What is Health Insurance Coinsurance?

Depending on your health insurance, you may be required to pay some of the costs of any treatment you receive. Depending on how you pay, and when, there are different terms:

• Deductible – This is how much you have to pay before your insurance “kicks in”. If your deductible is $500, and the cost of treatment is $800, you would pay $500 while your insurance company would pay $300. But if the cost of your treatment is $300, you’d have to pay for all of that yourself.
• Copay – This is when you have to pay a set fee for certain services. If your copay for medication is $20, and your medication costs $100, you’d pay $20 and your insurance company would pay $80. If your medication costs $22, you’d pay $20 and your insurance company would pay $2.
• Coinsurance – After the threshold for the deductible has been met, coinsurance is what percentage you have to pay of the rest of the costs for treatment.

Imagine a plan like this: your deductible is $500, and your coinsurance plan is 10%. You go see a doctor and the total bill is $1000.

$500 – you pay as the deductible, leaving a remainder of $500. Since your coinsurance plan is set at 10%, you pay 10% of the remaining costs ($500), which is $50. Therefore, in this example, your total cost would be $550 while your insurance company would pay the remaining $450.

The easiest way to think of coinsurance is that you are responsible for paying a percentage of the total costs, in effectively “insuring yourself” together with (co-) the insurance company.

Many insurance plans have different coinsurance rules depending on whether you receive treatment inside the coverage network or outside. Therefore, a doctor’s visit inside your network might have a coinsurance percentage at the lower rate, while a visit to a specialist outside the network carries a higher coinsurance percentage.

Pros and Cons of Coinsurance

The overwhelming benefit of coinsurance plans is that they usually carry lower monthly premiums. The downside is that you will always be responsible for a percentage of your treatments, which can sometimes be exorbitantly expensive.

Benefits:

• Lower monthly premiums
• Lower deductibles (sometimes)
• Sometimes more treatment options and specialist care is offered

Risks:

• Coverage outside the network has a higher coinsurance percentage rate
• You will have to pay a percentage of potentially very expensive treatment
• In some circumstances, you may be paying more of the total costs than your insurance company

It’s important to always carefully read and understand the details of any insurance plan before enrolling.

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