What are Out-of-Pocket expense?

Answer:
When you are dealing with insurance products such as

health insurance or auto insurance, you’ll hear terms such as “out-of-pocket.” What does this mean? Out-of-pocket expenses are quite simply the money that you pay. You take your wallet out of your pocket, open it up, and pay the doctor or collision repair company a certain amount of money before the insurance kicks in.

For example, if your auto insurance policy has a deductible of $200. You will be responsible for paying the first $200 out of your pocket. On a $1000 claim, you dig into your personal funds and pay the $200 deductible and the insurance company pays the $800 balance.

This is similar for medical insurance policies where you might have a co-pay that you must pay for each office visit or for each prescription you fill. These expenses are yours to cover, not the insurance company’s, and are considered “out-of-pocket” expenses. While annoying to have to pay a portion out of your own pocket, usually having deductibles and co-pays is a strategy for sharing costs and keeping premiums lower.


	more Q&A sessions like this
	What is a Deductible? What is an HSA? What is Health Insurance? Can I Deduct Health Insurance Premiums as a Business Expense? What is a Network of Healthcare Providers? If I Lose Weight or Get Healthy, Can I get Better Rates on Health Insurance? What are some websites that offer online insurance quotes? What is insurance? What is Pet Insurance? Will my Health Insurance pay for a Nose Job? What are the tax benefits of a home equity loan? Will my Health Insurance pay for Breast Implants? Why would I need a Second Mortgage? What is considered Elective Surgery? What are Employee Benefits? Will my insurance pay for LASIK eye surgery? Are there tax benefits to Student Loans? Is interest on a home equity loan tax deductible? Is Interest on a Home Equity Line of Credit Tax Deductible? Should I Purchase Travel Insurance for my Cruise?