What Does the Term Health Coinsurance Mean?
Some health insurance policies require the insured person to pay coinsurance. Coinsurance means that you will share some of the payment for your healthcare bills with your health insurer.
When you are selecting your health insurance policy, you might have several choices, including a few plans with the option of coinsurance. Before you purchase a new policy, it’s important to understand exactly what coinsurance is.
With coinsurance, even when you have health insurance, you will still be responsible for paying for a portion of the cost every time you receive healthcare services, whether it’s a doctor appointment, a test, hospitalization, or an individual drug prescription.
Coinsurance Differs From Your Other Healthcare Costs
In addition to coinsurance, there are other costs that you have to pay for your healthcare coverage, and it helps to know the difference between coinsurance and your other costs.
- Premium: Your health insurance premium is the amount of money that you pay to be covered by your health insurance. If you are getting employer-sponsored health insurance, you can usually elect to have your premium deducted from your paycheck, and this money is not counted as your taxable income.
- Deductible: A deductible is a pre-determined amount of money that you must pay towards your own health care services before your health insurance starts to cover the cost of your health care.
- Copay: Copay is a set amount of money that you must pay for some or all of your medical visits and care.
Coinsurance differs from these other costs because your coinsurance cost is usually a percentage of your care, while the other costs are a set amount. For example, your premium may be $500 per month, your deductible may be $1500 per year, and your copay may be $30 per office visit. Your coinsurance is usually a percentage of the cost of your health care services—so you may be required to pay 25 percent of the cost of your x-ray and surgery.
Percentages of Coinsurance
Your coinsurance responsibility is usually a percentage of the total cost for each instance of care, and there are several options to choose from.
For example, your insurance may be set at 80/20, which means that the insurance company pays 80 percent of the total bill and you pay the remaining 20 percent. Coinsurance may be as much as 50 percent for some insurance plans. If you have a high deductible or catastrophic health plan, it may even go up as high as 100 percent until you reach the total amount of your deductible.
When you have choices of different plans, your premium differs based on factors such as coinsurance, deductible, and copay. The higher the percentage you are expected to pay when you need healthcare services, the (relatively) less expensive your monthly premiums should be. High coinsurance usually means lower monthly premiums.
Coinsurance typically contributes to your deductible. Once you have reached your deductible, you may no longer have any responsibility for coinsurance for the rest of the term of your policy—which is usually through the end of the current fiscal year.
How Coinsurance Affects the Cost of Your Healthcare
Let’s say that you visit your doctor for a routine procedure and the total bill from the visit is $125. You may have already paid a $25 out-of-pocket copay. Once applied, this copay reduces the original bill from $125 to $100. Your coinsurance set up with your insurer is 80/20, which means that you are now expected to pay 20% of the remaining $100 bill, which comes out to be $20.
Thus, your total cost for the visit was the $25 copay plus the additional $20 coinsurance, which comes out to a total of $45.
A Word From Medicaltravel.ng
Be sure to consider the approximate cost of coinsurance when you are figuring out which healthcare insurance plan to choose, either as an individual policy or during open enrollment if you get your insurance through your employer.
The out-of-pocket cost of coinsurance can discourage you from seeing your doctor or seeking treatment, so consider that when you are selecting your insurance plan.
It can be hard to predict your health care needs for the upcoming year, and you may decide to try one type of plan one year, and another the next to see what works best for you and your family.