Do "cash" payments count toward my health insurance deductible?

Most people paying for healthcare are paying out of pocket.  Naturally, they want the best prices to minimize the cost.  While health insurers usually negotiate modest discounts, you can get much better prices by paying directly, without insurance being involved.  This is called paying "cash," although it might actually be by credit card, bank account, Venmo, etc.  Patients often ask: do these "cash" payments count toward your deductible?

Yes, usually payments you make directly to your provider can still apply toward your deductible.  It depends on your health insurance plan, so you should check with your insurer first.  But assuming your plan allows it, submitting invoices to your insurer is fairly simple.

How to efficiently submit invoices toward your deductible

How to handle every healthcare visit

Let's say your doctor charges $400 for a consultation.  Let's also say you have health insurance, but haven't reached your annual deductible yet.  Let's assume your insurer has negotiated a price of $200.  Let's also assume you're a Pocketero member, and you have invited this provider to join the Pocketero network and found their Pocketero price is only $100.  Obviously you would rather pay the Pocketero price.  However, you still want your payment to be applied to your deductible.  You shouldn't have to suffer because you got a better price than your insurer.  You should be able to submit your $100 invoice to your insurance company on your own, to be applied to your deductible.

The key is to get an "itemized" invoice from your healthcare provider that has a separate line for each service you received, which shows the price for that service.  (Pocketero network providers should always provide an itemized invoice, so you shouldn't need to ask.)  Also, if the invoice is not marked as "paid" or something similar, you should ask for a receipt showing the total you paid.  This documentation is what you will need to prove to your health insurer that this payment should be applied to your deductible.

After every healthcare visit, use the invoice to update your annual spreadsheet totaling how much you have paid for the year.  You can compare the total against your plan's deductible to know how close you are to reaching your deductible for the year.  Note that not every service is considered a "covered service" by your insurer – and only covered services count toward your deductible.  When in doubt about whether a service is covered, contact your insurer.

When to submit invoices

You typically need to submit your documentation to your insurer yourself.  That can be time-consuming.  Rather than invest that time every time, you can take a "middle ground" approach.  You can always gather the necessary documentation after each healthcare visit, but you can wait to submit it until you believe you're going to reach your deductible.  After all, your insurer doesn't care how much you have paid toward your deductible until you have reached it, and statistically you probably won't reach it.  Most likely, you won't need to submit anything to your insurer.  But you will be prepared if you do.

How to submit invoices

If you do decide to submit your documentation to your insurer, contact them to ask how they prefer to receive it.  They might want you to email or upload digital copies, or mail paper copies – it depends on the insurer.

Be sure your submission only contains invoices for "covered" services.  If your health insurance doesn't cover something, then they don't care how much you paid for it – it doesn't apply to your deductible.

Always include some sort of "cover letter" with your documentation.  It should include these elements:

1. Identify: This submission is in regard to Policy Number ___.
2. Explain: This submission contains documentation of health expenses paid by the policyholder directly to healthcare providers.  Although these expenses are for covered services, the policyholder chose to pay directly in exchange for a lower price.
3. Defuse: This is is not a request for reimbursement.
4. Request: Please apply these documented expenses toward this policy's deductible.
5. Invite: Please email me at ___.

How to handle further communication

You should prefer written communication (email or letters) for everything related to this submission.  You may choose to call your insurer if you don't hear back, but only to prompt them to take action.  Do not accept any statements from your insurer that are not in writing.  You provided documentation to them, they should do the same you.

If all goes as planned, your insurer should notify you the invoiced amounts have been applied to your deductible.  The most common problem is when the insurer rejects some of the amounts as being for "non-covered" services.  Those you will need to consider on a case-by-case basis based on your policy.  Another common problem is when the insurer rejects the entire submission as unacceptable.  Again, you will need to refer back to your policy to confirm that direct payments can be applied toward your deductible.  Critically, if your insurer does not refer to exact language from your policy, you should ask them to.  Again, you are referring to language from your policy, they should do the same for you.

Remember that a documentation-oriented approach is the only effective approach.  Your policy is your contract with your insurer, and your invoices are your proof of covered expenses.  Contracts and proof help things go smoothly, because it's hard to argue with them.  Do yourself a favor and base all your communication around these two things.

Additional reading about submitting invoices to count toward your deductible

• Sidecar Health on "Should I submit itemized medical bills, or “medical invoices,” even when I have an outstanding deductible amount?"
• StackExchange Money post on "Does paying a medical provider in cash count toward one's insurance deductible?"
• Kiplinger says: "Payments you make in cash may count toward your deductible".
• Cash Healthcare says: "The drawback to paying cash for medical services is that by not submitting your claims, medical bills won’t count toward your deductible." [Unless you submit your documentation.]
• Pinnacle III says: "If the patient opts to seek care under a self-pay arrangement, an insurance claim will not be filed.  This means the amount they remit under the self-pay arrangements is not credited to (applied against) their deductible. ... If the patient were to file a claim on their own, there is no guarantee it will apply towards their deductible."  [You should check your policy first.]
• ClearHealthCosts says: "Does this cash payment apply to my deductible? Probably not. You should check with your plan documents to be sure, but if by paying cash you are effectively declaring yourself uninsured, there’s no reason for it to apply to your deductible."  [This seems to be incorrect, and is included here to reflect there is some misinformation out there.]