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Coinsurance is the money you'll pay your provider after you've hit your deductible.
- Coinsurance is the percentage of your healthcare costs that you're responsible for paying once you've reached your deductible.
- Coinsurance is often expressed as a split, e.g. 80/20, with the second number indicating the percentage of your medical bills you'll need to pay after your deductible has been reached.
- To estimate your maximum coinsurance cost, subtract your out-of-pocket maximum from your deductible.
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When it comes to health insurance, there are a lot of things to keep track of. Premiums, deductibles, and in-network physicians are all things you'll want to consider.
Coinsurance is another important factor that you'll want to pay attention to when you're shopping for a healthcare plan. Let's take a look at what coinsurance is and why it can have a big effect on your healthcare costs.
What is coinsurance?
Coinsurance is the percentage of your healthcare costs that you're responsible for paying once you've reached your deductible.
Many people assume that 100% of their medical costs will be covered once they've hit their deductible, but that's often not the case. Instead, you may need to continue to pay a portion of your medical bills until you've reached your out-of-pocket maximum.
As you're shopping for healthcare policies, an 80/20 coinsurance split is one of the most common plans you'll see. Under this plan, your insurance company will pay 80% of your health costs after you've reached your deductible and you'll be responsible for the other 20%.
In general, you can expect your premium to be higher as your coinsurance responsibility goes down. In other words, you'll pay more for an 80/20 plan than one with a 60/40 or 50/50 split (all other factors being equal).
What's the difference between coinsurance and copays?
While the terms coinsurance and copays are sometimes used interchangeably, they are not the same thing. There are several key differences.
First, copays are flat fees as opposed to percentages. For instance, your may be charged a $100 copay per doctor visit or $50 per lab visit. The second difference is that while coinsurance is paid after your deductible, copay expenses may count towards your deductible.
Third, you'll generally be required to make your copay payment at the doctor's office or pharmacy. A coinsurance bill, on the other hand, will arrive later after your insurer has received and processed the claim.
Estimating your coinsurance cost
To estimate how much your coinsurance will cost you, you'll need to consider two numbers: your deductible and out-of-pocket maximum.
For instance, let's say you're looking at a plan with an 80/20 coinsurance split, a $6,000 deductible and a $12,000 out-of-pocket maximum.
Once you reach your $6,000 deductible, your medical costs will drop significantly. For every $100 you accumulate in medical bills, you'll only owe $20. For smaller healthcare expenses, that's great. But on a $5,000 medical bill, you'd owe $1,000, which is still a significant amount of money.
In this example, your maximum coinsurance cost is the difference between your $12,000 out-of-pocket maximum and your $6,000 deductible.
$12,000 (out-of-pocket maximum) - $6,000 (deductible) = $6,000 maximum annual coinsurance cost
As you're shopping for health insurance, lower premiums can be tempting. But it's important to do the math.
If you're healthy, choosing a plan with a cheap premium could be a smart move. But if you have a medical condition that requires regular care, a higher premium could be worth if you get a better coinsurance split or a lower out-of-pocket maximum.
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