Healthcare in the US is a major expense, no matter who you are or what type of health insurance you have. Many of us are at risk of financial ruin if we run into the wrong medical circumstances or needs.
Did you know, though, that your costs could be dramatically different depending on how you pay for your healthcare? While insurance is one option, your other choice is to be a self pay patient. Let’s take a closer look at what this means and why it might be the better choice.
What does “self pay” or “pay in cash” mean in healthcare?
In healthcare, most patients use health insurance to cover some of the costs of their medical needs. Despite having health insurance, you may be required to pay for portions of your healthcare depending on your insurance coverage. You may have things like a copay, which means you may be responsible to pay for a fixed fee for a service (e.g., $75) or you may have a deductible, which means you’re responsible for paying for most of your care until you meet your deductible (e.g., $5,000). The remaining portion of the care is paid by your health insurance. That “portion” could end up being hundreds or thousands of dollars.
A self pay patient or someone who pays in cash, on the other hand, is a patient who directly pays the provider for the full cost of the procedure. You don’t go through your insurance company at all when you’re self pay.
Why might paying in cash be a better choice?
In the past, it was only patients who visited doctors without insurance who would pay in cash.
Today, though, if you have insurance, you may pay less out of pocket if you pay in cash compared to using your insurance.
In particular, people who have not met their deductible can often save money by paying cash. If you have a high deductible for your insurance plan, paying for typical medical care through insurance could cost you thousands that you don’t have to spare. Even if you have good insurance, though, it can still be cheaper to pay cash!
Why? To keep it simple, many healthcare providers charge less to self pay patients compared to patients who use insurance because it’s cheaper to not deal with the administrative burden of insurance companies. There are also more complex, nuanced reasons related to how providers negotiate their payments with insurance companies and apply to join insurance “networks”, but that is for a separate discussion. As a result, providers charge less to those who pay in cash and they make up for it by charging more to insured patients.
Another reason cash prices are often lower than prices through an insurance company is because dealing with insurance companies is costly for healthcare practices. Take an MRI for example. MRIs are expensive and can often cost thousands of dollars if you have a high deductible and go through your insurance. However, when you pay cash, imaging centers often charge less because you’re saving them the time of dealing with your insurance.
Choosing to be a cash patient
The idea of being a self pay patient when you have insurance may seem strange to some, but in truth, you’ll often pay less out of pocket this way. Sometimes, health insurance is designed to protect against disaster scenarios (i.e., expenses in the hundreds of thousands of dollars).
At the end of the day, if you’re trying to save money, you should ultimately choose the cheapest option for you, which may be paying cash. Once you know that you should act as a self pay patient, you’ll find even more affordable care if you take the time to shop around. Or better yet, if you don’t have the time to call every provider in your area for their cash prices, you can use our price comparison service for radiology to find the procedures you need for less.