Use your insurance...or pay cash? you can save a lot.

Here is a familiar scene that plays out way too often. Before you have even seen the doctor or complete a scheduled procedure you’re presented with a lofty charge for services. You think, no problem, they must not know that I have insurance that will take care of it. Nope, they explain you have to pay the “insurance contracted rate” because you have not met your deductible for the year. You’ve probably heard that a time or two. Regardless, you need the procedure so you hand over your credit card and think, “Why do I pay for insurance anyway?!?!?”.

Well if there is an “insurance contracted rate” does that mean there is another rate? A cheaper rate? YES, the cash rate. And as the old adage goes, cash is king. This is where it gets perplexing...and maybe a bit infuriating. Why is the cash rate less than the insurance contracted rate? The answer is complicated, and I’ll handle that in another post, but let’s get back to the fact that there is a cheaper rate and you could be saving now. How do you get that rate and more importantly should you take it? 

There are certain circumstances where you might be better off paying the cash rate rather than using your insurance and applying the cost to your deductible. Here are some of the most common examples:

Diagnostic Testing (MRI’s, CAT Scans, X-Rays) -  I often get MRI’s because I had a tumor removed 15 years ago. I learned that it actually saves me money to ask the following questions before any procedure:

1. What is the insurance contracted rate? (the amount you will be responsible for paying)
2. What is the cash rate?
3. What are the CPT codes for the tests the doctor ordered?
4. Will you match other facilities' prices?

This past year I had 3  tests that would have totaled $1600 if I had used my insurance; which is well below my deductible. The cash rate at the same facility was $1200! I asked and found that they did match other facilities' prices. I asked for the CPT codes and then searched for “radiology near me” on my phone. I called 4 other places and asked them for the cash price and the name of the person I spoke to. I was able to find a location that charged $900!!! That is a savings of $700 compared to my deductible. Now I had a choice. If I pay cash, I need to pay in full at time of service. I also have to sign a waiver stating that I know insurance may deny a claim if they in fact find something in my scan. Because the odds of finding something are so rare, I decided to save $700 and paid the cash rate! 

I have done this several times now and it has saved me thousands of dollars. I know I have my insurance to protect me in case my tumor does come back, but since the cost of the scans doesn’t come close to helping me meet my deductible and I don’t use my insurance very often, I’d rather save the money and pay CASH.

Prescription Medications – Prescriptions can be expensive as well, especially name brand drugs. Believe it or not, in many cases you can use a discount prescription program like GoodRX and save hundreds of dollars. Insurance companies may make arrangements with the pharmaceutical companies that actually don’t allow you to use your insurance towards a generic medication. In essence, to use your insurance and apply the cost to your deductible, you would have to buy the expensive name brand. When this has happened with my family, I asked the insurance company, “Are you telling me if I want to use my insurance, I must get the name brand which is 7 times more expensive?” The answer was yes. No coverage if I chose to get the generic brand which was significantly less. So, I decided to look up the medication on GoodRX ​and found it for $36 instead of $220+ a month! That is a savings of about $2,600 over the course of a year!

​I also recommend asking for the CASH price. Even if you have a great insurance plan, your copay may be set at $25 for a Tier 1 medication. There are plenty of medications on the $4 cash list at several pharmacies. Why not save the $21 and just pay cash? Your copays don’t help you reach your deductible, so you might as well save money today! 

Lab Work - Getting blood drawn can be expensive. Have you tried asking what the CASH rate is for the very same procedure? You may be surprised to find out that your blood panel is 1/3 the price if you pay cash. 

The moral of the story, use some common sense and save. I have learned to always ask for the CASH price for everything medical related. I have a choice, do I want to use my insurance and have it go toward my deductible, or would I rather just pay cash and save now. Just to note, I am on a high deductible HSA plan (like most people these days), where you pay for everything at the contracted rate until you reach your annual deductible. Paying the cash rate is most advantageous for these types of common plans.

Some things to consider. If you or your dependents regularly meet your annual deductible, have chronic illnesses, visit the doctor often or have a large procedure or surgery scheduled, then this strategy may not be for you. When you meet your annual deductible, the cost for services will dramatically decrease or in many cases be nothing. But, if you have a pretty high deductible, like $3,000 or more and you’re generally healthy, it may be worth saving by paying the cash rate. If you normally don’t meet your deductible, then paying cash may be the way to go.

Unfortunately, with the soaring costs of healthcare and the way insurance plans are structured, the burden of cost is pushed to the patient. So consider your options, be smart and see if you can save a few dollars...or a few hundred dollars.

Occasionally office staff look at me strangely and wonder why I would not just pay the higher rate and put it toward my deductible, to which I respond, “There’s no prize for meeting my deductible.” I don’t ever really want to meet my deductible.