Your out-of-pocket health care costs need not be a mystery

Reviewed by Emily Henderson, B.Sc.Nov 15 2021

If you've ever had a serious illness or cared for someone who has, you know how quickly the medical bills can pile up: from labs, radiology clinics, pharmacies, doctors, different departments within the same hospital — some of them in your insurance network, others not.

It can be extremely confusing, no matter how clever you are, to determine which bills you need to pay. If you're sick, or have technological, cultural or language barriers — not to mention financial difficulties — navigating this maze can be especially intimidating.

A California law signed by Gov. Gavin Newsom last month may help you sort through a tangle of medical bills to figure out what your health plan will cover and when the coverage kicks in.

The law, SB 368, requires most state-regulated private-sector health plans to send enrollees updates, for every month in which they received care, showing how much they have paid toward their annual deductible — the amount a person must shell out before insurance begins to cover most of their care — and how close they are to reaching out-of-pocket limits, the amount after which the insurer pays for 100% of care.

The law, which takes effect in July, should help people with costly chronic conditions who need to keep better track of how much they owe, and healthy ones who rarely seek care but might suddenly encounter unexpected medical circumstances.

"It's not that hard to hit those maximums, and it doesn't take a cancer diagnosis to get there," says Dylan Roby, a professor of public health at the University of California-Irvine. "It could be one ER visit with a procedure. A broken leg could get you there pretty easily."

The new law requires health plans to send out-of-pocket updates via mail unless the insured opts for electronic delivery. The information must also be stored in a format that is accessible to customers at any time.

SB 368 "is part of a larger need to provide transparency about individuals' out-of-pocket risks," says Roby.

Consumers often are unaware, he notes, of what's available for free under the Affordable Care Act, including preventive services like screening tests and immunizations. Most health plans offered through Covered California, the state's ACA marketplace, also must cover outpatient services, including imaging, specialist appointments and physical therapy, before the deductible is met.

One potential pitfall of the new law, Roby observes, is that insurers can crunch numbers based only on the claims they've processed, and some doctors and other providers might take six months or more to file claims. That means the information plans send to enrollees could be outdated.

At present, state law imposes no specific requirement on insurers to inform enrollees of their current financial liabilities, but some plans already do so — either in the "explanation of benefits" they send after care is received, or in response to a customer request.

"This law makes an optional practice a requirement," says state Sen. Monique Limón (D-Santa Barbara), who authored the legislation. "And it's a good practice."

The new law should be helpful to a growing number of people, given the increasing prevalence of health plans with ever-larger deductibles.

Between 2012 and 2020, the percentage of California workers with single coverage who had an annual deductible of $1,000 or greater quadrupled, to 54%. And among families enrolled in health plans with deductibles, 70% had deductibles of $2,000 or higher last year, compared with 31% eight years earlier.

For the cheapest Covered California plans, the deductible this year is $6,300 for an individual and $12,600 for a family. And there's a separate deductible for prescription drugs (the new law requires health plans to inform enrollees where they stand on all their deductibles).

As deductibles rise, health plan members are seeing the financial protection of their insurance kick in later and later in the year. And in many cases, after meeting their deductibles they still need to spend a thousand or more before reaching out-of-pocket spending limits for the year.

People with serious diagnoses such as cancer, HIV, multiple sclerosis or cystic fibrosis frequently make such calculations.

Stacey Armato, a 41-year-old mother of three in Hermosa Beach, California, has a 6-year-old son with cystic fibrosis, a serious progressive lung disease. Her son, Massimo, takes about a dozen medications, with costs well into the thousands of dollars each month.

Armato and her family are luckier than many: They have good insurance that limits their total spending on Massimo's care to about $6,000 a year. But that is still enough to make them rethink spending plans at times. "I'm always going to prioritize my son's care," Armato says.

She likes the new law. "I think transparency about how much a patient is spending and what their financial obligations are is really important," she says.

Some families coping with cystic fibrosis and other expensive illnesses face much starker trade-offs — choosing between treatment and paying their rent, for example. In those cases, it can be indispensable to know when the financial hemorrhaging will stop, easing pressure on the family budget.

The new law can also be useful if you, like many people, postponed an elective surgery because of the pandemic — a hip replacement or cataract removal, for example — and want to reschedule it now. The best timing, financially speaking, will be when you are close to reaching your deductible and out-of-pocket spending limit — or if you already have reached them. If you know where you stand, you can schedule the procedure for a time when your financial liability will be minimal.

The law might also help people avoid paying money they don't actually owe. "Sometimes when people see any kind of bill, they think they need to pay it," says Jen Flory, a policy advocate at the Western Center on Law & Poverty, which supported the legislation. "So unless they understand that, 'Oh, I reached my deductible, or my out-of-pocket max,' people panic and do whatever they need to do to pay the bill. And it can be hard to get the money back from providers if they pay unnecessarily."

Although your insurer is not required to provide your out-of-pocket status until the law takes effect in July, you can still call the customer help line and ask for it — or for clarification about a bill. If you don't get the answer you want, ask your health plan to tell you who regulates it, and call that agency. It would usually be the Department of Managed Health Care, at 888-466-2219 or HealthHelp.ca.gov, or the California Department of Insurance, reachable at 800-927-4357.

If you need help sorting through heaps of medical bills, you could hire a professional patient advocate, who will typically charge you a percentage of the amount they save you. To find patient advocates in your area, log on to

To see if you qualify for free assistance, try the Patient Advocate Foundation (www.patientadvocate.org or 800-532-5274), which helps people resolve unaffordable health bills and also provides disease-specific, need-based financial aid.

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.