Underinsured describes someone who has health coverage and still cannot afford the care they need, usually because of a deductible, coinsurance or out-of-pocket maximum large enough that the coverage does not function when it is used.

In most of the country that is a description with no legal weight. A hospital’s financial assistance policy is written for uninsured patients, and an insured patient with a $7,000 deductible is told they have insurance and shown the door.

In New York it is a category with a threshold, and almost nobody who qualifies knows it exists.

Under the state’s hospital financial assistance law, a patient whose out-of-pocket medical costs over twelve months exceed 10% of gross income is treated as underinsured, and the hospital’s caps on what may be charged apply to them as well. That is the whole mechanism: you do not have to be uninsured, you have to have spent more than a tenth of your income on medical care in a year.

What that means in practice:

Count the whole year, not the bill in front of you. Deductible payments, copays, coinsurance, prescriptions you paid for. The test is cumulative.

Keep the documentation. Receipts, explanations of benefits, and any superbill you paid and submitted. The claim is arithmetic, and arithmetic needs paper.

Apply anyway if you are close. Applying is free, it is not a credit event, and while an application is pending a New York hospital may not send the account to collections.

The same law carries the rest of the structure: nothing charged out of pocket to an uninsured patient at or below 200% of the federal poverty level, capped at 10% of the Medicaid rate to 300% and 20% to 400%, no asset test, immigration status not considered, applications accepted at any stage including after collections, no lawsuits against patients below 400%, payment plans capped at 5% of monthly income.

Also called: under-insured, inadequate coverage. Full guide: Hospital financial assistance in New York.

More in Glossary of health coverage and billing terms

  • Fair hearing — The state's review of a decision about your Medicaid, with two different deadlines that people routinely confuse.
  • Managed Long Term Care (MLTC) — The plan that authorizes and pays for long-term home care in New York. It is the payer, not the care itself.
  • Dual eligible — Having Medicare and Medicaid at the same time, which covers premiums, cost sharing and the long-term care Medicare does not.
  • Deductible — A deductible is what you pay for covered care each plan year before your plan pays its share. How it works, what skips it, and which New York plans have none.
  • Charity care — Charity care is the everyday name for hospital financial assistance in New York. Who qualifies, the income tiers to 400% of poverty, and how to apply.

This page explains how the system works. It is not medical advice. More.