefore, you need to be careful when you make decisions that impact your medical insurance plan.
How Your Co-Pay Impacts Out-of-Pocket Maximums
Once you reach your out-of-pocket maximum, you will not need to provide co-payments for medical services during that year. It is important to note that prescription medications count towards your out-of-pocket maximum. Money you spend to purchase your prescriptions will count when you calculate your maximum out-of-pocket expenses. All of the calculations are made on an annual basis. At the start of the new year, everything is reset to zero and your out-of-pocket costs will need to accrue again.
It is essential to choose a health plan that has an out-of-pocket maximum that meets your financial needs. You don’t want to find out later that you can’t afford medical care due to high costs that you have to pay yourself. At Fast Health Quotes, we will help you find a healthcare plan that will be best for your particular requirements and financial situation. Contact us online or call Fast Health Quotes today at (855) 244-9579.