What Is an Out of Pocket Insurance on Health Insurance?

Types

Out-of-pocket insurance costs can include the deductible, which is the portion you pay before the policy begins to provide coverage. Coinsurance is the portion of the costs you share with the insurance company after your meet the deductible. A copay is a scheduled amount you are required to pay, such as a set fee for a doctor visit.

Effects

Generally, the more you are required to pay of-pocket, the lower your premiums will be. That's why relatively healthy people may choose higher deductibles in an effort to keep health insurance costs to a minimum.

Considerations

In some cases, supplemental insurance may be purchased to cover out-of-pocket expenses. A common example is when seniors purchase a Medicare supplemental policy to cover deductibles and copayments not covered by Medicare Part A and Part B. Your health insurance policy may not cover all of your medical expenses. In addition to your premium, you will likely be required to pay some expenses out of your own pocket.