What Is Coinsurance
One of the most misunderstood topics of insurance is coinsurance. This is a term that describes your cost-sharing for a health plan. Insurance is certainly not an easy topic to understand. Terminologies such as deductibles, copays, premiums, networks, and others can quickly confuse the average consumer about what they are buying. With coinsurance, you often see deductibles, percentages, and your max out pocket included on the plan description. The easiest way to understand your plan is by speaking with a health insurance broker. We can explain what coinsurance is as well as all other aspects of health insurance for no charge.
How It Works
There are three parts to coinsurance. Those are the calendar year deductible, coinsurance percentage, and max out of pocket. Let’s say your deductible on a plan is $5,000, your coinsurance rate is 30%, and max out pocket is $8,000. If you go to the hospital, you will need to satisfy your calendar year deductible of $5,000 first. After that, you share 30% of the cost of any remaining charges up your max of $8,000. Since you have already spent $5,000 of your $8,000 max, you will share only 30% until you have paid another $3,000. You are then covered for 100% of any remaining eligible expenses. Think of it in terms of you paying all expenses, then some, then none.
Avoiding Coinsurance
If you want to cut coinsurance out of your health plan, you will need to purchase a policy that has more copays. Copays are flat dollar amounts that you pay when you use a medical service. Most consumers prefer to have more copays since it is easy to understand and you can expect to pay only a certain amount. Having copays will also mean paying less for those services since the insurance company is covering those services before the deductible. Although, not all plans pay for copays before the deductible. It is important to make sure copays are first to avoid surprises with your next medical service.
