What is coinsurance?
If you have health insurance, then you’ve likely heard about coinsurance. But you may not know what this is, and how it relates to your coverage. Simply put, coinsurance is the percentage of a covered health service you will pay for out-of-pocket after having met your deductible. So how does this work? Learn more about understanding the function of coinsurance in your health coverage plan here.
Grab our guide to understanding your health insurance costs to learn about coinsurance, copays, deductibles, and more.
What is coinsurance in a health insurance plan?
Practically every kind of health insurance plan has something known as coinsurance. This is the percentage of a covered health service you will pay for yourself after you have met your deductible.
In other words, until your deductible is met, you will pay the full negotiated rate for a given covered health care cost in full. After your deductible is met, though, you will pay the coinsurance amount on a covered service.
For example, if a given covered health care service is $1000 and your coinsurance is 20%, if you have not met your deductible yet, you will pay the full $1000. After meeting your deductible, though, you will only pay the coinsurance amount, or $200, for this same service.
Keep in mind that plans with higher monthly premiums typically have both lower deductibles and lower coinsurance amounts. This means if you are someone who uses a lot of health care services in a given year, you will often get more value out of a plan with higher premiums that allows you to meet a lower deductible faster and then pay less for your care with a smaller coinsurance rate.
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What’s the difference between coinsurance and a copayment?
What is a copay?
A copayment is, in most cases, a flat fee you will pay a healthcare provider for a service. If you see an in-network provider, that provider and your insurance company have negotiated and set a maximum allowable amount they may charge you for a given health care service. A copayment is a portion of that amount that someone with in-network coverage pays to a provider for that service instead of paying the maximum allowable amount. You’ll likely pay this right at the doctor’s office—they typically charge you before you see the provider.
How do copays works?
For many health insurance policies, you will not begin to pay copays until after first meeting your annual deductible. For other plans, though, you will pay copays for certain services even before meeting your deductible. Either way, an example of a copay would be $20 per visit for your primary care physician and $45 per visit for a specialist. Both of these amounts would be less than the full maximum allowable amount negotiated between the insurance company and the provider.
Why are copays different than coinsurance?
Copays, however, are not coinsurance. Depending on the specifics of your given health insurance plan, after meeting your annual deductible you may pay copays for some kinds of health care and coinsurance for other kinds of health care. For example, you may pay a copay to see a provider, but coinsurance for a procedure.
How do copays and coinsurance work in relation to your annual deductible and towards your annual out-of-pocket maximum?
Don’t forget that for some plans, you will pay copays before meeting your deductible and that copays do not ever count towards your deductible. So, you will pay a smaller, negotiated rate — a copay — to see an in-network provider if you have health insurance. But you will not pay coinsurance until you have met your annual deductible, which copays do not count towards. Once you meet your deductible, your coinsurance means that your health plan will cover the majority of your health care expenses, while you personally are responsible for a smaller percentage of the total costs. You will pay coinsurance until you meet your annual out-of-pocket maximum for the year, at which point your plan will pay for your in-network healthcare in full.
How does coinsurance impact your total out-of-pocket costs?
In addition to your monthly premiums having an inverse relationship with your coinsurance rate, your annual out-of-pocket medical expenses will also be largely determined by how much in-network care you receive relative to out-of-network care. While you will pay your coinsurance rate after meeting your annual deductible for all in-network care, coinsurance will not apply for out-of-network care. That is, your out-of-pocket costs will be much higher if you get out-of-network care than in-network care because your coinsurance will not apply and you will pay the full medical costs of services yourself.
What are all my health insurance options?
- Marketplace/Obamacare plan. You can enroll in a Marketplace health insurance plan, also known as Obamacare or Affordable Care Act insurance. See plans and prices here.
- Medicaid. You also may be eligible for Medicaid, depending on your income. You can see if you’re eligible and apply here.
- COBRA. If you’ve been laid off recently, you usually have the option of COBRA, where you pay the full premium of the same insurance your employer purchased for you. COBRA is typically much more expensive than Marketplace insurance, but it allows you to continue the coverage you already had. Learn more about comparing COBRA with Obamacare health insurance.
- Medicare. Once you turn 65, you’re eligible for Medicare. Call us to enroll at (855) 677-3060.