What Does Out-Of-Pocket Mean?

What does out-of-pocket mean? Definition of Out of Pocket Expense: The amount of money the patient has to pay from their own funds for things like Deductibles, Co-Insurance and (possibly other expenses) not paid for by the insurance company.

Cindy J. Holtzman, Director of Operations at Medical Billing Advocates of America (MBAA) answers, "O.O.P. is a common abbreviation for these terms. Definition of Out of Pocket Expense: The amount of money the patient has to pay from their own funds for things like: Deductibles, Co-Insurance and (possibly other expenses) not paid for by the insurance company." Medical insurance generally requires the patient to pay for a portion of their medical expenses. It's a way for health insurance companies to keep their costs down for a number of reasons. When the patient is looking at having to pay part of the bill out of their own cash, they will take that into consideration when choosing whether their health concern is worth going to the doctor for a check up and treatment.


"When the member has a P.P.O. insurance plan, the policy should clearly state "Maximum Out of Pocket Expenses" and detail the member's maximum out of pocket when you are using the P.P.O. network and what it would cost the member if they are using Out-of-Network providers," Ms. Cindy J. Holtzman informs members of Preferred Provider Organization medical insurance plans. "When the member reaches their total out of pocket amount, all services that would normally apply to the deductible and/or co-insurance, will be paid at 100% for the balance of that calendar year. The member will still have to pay their normal office visit co-payments to the physician and their prescription co-payments." If you participate in a P.P.O. plan, it would be wise to keep record of your out of pocket expenses throughout the year. While the maximum out of pocket expense limit is usually higher than the majority of people would reach in a year, should you have an especially challenging year of medical problems that would require surgeries and on going treatments (an uncommon illness, a life threatening condition, or a serious accident could result in an expensive year of medical bills) you may find yourself easily surpassing that limit. Basic record keeping of the amount you have paid from your own finances would be helpful should your health insurance company make any mistakes in their tabulation. Simply holding onto receipts that show what you, yourself paid should be all that you need. Designating a folder in a drawer where you put those receipts would be an easy way to track of the expenses.




When it comes to out of pocket costs, there's a large difference when using an out of network doctor verses an in network doctor. When you see a health care provider within your network, you usually pay a pre-set co-pay, $10 or $20 for example. When you receive medical treatment though a source outside of your network, it's usually a percentage of the entire bill that you will be paying which the amount varies depending on your medical insurance policy but generally is 20% or more. If you had surgery with an out of network surgeon and the bill was $10,000 you will be looking at having to pay $2,000 yourself, if not more. If the hospital was in network, the bill for the hospital costs may be covered, but if the hospital is also out of network, then you're looking a very large sum. It's best to know what your out of pocket costs will be ahead of time, so get to know that part of your medical insurance policy well.

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