What Are Out-of-Pocket Expenses in Healthcare?

Out-of-pocket expenses

Health insurance can protect you from financial burdens caused by high and unplanned medical bills. An insurance plan protects you, but it doesn’t always pay the full costs of the healthcare you receive. Regardless of your coverage, you can expect to be responsible for certain expenses associated with your care. These are called out-of-pocket costs.

Thanks to the Affordable Care Act (ACA, also known as Obamacare), many health insurance plans cover 100% of preventive services, such as annual exams and certain screenings. Your insurance likely covers a portion of the costs for doctor visits and emergency care. The amount of coverage will depend on the specifics of your plan.

You are typically responsible for any healthcare charges that are not covered or reimbursed by insurance. Depending on your plan, the amount you pay could be anywhere from 10% to 100% of the cost of the service.

However, out-of-pocket expenses don’t just occur when you get sick or injured. There are many types of out-of-pocket medical expenses you could face, including the cost of having your plan. Here’s everything you need to know about the many types of healthcare-associated out-of-pocket costs, how to estimate them, and how to pay them.

Examples of out-of-pocket expenses

Out-of-pocket costs can include the following: 

• Premiums

• Deductibles

• Coinsurance 

• Copayments (copays)

• Unreimbursed medical expenses and other related financial responsibilities

• Your portion of the cost of prescription medications 

Using GoodRx to reduce out-of-pocket costs for prescriptions

You can check GoodRx for coupons for your prescription medications. The GoodRx price could be a lower out-of-pocket expense than your insurance copay. To see the GoodRx price for your medication:

• Go to www.goodrx.com or download and open the GoodRx app.

• On the app or website, type your medication into the search field.

• Choose the dose and desired quantity. Input your ZIP code or address, or select “Use my current location” so the results show local pharmacies.

• Compare the coupon price at a pharmacy near you to your out-of-pocket cost with insurance.

• If desired, choose how to receive your coupon (printed, emailed, or texted) to lower the price of your prescription.

Health insurance premium

This is the cost of your plan so that you have active health insurance. If you have health insurance through your job, your employer may pay all or some of your premium. Your portion of the premium is often deducted from your pay.

• Example scenario: You purchase a health insurance plan through the HealthCare.gov marketplace that costs $400 per month. You are responsible for at least $400 per month in out-of-pocket expenses. However, if you have the same plan through work, your employer may contribute to the monthly cost of the premium. If your employer contributes $300, your out-of-pocket cost would be $100 per month. (It’s important to note that you may qualify for a premium subsidy, which could reduce the cost of your ACA marketplace plan.)

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• Need help affording medication costs? In addition to manufacturer savings options, you may be able to get help paying for prescriptions through state programs, Medicare’s Extra Help program, or nonprofit organizations.

• Medicare Part D out-of-pocket limit: Starting in 2025, people enrolled in Medicare prescription plans have a $2,000 spending cap for covered medications, after which their plan pays 100% for items on the formulary for the rest of the year.

• Summary of benefits and coverage (SBC): The SBC — which briefly outlines a health insurance plan’s costs, benefits, and exclusions — serves as a snapshot of the detailed document known as the evidence of coverage (EOC).

Deductible

The deductible is set by your plan. You will pay this amount annually for all covered healthcare services before your plan begins to pay. Deductible amounts range greatly based on the type of plan.

• Example scenario: Let’s say your annual deductible is $2,500. That is the amount you’ll pay out of pocket for covered services during the year until your insurance begins to offer any cost-sharing.

• High-deductible health plan (HDHP): As its name suggests, the HDHP has a higher annual deductible, but low premiums. These plans typically cover in-network, preventive care even if you haven’t met the deductible. These plans must have minimum deductible and maximum annual out-of-pocket costs. If you reach the out-of-pocket limit, your plan will pay 100% of the costs of covered services for the rest of the year.

The table below shows HDHP minimum deductibles and maximum out-of-pocket expenses for 2025 and 2026.

Source: IRS

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Coinsurance

Once a deductible is met, insurance plans and enrollees typically split the cost of healthcare services. If the cost-sharing is a percentage, this is called coinsurance. For instance, Medicare Part B typically pays 80% of covered services after you meet your deductible and you pay 20%, which is called 80/20 coinsurance. However, coinsurance rates can vary if you have other types of health coverage. You could pay from 0% to 30% or more, depending on the service and insurance plan. You can have coinsurance for your healthcare plan and/or your prescription coverage. Not all plans use the coinsurance model for cost-sharing.

• Example scenario: You have already met your annual deductible and go to the doctor for services that cost $100. If your plan’s coinsurance is 80/20, your out-of-pocket expense for this visit is $20.

Copayment

Copayments, or copays, are a set dollar amount you pay for a healthcare service or prescription. Copays count toward your deductible and are typically charged after you meet your deductible. Not all plans use copays for cost-sharing.

• Example scenario: Your health insurance plan states that you will pay $20 every time you visit the doctor, regardless of the reason (illness appointment, blood pressure check, well woman exam, etc.). Your out-of-pocket expense is $20 for every visit after you meet your deductible — unless it’s preventive care that doesn’t require you to meet a deductible and can be provided without any cost-sharing.

Prescription medication

Out-of-pocket expenses for prescription medication are typically distinct from your cost-sharing for healthcare services, supplies, and items. If you do not have health insurance, or your plan does not include prescription coverage, you will have to purchase your prescribed medications out of pocket. If you have health insurance with prescription coverage, the plan will likely have pre-negotiated rates for medications.

Your out-of-pocket expenses for prescriptions depend on your deductible responsibilities. Some health insurance plans allow certain medications to be covered even if you haven’t met your annual deductible. Others require you to satisfy a deductible before any prescription cost-sharing happens.

Your health plan may have a combined medical and prescription deductible.

• Example scenario: Your plan has a $2,000 combined deductible. You have already paid $1,900 in out-of-pocket expenses toward your deductible and now need to purchase $100 worth of prescription medicine covered by your plan. Your out-of-pocket cost will be $100; however, now your combined deductible will be met and your plan would share costs — or pay 100% of costs — for covered medications for the rest of the year.

But that doesn’t mean prescriptions are always free once your deductible is met.

• Example scenario: Your plan has a $2,000 combined deductible, which you have already met. Your plan also states that you’ll pay $10 for each generic refill, and now you need a generic medication. Your out-of-pocket cost will be $10 for this prescription.

If you have a separate prescription deductible, no other medical costs will count toward fulfilling that out-of-pocket expense. Once you meet your prescription deductible, you’ll be eligible to receive specified reimbursements and coverages under your health plan.

Medicare Prescription Payment Plan and Part D out-of-pocket limit

If you have Medicare Part D, how and when you are responsible for meeting your deductible changed in 2025. Deductibles vary by plan, but they can’t exceed $590 in 2025. The Medicare Prescription Payment Plan is in effect, which means you don’t need to meet your deductible upfront to access medications. Now, you can spread prescription costs across the year. Medicare Part D plans also have a $2,000 out-of-pocket limit that’s also new in 2025.

GoodRx Prescription Cost Tracker

The GoodRx Research Team follows prescription out-of-pocket spending nationwide with a tracker for people with and without insurance. The tracker reveals barriers to costs and coverage, including:

• Increased out-of-pocket spending per prescription fill

• Rise in prescription prices by more than 39% in the last decade

• More complex and restrictive insurance coverage, such as fewer medications appearing on formularies (insurers’ list of covered medications) as well as the higher possibility of prior authorization and step therapy requirements

• Lack of access to medications for millions of people because of cost and not filling prescriptions

What is an out-of-pocket maximum?

If you have an ACA or commercial health insurance plan, the federal government establishes limits on how much a person or family will pay out of pocket annually. In 2025, those limits are $9,200 for individuals and $18,400 for families. Every health plan has its own out-of-pocket maximum, which may not be as high as the limits established by the government. Note that there is no out-of-pocket maximum for original Medicare, but there are such limits for Medicare Advantage plans: $9,350 for in-network covered services and $14,000 for in-network and out-of-network covered services combined.

If you don’t have health insurance, there is no maximum amount of out-of-pocket expenses you might pay or that you may be charged in a year.

Out-of-pocket maximum vs. deductible

Your out-of-pocket maximum, also known as an out-of-pocket limit, is the most you will pay each year for in-network healthcare expenses covered under your plan. After you reach the annual limit, your health insurance plan pays for 100% of your qualified health costs.

Out-of-pocket costs for services that aren’t covered

Because health plans vary greatly, your potential out-of-pocket expenses can, too. Common expenses that may not count toward a deductible or be eligible for payment via health savings account (HSA) or flexible spending account (FSA) funds include:

• Hair transplants

• Hair removal for cosmetic purposes

• Out-of-network healthcare costs (though they may be covered at a reduced rate)

• Over-the-counter supplements

Before receiving any nonemergency healthcare service or purchasing a nonemergency health care item, it’s best to check your insurance plan. This will help you determine what — if any — portion of your expense is eligible for reimbursement or will count toward your annual deductible.

Estimating your total out-of-pocket costs

Because you can’t truly know if — or how often — you’ll require medical care, it’s impossible to predict your out-of-pocket expenses with 100% accuracy. But that doesn’t mean you can’t establish a basic budget.

Start by doing the following:

1. Determine the amount you’ll pay monthly for premiums. Multiply that by 12 to get the annual amount.

2. Establish the amount you must pay to satisfy your annual deductible.

3. Calculate your typical average annual cost for prescription medicines.

4. Add these three costs and compare them to your plan’s maximum out-of-pocket limits.

This estimate doesn’t include copays or coinsurance, since you don’t know exactly how many medical visits you’ll need to make. But this basic budget approach will give you an idea of whether you’ll meet or come close to your annual maximum limit, as well as the amount of out-of-pocket expenses you could face in a year.

This forecast also does not include your typical average annual cost for out-of-pocket expenses not covered by insurance or not eligible to meet your annual maximum out-of-pocket limit. To best understand what is and isn’t covered by your plan, speak to your workplace benefits administrator or your plan’s customer service.

Price transparency

These price estimation tools from healthcare facilities and your insurance plan can help you estimate costs in advance:

• Hospital price transparency: Since 2021, hospitals have been required to publish standard charges for services that can be scheduled. Starting in 2024, those price lists were required to appear on standardized templates to make the files easier to read and compare.

• Health plan price transparency: Since 2022, health insurance plans have been required to publish price information on certain covered treatments, services, and medications on their websites. In 2023, insurance plans had to provide online cost-sharing estimates for 500 shoppable services. By 2024, plans were required to provide cost-sharing estimates for all covered services.

Paying for out-of-pocket expenses

You should never avoid or delay seeking medical care because you fear out-of-pocket expenses. Skipping healthcare can be detrimental to you, and untreated, advanced conditions could cost you more in the long run.

Out-of-pocket expenses can be paid in many ways. You can:

• Pay at the time of service with cash, check, or credit card, depending on the forms of payment accepted by the healthcare professional or facility.

• Seek reimbursement using funds in an HSA or FSA, if the expense qualifies. The IRS allows many medical expenses to be paid using funds in either type of account. Eligible items include vaccines, many over-the-counter medicines, and first-aid kit items, as well as menstrual products such as tampons, pads, and period underwear.

• Establish a payment plan (if the healthcare professional or facility allows) to satisfy the charges over time.

• Seek financial assistance from programs and organizations that offer help with medical expenses.

• Use free coupons from GoodRx to reduce your out-of-pocket expenses for medications, vaccines, and other items.

• Learn more about how to handle medical bills you can’t afford.

Out-of-pocket expenses beyond healthcare

In addition to what you are charged by healthcare professionals and facilities, you may have personal costs involved in seeking and receiving treatment. They include:

• Child care costs

• Lodging, if you have to travel for care

• Lost income for time taken off work

• Transportation costs, including fares, gas, and parking fees

Frequently asked questions