Your coinsurance is 10%, which in this case would be $100. For example, let’s say you have a $1,000 procedure and your insurance covers 90% of the overall cost. After your deductible has been met, your insurance company will cover a certain percentage of the overall cost of each visit, leaving you responsible for the remainder. The broad concept of coinsurance is fairly simple. Coinsurance goes into effect after the deductible has been met. Unfortunately, the system isn’t always so simple.Ī deductible is a fixed amount that an individual must pay out-of-pocket before the insurance company will step in to cover most healthcare costs. Some consumers operate under the assumption that once they fulfill their annual out-of-pocket deductible, their health insurance company will step in and cover any additional costs for the rest of the year. A coinsurance payment, by contrast, is a percentage of a doctor or pharmacy’s overall fees, meaning that the out-of-pocket expense can vary. Copays are a flat fee that an individual is required to pay at the time of a doctor’s office visit or for a prescription. Other methods of cost-sharing include deductibles and copays, and all three terms are often-and incorrectly-used interchangeably. Understanding coinsurance requires understanding its role within the overall cost-sharing system. This concept, often referred to as “percentage participation” mitigates the risk for the insurance company by requiring the individual to share a portion of the post-deductible costs. For example, your insurer pays 80% and you would pay 20%. Your insurance company pays the higher percentage, and you are expected to cover the smaller one. This figure is determined by a percentage applied to the total cost of each medical service. Coinsurance is the percentage of costs of covered healthcare services you have to pay out of pocket after you have reached your annual deductible. We break down terms so you can understand-and with understanding comes better savings. With words like copay, deductible, and out-of-pocket maximum being thrown around, how are you supposed to know what’s what? That’s where our Healthcare Defined series comes in. Sometimes healthcare terms can seem like a whole different language. Now that you know how health plans work, it’s time to dig into your benefits and start experiencing all that care can do for you.Share on Facebook Facebook Logo Share on Twitter Twitter Logo Share on LinkedIn LinkedIn Logo Copy URL to clipboard Share Icon URL copied to clipboard Your health plan offers you further protection with an out-of-pocket limit, which is the most you could pay for covered services in a plan year.Ĭoinsurance and copays count toward your out-of-pocket limit - but premiums don't.Īfter you reach your out-of-pocket limit, your plan pays 100% of the cost. For example, you may pay 20% of a covered medical expense and your health plan will pay the remaining 80%.Īlong the way, you may pay a fixed amount - also known as a copay - for certain covered health services, like a doctor’s appointment. Once your deductible is reached, your health plan starts sharing a percentage of the costs with you. Paying your premium helps keep your plan active, so you can stay covered.Īt the start of your plan year, you pay 100% of your covered health services until you meet your deductible. ON-SCREEN TEXT: Įach health plan has a premium, a routine payment. Health plans are designed to help take good care of you - and knowing how they work can help you get the most out of your benefits.
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