Health insurance can be really tricky. We’ve written a couple blogs about it so please check those out for more information because right now we’re just going to be talking about coinsurance.
Coinsurance is the amount you as the insured must pay only after your deductible is satisfied. This is somewhat similar to a copayment or “copay” provision where you’re required to pay a set dollar amount for a service. Both grant insurance companies the ability to spread out risk amongst those they insure.
Coinsurance is usually a percentage that is agreed upon between you and your insurance company in regard to covered expenses or services. The most common breakdown is an 80/20 split where your insurance company pays 80% while you cover the remaining 20%. On top of that, most policies include an out-of-pocket maximum which limits the total amount you pay for covered care in a given period. This is great for those who have a manageable or low deductible as you’re likely to hit it early on in the year therefore having minimal out of pocket costs and your insurance company covering expenses for the remainder of the year.
Let’s walk through an example. Say you had a serious injury and had to get surgery with your total costs being $10,000. Your deductible is $2,000 and your coinsurance is the usual 20%. You also have an out-of-pocket maximum of $5,000. Firstly, you pay $2,000 (your deductible) and then 20% of the remaining $8,000 which would be $1,600. In total you’re going to be paying $3,600 for that surgery.
Additionally, let’s say complications arose and you had to have another surgery. Despite those additional costs you won’t have to pay more than $5,000 total as that’s your out-of-pocket maximum so your insurance will take care of the rest.
For more information on health insurance and general health please visit our blog.