These Are the Only Times It Makes More Sense To Pay for Medical Care Without Insurance

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If you’ve got health insurance, it may never even occur to you to pay cash for your medical procedures and services. After all, that’s the point of paying for insurance, right?

The assumption of most Americans is that insurance companies will negotiate the lowest rates for their customers and/or pay some or all of the remaining amount, leaving costs low for their members. However, the way that the American healthcare system is set up, that’s not always the case.

Here are a few examples of when it makes more sense to pay for medical care yourself, even if you have insurance.

You Have a High Deductible

It might seem counterintuitive to pay cash for medical care if you have a high deductible. Any cash payments don’t count towards your deductible, meaning you’ll still have your full deductible left after you’re already out-of-pocket for medical care. But even under this scenario, it could sometimes make sense to pay cash.

The reason for this is the way that providers bill insurance companies. Although insurance companies negotiate rates with medical providers, the amount they pay is often quite a bit more than what the cash price is for customers who pay upfront. This is because billing an insurance company is a time-consuming process that results in paperwork snafus, payment delays and even claim rejections. As a result, providers often charge insurance companies more than a cash payer.

If you find yourself in this scenario, you might consider making a cash payment. Imagine that your procedure will cost $2,000 if paid through your insurance but just $800 if you pay cash upfront. If you have a $3,000 deductible, in either scenario, you’ll be out of pocket the full amount. But if you pay cash, you’ll only pay $800 instead of $2,000.

The answer if you have a high deductible isn’t always cut and dried. If you did pay the $2,000 through your insurance, you’d be two-thirds of the way to satisfying your deductible for the year. But if you end up having no more medical costs the rest of the year, it would mean you ended up paying $2,000 for an $800 procedure. 

You’re Going Out-of-Network

Out-of-network medical costs are by definition higher than if you remain in-network. Your insurance company has typically negotiated lower costs with in-network providers, and the savings are passed along to you. But if you’re going to get out-of-network care, you’ll end up paying a lot more. 

At least, that’s the case if you try to run an out-of-network claim through your insurer. In that scenario, you’ll be on the hook for a high amount, even if your insurance covers part of it. But if you negotiate directly with an out-of-network provider by offering to pay in full upfront, you’ll almost always be able to score a lower rate.

For Routine Services

Your insurance company likely has fixed, negotiated prices for basic services, such as lab work and imaging scans. You can find out how much you’ll pay either by calling your insurance company or looking at the terms of your policy. While these prices may be discounted over full list price, they are usually higher than if you use an independent lab or clinic and pay cash.

For example, if you’re getting a full blood panel, you might have to pay your insurance company a negotiated price of $250. But if you go to a lab like Quest Diagnostics, you might be able to get that full panel for $75 or less. For run-of-the-mill testing that doesn’t even require the services of a doctor, you might consider shopping around and paying the cost yourself instead of running it through your insurance. 

The Bottom Line

In many cases, the cash price for various medical products, services and procedures is much less than the negotiated price charged by insurance companies.

Ever since Jan. 1, 2021, the federal government has required hospitals to provide clear, accessible information about the prices they charge for various services. This makes it easy to compare what you’d have to pay to a hospital or provider directly instead of running it through your insurance.

While factors like deductibles and out-of-pocket limits may influence how you want to pay for your medical costs, you should at least be aware of the fact that you may be able to negotiate lower fees for upfront cash payments.

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