Coinsurance is a term that describes how much of the cost of a health care service or product will be paid by the patient, rather than by the insurer. This term can be found on health insurance policies, doctor’s office bills and even hospital discharge papers. Coinsurance can happen in two ways: as a percentage of covered costs (known as percent coinsurance) or as a fixed dollar amount (known as dollar coinsurance).
What is Coinsurance?
Coinsurance is a type of coverage on health insurance that calculates the percentage of costs that a patient pays for services rendered. Coinsurance is often used in conjunction with deductible plans, where patients must pay a set amount before their insurance pays any other expenses.
Types of Coinsurance
There are two types of coinsurance: fixed and percentage. Fixed coinsurance is the amount you are responsible for, regardless of how much your health insurance policy pays. Percentage coinsurance, on the other hand, is the percentage of the cost of a medical service that you are responsible for.
For example, if you have a policy with a fixed coinsurance rate of 20%, then you will be responsible for $100 of any medical expenses that exceed that amount. Your health insurance policy would then pay the other 80%. If you have a policy with a percentage coinsurance rate, however, then your health insurance company will only pay 70% of any medical expenses that exceed the $100 threshold. So if you have $200 in medical expenses that exceed your $100 limit, your health insurance company would only reimburse you for $140 – or 30% of the total costs.
Both types of coinsurance can be beneficial to you depending on your needs. Fixed coinsurance is usually preferable because it gives you a set limit on how much you will be responsible for in case of an emergency. With a percentage coinsurance plan, on the other hand, you may be more comfortable knowing that most costs over your deductible will be covered by your health insurance policy.
How Does Coinsurance Work?
Coinsurance is a percentage of a bill paid by the insured. Coinsurance is typically expressed as a percentage of the bill exceeding a set dollar amount. For example, if your healthcare insurance policy has a coinsurance of 20 percent, and your doctor charges $100 for services, you would pay $20 out-of-pocket (20% of $100 = $20), and the insurance company would pay the remaining $80.
When to Use Coinsurance
When coinsurance is used on health insurance, it is a percentage of the cost of the treatment or service. Coinsurance can be beneficial if the patient is only responsible for a fraction of the cost of the treatment. For example, with a 50% coinsurance rate, the patient would pay half of the cost of the treatment, and the insurance company would pay the other half.
Conclusion
Coinsurance is a term used in health insurance that refers to the percentage of a bill that a policyholder will have to pay. For example, if you are covered by health insurance and need surgery, your coinsurance might be 50%. This means that you will have to pay half of the cost of the surgery, which could amount to thousands of dollars. Be sure to ask your insurance representative about coinsurance when you are shopping for coverage.
