When to Choose the Self-Pay Option Instead of Insurance

When does it make sense to pay out of pocket for healthcare instead of using insurance?

In this episode of the Take Care podcast, Melody Mulaik answers David’s question about the pros and cons of self-pay (cash pay) versus using health insurance for medical services.

She walks through real-life situations where paying out of pocket may cost less, when insurance is clearly the better choice, and the key tradeoffs to think through before making a decision.

What You’ll Learn:

• [00:02:40] Why self-pay can sometimes be cheaper than using insurance, including a $75 self-pay vs $100 copay urgent care example.
• [00:02:40] How copays, deductibles, and negotiated rates can change what you actually pay out of pocket.
• [00:03:52] Why does self-pay not count toward your deductible because the claim is not submitted through insurance?
• [00:04:18] When prompt-pay discounts may be available if you pay upfront as a self-pay patient.
• [00:05:07] How privacy concerns can factor into your decision if you prefer not to submit a service to insurance.
• [00:05:39] Why prior authorization requirements can push some people toward self-pay for faster, simpler access.
• [00:06:43] When insurance is usually the smarter option, especially for hospitalizations, surgery, and ongoing treatment.

This episode is educational and helps you think through your options. Your costs and coverage depend on your specific insurance plan and provider.

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Transcript

Melody: 0:12

Hello everybody and welcome to this episode of Take Care. Got a question from David who asked, what are the benefits of paying for healthcare services out of pocket versus using my insurance? And that's a really great question and it's one that you have to think about in terms of what specific types of services that you're looking to have. And why would you consider not using your insurance? So, for some people you always use your insurance no matter what. And I get that. And that may make total sense, but maybe in there may be some situations where actually thinking about not using your insurance may actually cost you less money. So, let's talk about some of those particular scenarios or some of the considerations that you should think through as you make those decisions. Now, usually this comes up when you have something that an imaging exam or some type of service that is not covered by your insurance company, right? Give you an example. So, for a while I was having really bad tennis elbow, right? I'm not a tennis player, I will admit that. But I had tennis elbow and I had it in both arms at different times. Well, I wound up getting a procedure called plasmapheresis, which is actually where they remove your blood, spin it, pull the plasma out, reinject it into the joint. And that is a way of treatment for certain joints to provide healing. And it worked for me and it was great. Insurance company doesn't cover plasmapheresis, so that was an example where being in my orthopedist, they actually said, you know, you'd like to get this done. This is how much money it is. And I will admit, I don't remember off the top of my head'cause it's been a couple of years ago, more than a couple of years ago, several years ago. But I want to say it was probably around maybe 150,$200. Now, I know that sounds like a lot of money but it was a great treatment and it actually got rid of my elbow pain because surgery wasn't really an option, et cetera, et cetera. But that was an example where my orthopedics office was very upfront. Insurance doesn't cover this. This is a choice you have as a patient. You don't have to get it done. But if you do get it done, just know that you are going to be self-pay, and that's what it's going to be. So, that's a great example where it really wasn't even a choice. My choice wasn't about using my self-pay or cash versus insurance. It was a choice of did I want to get the service or not. So, to answer your question, David, that sometimes the decision, it's more about do we want to get that particular service that an insurance company pays versus when they don't. But there's other scenarios that come up where you might be looking at it and you might say, well, gee, I'm at this urgent care office. And I see that they have a self-pay price of$75, but yet my insurance company requires a copayment of a hundred dollars. And you might make a decision well, based on where I am with my deductible based on the care. I think I'm going to get this year, I'm going to go for the$75 option versus my a hundred dollars option. It's important to keep in mind that even though we have insurance or you have insurance, it's your choice whether or not you want to use it each time that you're getting care. So, you could choose to take a self-pay price. Again, there's several things that come into play as you're looking at it. So, one thing with paying self-pay or cash, as we'd say, is that you typically, you're going to know what the cost for that service is, right? And you're able to look at it versus, if we are applying towards our deductible that we're going to come out of pocket for it. It may be a bigger dollar amount because we're going to be responsible for whatever that insurance company's negotiated rate is with that physician or that hospital or whomever. And that price may be more than that self-pay price. Now, I want to be really clear. Anytime that you choose to pay self-pay, that's never going to count towards your deductible because it hasn't gone through your insurance company. So, you know, there's always kind of those pros and cons as you look at why would I do self-pay versus the insurance with it? With cash pay, a lot of times there are discounts and, and this applies for a lot of physician office, a lot of hospitals. Again, that's not a guarantee, but there are many times if you ask them if I am self pay or is there any kind of discount that you can give me? And they will let you know. Maybe it's 20%, maybe it's 50%. And sometimes you'll even find that they have what's called a prompt pay discount if you're paying everything up front. You may find there's even some additional discounts that are there as well. So, typically with insurance, you're not going to get those particular prompt pay discounts. Again, there's a negative that because it doesn't account towards your deductible if you're doing self-pay versus using insurance. The other thing is if you're doing self-pay, there's no cap, right? I mean, if you're paying out of pocket, there's no one that's going to come along and say, oh, you've paid the maximum you're going to pay out of pocket. Where with insurance, there is a point whatever that dollar amount is. Where you're going to reach that particular out-of-pocket maximum. Other things with self-pay, if you choose to not have something submitted to an insurance company that's something that, again, maybe for privacy reasons, you don't want that going to your insurance company for them to be aware of. You would choose self-pay in that situation if you were getting care that you chose to keep private. Now, granted, your insurance company quote has to keep it private. But I think you understand what I mean in terms of if there's something you want dealt with that you don't want to share with them. And again, as a patient, that is totally your right to do. Again versus it putting it into the system. The other thing is with prior authorization. It's not required, obviously if you're going to be self-pay where we look at using insurance for other types of things that you would be potentially required to have something approved in advance for that. So, you know, the short answer is it really depends on the service and it depends on, do you have an opportunity to get some discounts? And is it worth it as you balance it against what your deductible is and what your insurance company overall coverage is? So, that's those decisions that you have to make on a case by case basis. So, if we really look at it, there's pros and cons to doing both. When we look at it with typically as a pro to being self-pay, typically the cash price is going to be lower. And again, I'm not saying it's always the case, but many times it is. If you want privacy. You don't want the insurance company to have information on the services that you've received. If you want to keep things simple and you know how much it's going to come out of pocket, you're not going to worry about things being submitted to the insurance company, denials, et cetera. You've paid for it, it's done. But again, insurance is there and available and best use for emergency situations. If you're going to be hospitalized, you're having surgery, you've got ongoing treatments, especially if you've already met your deductible, you absolutely want to use your insurance'cause you won't have as much out of pocket. Or you expect that you're going to have high medical expenses in a given year, you're going to want to use that insurance. So there are options for you if you want to be self-pay. There's definitely situations and treatments that come up where self-pay makes sense. You just have to look at it on a case by case basis. So, hopefully this has been helpful for you as you navigate that question. And for all of you, if you have any other questions, go to that form on my website, send it to me or post it on social media. And I'd love to answer your question. Until next time, take care.