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How to Manage Out-of-Pocket Medical Costs

Medical care

A whopping $1,500.

To my surprise, that was my portion of a bill from a visit to the doctor last year. Talk about getting up close and personal with the health insurance concept of "cost-sharing."

To be fair, my physician's office told me what the tests were going to cost. I just ignored them and assumed that hard-to-swallow number would be subject to severe shrinkage after it went through my insurance company.

Oops.

That big bill came with a lesson: Know your coverage and manage your care to help control costs. As changes in our health care system put more and more decisions in your hands, it's critical that you arm yourself with the knowledge to take charge of your care.

The first step in avoiding an expensive surprise is understanding the cost-sharing terminology. So let's review some of the key terms:

  • Premium. That's what you pay, typically on a monthly basis, for your health insurance. If your coverage is through your employer, it will be deducted on a pretax basis. If not, you may be eligible for special tax benefits based on the premium you pay.

  • Deductible. This is what you may have to fork over before your insurance begins to pay. One exception: Most insurance policies cover the cost of preventive care -- such as immunizations, annual physicals, screenings and mammograms -- without meeting a deductible.

  • Co-payment. This is a set cost you'll pay every time you visit the doctor, get a prescription, go to the emergency room or use health care services or supplies. The co-pay will vary for different services. For example, a doctor's visit may be $25, a trip to the ER $100 and a generic prescription $8.

  • Co-insurance. After paying your full deductible, you may be responsible for a portion of your health care costs. For example, you may pay 10% or 20% and your insurance will cover the rest of the cost of covered care. This shared approach toward medical expenses will continue until you hit your out-of-pocket maximum.

  • Out-of-pocket maximum. Every dime you pay in deductibles, co-payments and co-insurance payments counts toward this figure. Once you hit the maximum, your insurance covers the rest. The Affordable Care Act set the maximum out-of-pocket total at $6,600 ($13,200 for families) in 2015.

It sounds confusing, but knowing these terms can pay off. This year, I cut that $1,500 bill down to $216 by simply taking the test at a different facility.

That's a tangible benefit of taking charge of your health care.

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Contributor

USAA, a diversified financial services organization, is the leading provider of competitively priced financial planning, insurance, investments, and banking products to members of the U.S. military and their eligible families. Rated among the highest among financial services companies for customer advocacy in a Forrester Research survey, USAA provides convenient and accessible financial products to its more than 9 million members. For more information about USAA, or to learn more about membership, visit usaa.com
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