Co-Pays and Out of Pocket Expenses – Out of Pocket Expenses are amounts you have to pay until you meet your deductible set up on your insurance policy or plan on your doctor’s visits. After you have completed your Out-of-Pocket Expenses during the calendar year, then your insurance starts to pay.

When you arrive at your physician’s office or after the appointment, the receptionist will ask you to pay the co-pay amount on your way out. Some offices will go ahead and bill you for this amount, but other doctors require an upfront co-pay.

Suppose you have an appointment with your doctor. In that case, the physician’s office will generally call the health insurance company or Medicare to inquire what your co-pay and Out-of-Pocket Expenses look like so that they know the correct amount of co-pay to charge you.


Not all Out-of-Pocket Expenses will count towards your deductible. The government and your health plan limit the amount of money you spend on your Out-of-Pocket Expenses during each calendar year.

This amount will include deductibles, coinsurance, co-pays, and any types of medical treatment or services that are not covered by your health care or Medicare plan.

  • When you have paid enough in Out-of-Pocket Expenses, you can reach your deductible or the maximum Out-of-Pocket Expenses. After this happens, your insurance company begins to pay for your medical expenses either in full or sometimes partially.
  • The annual deductible for your health plan or Medicare plan can be anywhere between $500 to a few thousand dollars if you’re an individual.
  • If your plan has a higher deductible, you may pay more in Out-of-Pocket Expenses.
  • Also, not all Out-of-Pocket Expenses count towards the insurance deductible. For example, monthly premiums will not help you meet the deductible, and neither will co-pays. If you have a $1,000 deductible and need to have a surgical procedure that costs $500, you’ll have to cover the costs yourself. Those costs will count towards your deductible.

Are Out-of-Pocket Expenses Tax Deductible?Taxes

Some Out-of-Pocket Expenses can be deductible from your personal income taxes. For example, income tax deductions are still available for expenses related to charitable donations and unreimbursed medical expenses.


If you have health insurance or Medicare, you will pay a premium every month to keep your plan active. The monthly premium is typically the first cost you pay to maintain coverage.

Premiums and co-pays are fixed amounts for a specific medical treatment. For example, you might pay a small co-pay for a preventive care visit to your primary care doctor or a visit to your specialist. Your co-pay rates and what they apply to will be different based on various plans and providers.

Prescription drugs

medsAll health care plans and Medicare plans vary, and all prescription drugs are covered differently under each scenario. Many policies do not pay for the full cost of drugs. Most plans will require you to pay a co-pay.

Once you have paid a specific amount of co-pay, you will usually meet your deductible. However, co-pays on prescription drugs are treated differently than office visit co-pays.  Ask your insurance company what your Out-of-Pocket Expenses will look like.


Once your insurance has kicked in after you meet your deductible and starts to pay for your medical bills, it might not cover everything.

For example, suppose you have a medical procedure (and have already met your deductible or Out-of-Pocket expenses). In that case, you might have to pay a percentage of the costs, and this is known as is called coinsurance and is cost-sharing.

Many companies have coinsurance, which may be 80/20, meaning you may have to pay 20% while your insurance covers the remaining 80%. Check your insurance policy to see what your coinsurance amount is and ask for clarification about your Out-of-Pocket Expenses.


While health insurance is intended to help you cover medical care costs, you can see how you can spend quite a bit of money on your own. To limit this and provide more affordable care, the government has set a cap on how much people spend on their own during the calendar year if they have health insurance.

Call John Miller at Miller Insurance Management today