Once you sign up for a health insurance plan, you are immediately expected to start monthly premium payments. Then, if you incur medical expenses such as lab work, you are expected to pay these expenses, contributing to your ‘deductible.’ A deductible is an amount you have to pay before your insurance starts paying a percentage. Then, once you are finally all caught up with your deductible, your insurance policy covers the rest of your claims, right? Well, kind of, unless your policy has a coinsurance clause.
Once your deductible is met, any insurance-covered procedure, treatment or service will result in a medical expense. This is called coinsurance. Your insurance company will pay a large portion of any bill (after your deductible is met), and you are responsible for the rest. There are different breakdowns for how the coinsurance is paid for.
How It Breaks Down
The divisions in coinsurance policies are usually broken down into 70/30 or 80/20. What this means is the insurance company will pay 70% or 80%, and you will pay the remaining 30% or 20% out of pocket. The most common coinsurance breakdown is 80/20.
This will only apply once your deductible is met. If you have a $1500 deductible, then you must pay this off first before activating the coinsurance.
Now, let’s use an example. If your medical bill is $2,000 and you have a $1,000 deductible, then the portion of the bill that the coinsurance will apply to is $1,000. With a 20% coinsurance, you will pay $200 extra. In total, the $1,000 deductible plus the $200 remaining of the coinsurance will equate to $1,200 out of pocket.
Now if your deductible was already met and you had that same procedure that was $2,000, then you would have to pay 20% of it. The sum total of $400 out of pocket, since the insurance company paid $1,600 of the service.
Out-of-Pocket Maximum
Now, to throw a wrench into things, health insurance companies offer plans with an out of pocket maximum- but this will work in your favor if you have coinsurance. Once you reach your out of pocket maximum, then the insurance company will pay for any following services 100%.
For example, if you have a $5,000 out of pocket maximum, then the $1,000 deductible you paid goes towards that. This leaves you with only $4000 left to pay. Every 20% or 30% you pay in coinsurance goes towards your out of pocket maximum.
If you have surgery that costs $20,000, then you will have to pay a 20% coinsurance of $4,000. Once you pay that off, including the previous $1,000 deductible, then you can not be charged for anything further out of pocket. The out of pocket max will have been satisfied and the insurance company must pay any following services fully.
Because policies are renewed annually, once the new year begins, then your deductible restarts, and you will have to meet that price again. Some people have to deal with coinsurance, while others just have to pay their deductible and the insurance company will pay the rest.
In order to find a plan that meets your budget, and needs, speaking with an agent will help. They can help guide you in the best direction, and explain to you thoroughly how much everything will be. You can discuss with them coinsurance, and if you would like a plan that has one or doesn’t. To speak to one of our highly trained agents in your area call 888-350-1890, or email us at [email protected]. Or to get instant quotes, enter your zip code in the bar above. Health insurance has so many different variables. Let us make it more simple and easy for you.
