What is Coinsurance?

Coinsurance is one of the costs that you may find in the details of your existing or desired health plan. Coinsurance is a percentage that you pay for covered services. Typically, coinsurance means that you will always be charged the same amount of the bill for every covered service. Much like a copay, coinsurance is your share cost for covered services. Let’s explore how coinsurance works and how it compares to other out-of-pocket expenses.

How does coinsurance work?

When you file a health insurance claim for a service covered with a coinsurance, you will share a percentage of the cost. Many insurance companies operate on an 80/20 coinsurance plan. On an 80/20 coinsurance plan, your coinsurance is 20%. As an example, on a $1,000 medical claim, a 20% coinsurance means you pay $200.

Many of your coinsurances will be listed in percentages. You may see 20%, 0%, or depending on the service, sometimes even up to 60%. This percentage is your share of the costs for the related service. Some of the most common percentages are:

• 20% coinsurance: At this rate, you are responsible for 20% of the total bill.
• 100% coinsurance: At this rate, you are responsible for the entire bill.
• 0% coinsurance: At this rate, the insurance covers the entire bill.

Commonly, but not always, visits to your primary care provider or a specialist will have a copay. Coinsurances are more common for things like durable medical equipment, x-ray or radiology services, some prescription drugs, and more.

How do coinsurances work with my deductible?

Another important thing to keep in mind is that coinsurances kick in after your deductible is met. Before you have met your deductible, you are responsible for the full bill. After you have met your deductible, you pay the copay or coinsurance on related services.

How do coinsurances work with my out-of-pocket maximum?

Coinsurance payments contribute to your out-of-pocket maximum. After your deductible is met, you will pay copays and coinsurances until your out-of-pocket maximum is met. Upon reaching your out-of-pocket maximum, your insurance covers 100% of covered medical costs.

As an example, say you have a deductible of $1,000, a 20% copay, and an out-of-pocket maximum of $4,000. In this case, you would pay for services up to $1,000 in full. After you pay $1,000, you pay only 20% of coinsured services. Once you have paid up to a sum total of $4,000, you are not required to pay any more for services. The deductible counts as well toward your out-of-pocket maximum.

Pros and Cons of Coinsurance

While coinsurances can mean that you may pay a larger share of services, they also help incentivize coverage. If insurers had to bear the full cost, they may choose not to cover certain services at all instead. Additionally, with coinsurances, you are more likely to reach your out-of-pocket maximum. After this, your insurance company incurs all costs for the rest of the year.

However, the main downside to coinsurances are the up-front cost. Policyholders tend to absorb a higher initial cost, which can be hard for some.

In- vs. Out-of-Network Coinsurance

Out-of-network care coverage can vary greatly by plan. Some plans may offer out-of-network coverage, and some may not cover out-of-network care at all. When covered, out-of-network care tends to have both higher deductibles, and higher co-pays and co-insurances. You will pay more before care is covered, and share more of the cost once it is covered.

To understand your out-of-network coverage and costs, review your plan details.

What does coinsurance mean for me?

Understanding coinsurance means better understanding your costs in healthcare. It gives you a better understanding of how your health plan is used. You can plan for the future more proactively and compare between plans more resourcefully. Be more in charge of your health plan by knowing what it all means and how it affects you.

If you have any questions about coinsurance, your health plan, or anything else, give us a call. Health Plan Advocates is here to advocate for your health and get you the best plan for your needs. We offer free, no-pressure consulting services to help you compare between the plans available in your area. Additionally, we are licensed in all 50 states with all trusted providers to be able to best serve you. Reach out to us for any and all help you need with your health plan!