About Coinsurance And How To Benefit From It

Coinsurance is a well used health insurance word. It simply means that you share the cost of a health care service.

This is a common aspect of health insurance and health care coverage. And the rates are usually based on the amount paid for services and the amount for which insurance is valid. Again, it is most common in no-fault insurance, such as an automobile insurance policy.

What is Coinsurance?

Firstly, it is a type of insurance in which an insured pays a percentage of the costs associated with specific health care events, such as the cost of a doctor’s visit.

For more clarification, coinsurance is the percentage of costs that an insured must pay. Your insurance may cover 80% of the cost of the service. So, you pay 20%. It may also be the percentage of damages one must pay after an accident is covered by insurance.

For example, if an accident has a medical bill of $1,000, and the injured party has $1,000 in coinsurance, the injured party would pay $50 towards the bill.

How does coinsurance work

Coinsurance is an insurance policy where the policyholder is responsible for paying a set percentage of their medical expenses, with the insurance company picking up the rest of the tab.

In most cases, the policyholder will be responsible for paying 20-80% of their medical expenses, with it typically kicking in for hospital stays.

For example, if you have an in-patient hospital stay of 24 hours or more, you will need to pay 20% of the bill. The remaining 80% of the bill, would be paid by the insurance provider.

If the hospital stay is 48 hours or more, you’ll need to pay 30% of the bill. The remaining 70% of the bill, would be paid by the insurance provider.

How to apply coinsurance to your medical plan 

When you sign up for health insurance, the monthly premium, co-pay, and coinsurance all determine how much you’ll pay out of pocket for medical services.

It also refers to a percentage of the balance you owe after you’ve paid your co-pay and deductible. So, for example, you might pay $500 in co-pays and deductibles for medical services, and then owe the remaining $100 to your insurance company.

You have 20% of it, so you’d pay 20% of that $100, or $20. That’s called 20% coinsurance, and it means that you pay 20% of the bill, after you’ve paid your deductible and co-pay.

Types of coinsurance

There are generally two types of coinsurance:

percentage coinsurance 

Percentage coinsurance is the percentage you have to pay for a covered expense.

For example, you may have a $1,000 deductible and 20% coinsurance, which means that you will have to pay $200 of the $1,000 before your insurance company will kick in.

Flat coinsurance 

This is a flat rate that you have to pay. For example, you may have a $1,000 deductible and a flat coinsurance of $20, which means that you will have to pay $20 of the $1,000 deductible before your insurance company will begin paying.

Difference between co-pay and coinsurance

Co-pay and coinsurance are the two common types of health insurance deductibles. They allow policyholders to pay a set amount for health care services.

For the insured, the co-pay is typically a fixed amount, Where coinsurance comes into play is, by covering part of the remaining amount. And it is an amount that you pay in addition to your copay.

Coinsurance percentage

Coinsurance percentage is a cost-sharing component that is applied to a health care policy. When this percentage is factored in, the insured may have to pay a certain portion of the cost. The coinsurance percentages vary according to the type of health care policy. 

This means that it is the percentage that you pay as a non-covered expense. It’s basically the percent of the cost of a claim that is not paid by your insurance provider.

Coinsurance clause

This clause is an insurance policy that allows the insurer to share part of the burden. For example, let’s say that policy A covers you for $50,000 and policy B covers you for $100,000. Together, they total $150,000. This clause states that the policy that pays out first will pay 80% of the costs, and the policy that pays out second will pay 20% of the costs.

Coinsurance and reinsurance

Now, reinsurance is the insurance that insurance companies purchase so that they can secure themselves from the risk of paying out large sums to the insured. Coinsurance is the practice of insurance companies sharing the financial burden of risk.

Furthermore, they are two similar insurance terms, however, they are still very different. The former refers to coverage that will be paid after you pay for your deductible. Reinsurance, on the other hand, is the insurance purchased by a healthcare organization, usually a health center or hospital, to cover their losses.

Deductibles, Copays, and Coinsurance

Deductibles, or initial out-of-pocket costs, are the amount of money you have to pay before the insurance company starts covering your expenses. Examples of deductibles are $1,000, $2,000, $2,500, and so on. But copays and coinsurance are percentages of what the insurance company pays after you meet a deductible.

Benefit

Meanwhile, this plan is an insurance concept utilized by health insurance. The plan provides an incentive to get lower-cost outpatient care, without completely cutting the patient off from medical care.

Disadvantage

This is one method that health insurance companies use to control their costs. It takes its cue from the way most health savings accounts work. By requiring the insured to pay a percentage of the bill, the coinsurance makes the patient responsible for part of the expense. Each company sets its own co-pays and coinsurance percentages, so it’s important to know what they charge before you make an appointment.

Best health care companies

• Cigna
• UnitedHealthcare
• Anthem
• Aetna
• Humana
• Blue Cross Blue Shield
• Kaiser Permanente
• Highmark
• Blue Shield of California
• CareFirst
• Premera Blue Cross
• Health Net of California, Inc