UPDATED: JULY 05, 2023 | 2 MIN READ
Coinsurance is a type of cost-sharing in health insurance where the policyholder pays a portion of the cost of a medical service, and the insurance company pays the rest.
Understanding coinsurance is essential for anyone who wants to make informed decisions about their healthcare and health insurance.
This article will dive into what coinsurance is, what sets it apart from other forms of cost-sharing, when you can expect to pay coinsurance, and how to calculate your coinsurance costs.
Coinsurance: How does it work?
Coinsurance is a type of cost-sharing between the policyholder and their insurance company.
Unlike copays, where you pay a fixed amount each time you receive a specific medical service, coinsurance is a percentage of the total cost of the medical service.
If your plan has a deductible, it must be paid before your coinsurance begins.
For example, if your coinsurance is 20%, and the cost of a medical service is $100, you would pay $20 in out-of-pocket costs, and your insurance company would pay $80.
Differences between coinsurance and copay
A copay is a fixed dollar amount you pay each time you receive a specific medical service, such as a doctor’s visit.
At the same time, coinsurance is a percentage of the total cost of the medical service or doctor visit.
Copays are typically lower than the amount you would pay for coinsurance.
On the other hand, coinsurance is a higher percentage of the cost. Still, it also provides more comprehensive coverage.
It helps spread the cost of medical services over a larger pool of policyholders. Most co-pays are under $100, especially for routine doctor visits or virtual appointments.
Your coinsurance varies based on the actual care costs so it may be over $100 for a specialist visit or a medical procedure.
When do I pay coinsurance?
You typically pay coinsurance when you receive a medical service covered by your health insurance policy. It is important to note that coinsurance generally is only applied to services subject to a deductible.
A deductible is the amount of money you must pay before your insurance company starts covering the cost of medical services.
Once you reach your deductible, your coinsurance will kick in, and you will begin paying a percentage of each medical service you receive.
Which is better? copay or coinsurance
Whether a copay or coinsurance is better depends on individual circumstances and personal preferences.
A copay is a fixed dollar amount a policyholder pays for a specific medical service, such as a doctor’s office visit or prescription drug. Copays are usually a low and predictable flat fee, making it easier for policyholders to budget for their healthcare expenses.
Coinsurance is a percentage of the total cost of medical services that the policyholder is responsible for paying.
Coinsurance can increase out-of-pocket expenses for policyholders, particularly for more expensive medical procedures. Still, it can also result in lower monthly premiums for the policyholder.
Individuals who prioritize lower monthly premiums over out-of-pocket expenses may prefer coinsurance. In contrast, those prioritizing predictable and low out-of-pocket expenses may prefer copays.
It is essential to carefully consider both options and review the specific details of a health insurance plan, including the copay and coinsurance rates, annual deductible, and overall monthly premium, before deciding.
What does coinsurance after deductible mean?
You’ll pay whatever the stated percentage is, and your carrier will cover the remaining amount. Coinsurance doesn’t apply until after you hit your annual deductible. If you have a high deductible, it can be until coinsurance kicks in.
Coinsurance rates
Coinsurance rates can vary widely depending on the health insurance plan and the type of medical service you receive. Here are some common coinsurance rates:
- 0%: Some health insurance plans offer 0% coinsurance, which means that the insurance plan pays the entire cost of covered medical services, and you are not responsible for paying any portion of the medical cost
- 10-20%: Some insurance plans may have coinsurance rates in the 10-20% range, meaning you would be responsible for paying 10-20% of the cost of covered medical services, while your insurance would pay the remaining 80-90%
- 30%: A common coinsurance rate is 30%, meaning you would be responsible for paying 30% of the cost of covered medical services, while your insurance would pay 70%
- 50%: Some insurance plans may have coinsurance rates of 50%, meaning you would be responsible for paying half of the cost of covered medical services
It’s important to understand that coinsurance rates can change based on the specifics of your insurance plan, the type of medical service you receive, and other factors.
Before receiving medical services, checking your plan’s details is a good idea. This will help you to understand your financial responsibility for the services, including any coinsurance amounts you may owe.
In-network coinsurance vs. out-of-network coinsurance
Some plans are Health Maintenance Organizations (HMOs), while others are Preferred Provider Organizations (PPOs). With an HMO plan, you don’t have coverage out of the plan’s network.
PPO plans allow for the use of in and out-of-network providers. Typically using an out-of-network provider will require you to pay a higher coinsurance amount.
Calculating my coinsurance costs
Calculating your coinsurance costs is relatively straightforward. Multiply the cost of the medical service by your coinsurance percentage.
For example, if a medical service is billed to your insurance company is $100, and your coinsurance is 20%, you would pay $20.
Lowering coinsurance rates
You may lower your coinsurance rates by signing up for health insurance through the Affordable Care Act (ACA) Marketplace. These discounts are called cost-sharing reductions and only apply to Silver healthcare plans. Cost-sharing reductions are based on income and household size. If you qualify, you may have a lower coinsurance rate. To save on coinsurance costs, consider a Silver plan as you sign up through the Marketplace.
FAQs
What is health insurance coinsurance?
Coinsurance is a cost-sharing mechanism in health insurance where the policyholder and the insurance company share the cost of covered health care costs.
In a coinsurance arrangement, the policyholder pays a fixed percentage of the total cost of medical services.
What does 20% coinsurance mean?
If your health insurance plan features 20%, you only pay 20% of all covered costs after you reach your deductible. Your insurance company will cover the remaining 80% of the costs.
What is the difference between coinsurance and copay?
A copay is a fixed dollar amount you pay each time you receive covered health care services. At the same time, coinsurance is a percentage of the total cost of the medical service. The amount varies since the coinsurance amount depends on the costs of your health care services.
How is coinsurance different from a deductible?
Coinsurance is what you pay after you meet your deductible. It doesn’t apply after you reach the deductible.
When do I pay coinsurance?
You will typically pay coinsurance when you receive covered services in your insurance policy. Coinsurance can be applied at primary care physician offices, emergency rooms, or other medical expenses.
What does 70% coinsurance mean?
A plan with 70% coinsurance pays 70% of your covered medical costs, and you pay 30%.
Is there a cap on coinsurance?
Coinsurance counts in your out-of-pocket cap. A typical cap can be $2,000 to $3,000. Once you reach the stated cap, your insurance company will cover all reasonable costs for your medical care for the rest of the year.
Do you have to pay coinsurance when using Medicare?
Medicare beneficiaries are responsible for a 20% coinsurance. However, those costs can be covered differently if they enroll in a Medicare insurance plan.
Get help lowering your health insurance coinsurance and premiums
If you’re looking for a low-cost healthcare plan that covers coinsurance, many resources are available to help you. Speaking with a licensed health insurance agent can help answer any questions.
To find an agent licensed in your area, give us a call. You can also review rates and health insurance companies by completing our online request form.
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