The Need To Know Basics of Coinsurance
November 12, 2020
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Coinsurance is one type of way you pay for healthcare under certain insurance plans.
It can seem like health insurance companies want to confuse you by using overly complex terms.
We’re here to break it down for you—with a promise that it’s not that tricky.
It can help to start with a primer of a few common terms in the insurance world.
Deductible—How much you pay each year before your insurance starts paying for the majority of your healthcare costs.
Premium—How much you pay every month to keep your health insurance plan.
Copay—A set amount you pay per medical expense that kicks in right away, and before you meet your deductible. For example, you might owe $10 per visit with your physician for your copay.
Coinsurance—A percentage you pay for each medical expense — but only after you hit your deductible. The percentage depends on your plan.
Network—The team of doctors and medical professionals covered by your health insurance. If you go out of network, you’ll likely pay more, and any expenses you pay probably won’t go toward your deductible.
If you live in the U.S., your healthcare probably isn’t free. Coinsurance is one of the ways you share the costs of your medical expenses with your insurance company.
Many people’s health insurance has coinsurance as part of the plan, but not all. It’s a percentage of the amount you owe on something like a doctor’s visit, for example.
Coinsurance comes into play after you hit your deductible. Your deductible is how much you pay every year on covered services before your insurance kicks in.
If your deductible is $1,500 per year, you’ll pay that much on health care services every year— but then your insurance will start to pay. After you meet your deductible, you typically will only owe either coinsurance or a copay, which we discuss below.
Usually, if your plan has a high monthly premium, or the amount you pay each month to have the insurance, your coinsurance will be lower. But if your monthly premium is lower, your coinsurance will probably go up.
Let’s use an example to make things simpler to understand.
Say you go to a doctor that costs $100 per visit. You have already reached your deductible for the year, so your coinsurance kicks in.
The insurance policy you chose is what’s called an 80/20 plan, where you pay 20% of each medical cost in coinsurance, and your provider covers 80%.
For this visit, you’ll pay 20% of $100, or $20. Your health insurance will pay the remaining $80.
How much you will actually pay depends on your plan. Typically, coinsurance requires you to pay between 10% and 40% of each expense.
Knowing how much coinsurance costs you can help you better plan out how much you’ll pay on healthcare. That way, you can have a good idea of the amount you’ll need in savings for routine and emergency care.
To find out how much you owe for your deductible or your coinsurance, read over the health insurance documents you got when you signed up for your plan. These documents should outline exactly how much you’re expected to pay throughout the year.
That way, you won’t be surprised with a $50 bill from a specialist you had to see.
Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s).
Coinsurance is one type of way you pay for healthcare under certain insurance plans.
It can seem like health insurance companies want to confuse you by using overly complex terms.
We’re here to break it down for you—with a promise that it’s not that tricky.
Useful health insurance terms to know
It can help to start with a primer of a few common terms in the insurance world.
Terms
Deductible—How much you pay each year before your insurance starts paying for the majority of your healthcare costs.
Premium—How much you pay every month to keep your health insurance plan.
Copay—A set amount you pay per medical expense that kicks in right away, and before you meet your deductible. For example, you might owe $10 per visit with your physician for your copay.
Coinsurance—A percentage you pay for each medical expense — but only after you hit your deductible. The percentage depends on your plan.
Network—The team of doctors and medical professionals covered by your health insurance. If you go out of network, you’ll likely pay more, and any expenses you pay probably won’t go toward your deductible.
What is coinsurance?
If you live in the U.S., your healthcare probably isn’t free. Coinsurance is one of the ways you share the costs of your medical expenses with your insurance company.
Many people’s health insurance has coinsurance as part of the plan, but not all. It’s a percentage of the amount you owe on something like a doctor’s visit, for example.
When do I pay coinsurance?
Coinsurance comes into play after you hit your deductible. Your deductible is how much you pay every year on covered services before your insurance kicks in.
If your deductible is $1,500 per year, you’ll pay that much on health care services every year— but then your insurance will start to pay. After you meet your deductible, you typically will only owe either coinsurance or a copay, which we discuss below.
Usually, if your plan has a high monthly premium, or the amount you pay each month to have the insurance, your coinsurance will be lower. But if your monthly premium is lower, your coinsurance will probably go up.
The key differences between a copay and coinsurance
- When you pay: You pay a copay before you hit your deductible, but you’ll only pay coinsurance after you have reached your full deductible
- How common it is: Not all health insurance plans have copays, but most have coinsurance
- How much you pay: A copay is a set amount, like $10 each time you see a doctor, while coinsurance is a percentage of the full amount you owe.
How much does coinsurance cost?
Let’s use an example to make things simpler to understand.
Say you go to a doctor that costs $100 per visit. You have already reached your deductible for the year, so your coinsurance kicks in.
The insurance policy you chose is what’s called an 80/20 plan, where you pay 20% of each medical cost in coinsurance, and your provider covers 80%.
For this visit, you’ll pay 20% of $100, or $20. Your health insurance will pay the remaining $80.
How much you will actually pay depends on your plan. Typically, coinsurance requires you to pay between 10% and 40% of each expense.
Plan for your medical costs better
Knowing how much coinsurance costs you can help you better plan out how much you’ll pay on healthcare. That way, you can have a good idea of the amount you’ll need in savings for routine and emergency care.
To find out how much you owe for your deductible or your coinsurance, read over the health insurance documents you got when you signed up for your plan. These documents should outline exactly how much you’re expected to pay throughout the year.
That way, you won’t be surprised with a $50 bill from a specialist you had to see.
Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s).
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Writer Bio
Tiffany Verbeck
Tiffany Verbeck is a personal finance freelance writer and podcaster. You can find her full portfolio and the latest episodes of The Poor Me Podcast at www.tiffanyverbeck.com.