By In Do the Math, Health Insurance, Health Insurance Utilization, Money-Saving Tips

Should You Pay Cash for Medical Care?

In the “My Benefits ‘Intentions’ for 2019 and Beyond” post, I noted that it’s important to always ask the price for a service. The premise is pretty basic — we ask the price for pretty much everything else we want to buy, so why wouldn’t we ask the price and be able to see it before we have something done to us.

Of course, reality can be a relative term in healthcare. First, you’re not always in a position to shop around when it comes to your health. A recent article by Vox writer Sarah Kliff, who’s been tracking and reporting on outrageous emergency room bills for the past year, showed how the largest public hospital in San Francisco is “out of network” for ALL private insurance and the result is insured people getting bills for tens of thousands of dollars. Remember, this is the emergency room and, as one “victim” of a crazy bill noted, she was so overcome with the pain and confusion of her migraine that she didn’t have the capacity to ask where she was being sent for care and whether they were in-network for her insurance.

Second, and this is the nutso boondoggle of our system, prices are really, really hard to get straight because there are so many different negotiated rates that you might pay. There’s a different in-network and out-of-network rate for every different brand insurer and plan a provider accepts. There’s a Medicare rate, a Medicaid rate, and possibly many others.

The one (hopefully) consistent rate is straight-up cash. Depending on what kind of insurance you have and what kind of treatment(s) or service(s) you need, this might be your best bet.


The example I gave was medical tests that I needed to get for my daughter. I called two places to get a price. The first place was an independent imaging center, which quoted me the cash rate first and said that my health insurance would impact how much of that amount I would pay. The second place I checked was the in-house imaging department in the provider network we were using. On my first call, they wouldn’t tell me a rate and instead directed me to my insurance company. I called them and spent about 20 minutes figuring out that they couldn’t or perhaps wouldn’t, tell me what my cost would be at either the independent imaging center or at the in-house imaging center. She said I should call them back and tell them my coverage again and they should be able to look it up. I did and was told that the image I needed was, let’s say, $150. That was the negotiated rate for my type of insurance. When I asked her the cash price, she said it was $75.

Huh? How was it that my insurance’s negotiated rate was double the cash rate? Certainly part of it had to be administrative costs, i.e. there’s less administration on a cash payment than on an insurance claim. But that was a massive difference.

The catch was that, if I were to pay cash, it would not show as a claim and therefore not count toward my deductible. This is pretty infuriating and, as part of my day job, I’m trying to get to the bottom of this crappy practice. But for practical knowledge here, I had to work with the information I was given.

So what did I do? I paid the cash. Here’s why.

The high-deductible health plan (HDHP) we had at the time had a family deductible or $10,000 deductible or a $5,000 deductible per person, whichever came first. My daughter’s needs were not going to be seen as very extensive for the year and the other children (and us) were doing OK from a health standpoint. If an emergency situation were to arise, chances were better than not that it would either exceed $5,000 for one of us and/or put us over our $10,000 deductible for the whole family. I was less worried about the cumulative impact of including that expense toward my deductible than I was with spending double for the image. (Plus, I can still claim the medical expense as a deduction on my year-end taxes.)

I paid the cash because it was a better deal, straight up, and the alternative money and time spent would have been more than the potential value of paying extra.

This advice may seem counterintuitive to a cumulative saver’s mentality, but remember that your deductible renews on an annual basis, so “long-term” in health expense can often mean a ticking 12-month clock.

The takeaway is that you should not only always ask what something will cost but be sure you’re understanding what it will cost you in-network, out-of-network, and cash. That way you can determine what will be your best financial decision.

Another suggestion for those looking to avoid a surprise medical bill: If you live in an area with multiple hospitals or provider networks, find out, to the best of your ability, how your insurance covers you if you were to unexpectedly end up inside one of those networks. You don’t always have a choice where to go when it’s an emergency, but if you are able to find out in advance where you’ll get the best treatment at the lowest cost to you, then you can write that down and keep it on you, like an organ donor card, and hopefully you’ll be sent to the place that will cost you the least.

Again, that may seem like a super-cynical thing to say and it’s certainly a commentary on our healthcare system to hear that kind of recommendation. But the system is what it is, so be best prepared to navigate to your best financial and physical advantage.

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