Before you agree to an insurance plan, there are different terms you have to understand. Don’t just agree and sign for a plan before getting into the details of each term. Usually, there are charges you might agree or not agree to, which can lead to future problems.
Coinsurance in health is an amount that you pay while your insurer pays the balance. In other words, you split the bill between you and your insurer. When you get an insurance plan, you’ll first pay the deductible, a percentage of the premium.
After paying the deductible, you still have to pay a coinsurance before your insurer takes overpaying your medical bill. Quite complicated, right? Let’s understand more about these insurance terms in the below article.
What Is Coinsurance?
Coinsurance is the amount (usually determined by your insurer) that the insured pays before the insurer covers the rest. It is usually an amount determined by your insurance company and is a percentage that you have to agree to.
As much as they say health insurance relieves you of paying bills, it is not entirely true. Somehow medical bills that you pay-out-of pocket keep coming in.
Example
Let’s assume you have a one-year period policy with a deductible of $500. If it’s supposed to end in December and in January you get a medical complication that costs $50, you’ll have to pay for it.
Note that the whole year you didn’t use any of your insurance. If another medical bill comes up, you still have to pay it until you fully pay the $500 deductible.
Even after paying the deductible in full, the next bill you’ll share with your insurer. This is the coinsurance. If you get a bill of $1000 and have a coinsurance of 80-20, it means you’ll pay 20% of the $1000 while the insurance company pays 80%.
Therefore, you’ll pay $200 as a coinsurance cost, and the insurance company will pay $800.
Other Health Insurance Terms
Deductible
On top of paying your monthly premium, you also have to pay a deductible. It is an amount an insured pays before the insurance provider assumes responsibility.
If you pick an insurance plan with a deductible of $2000, it means that you’ll pay all the medical bills fully until you reach $2000. At this point, the insurance company comes in, but again you share the cost, called coinsurance.
Note that there are ways you can reduce your deductible. For instance, choosing a plan with a lower premium raises the deductible and vice versa.
Premium
A premium is a monthly fee the insurer pays to keep your plan going. Whether you fall sick or not, you have to pay this premium; else, they cut you off.
To determine one’s premium, the insurance provider considers one’s age, where they live, and their family size. From these factors, they can calculate your premium.
Copayment
This is one term everyone who wants to buy insurance should understand in detail (and the other terms too). The copayment is a flat fee that you pay when you go to the hospital and get a service.
The copayment fee varies according to the type of service. For instance, being attended to in an emergency department might cost $200, while physical examination might cost $30 and drugs $10.
Before you pay for a plan, ensure you ask your insurer whether the copayment will be subtracted from the deductible. Some policies do while others don’t; therefore, understand these details first and see if you are ok with it.
Why Coinsurance?
All these out-of-pocket bills like coinsurance allow you to share insurance bills with your insurance provider.
Also, note that some healthcare practitioners are cheaper than others. Therefore, if you choose expensive ones, remember you also have to pay some bills too. This lessens the burden on the insurance companies.
Final Thoughts
Health insurance is one that seems to have unending bills. Even after you have paid the premium, you still have to pay a coinsurance, copayment, and deductible.
Coinsurance is when you and the insurer split the bill. Usually, it’s an 80-20% or 70-30% plan where you pay the lower amount and your insurer the bigger part.