What Is Coinsurance?

Coinsurance is the amount of health care premiums you get to reimburse once you have reached your health insurance deductible. This is different from a copay, a fixed charge for some programs. You have to pay it.

For example, any time you visit a primary care physician for an illness you may owe a copay of $25. Coinsurance, on the other hand, is more a fixed charge than a percentage of health care expenses.

How Does Coinsurance Work?

When you have spent enough to fulfil the deductible, you are liable for coinsurance payments. You and your employer start sharing expenses after you've paid your bag up to the deduction – your insurer can pay a percentage of healthcare and pay the remainder. Coinsurance programs such as the treatment of a broken leg and emergency care are also needed for high cost services. A common shared cost divide is 80/20, which accounts for 80% of healthcare costs and the rest of the 20%.

How Does Coinsurance Work with Other Cost Components?

It is possible to get confused because there are other currency moving elements of health insurance. This is how coinsurance interacts with other elements of cost-sharing:

Premium: The annual amount that you pay to the insurance company to continue inscribing your plan. What you pay in prizes does not count to the full amount you pay out of pockets or the deductible.

Deductible: The amount you have to pay is the deductible before your insurer begins to pay a portion of the premium. You have to pay $2,500 out of the pocket, for example, because your premium is $2,500, until your insurance covers any portion of your expenses.

Copayments: You would have to pay for some programs for copayments, fixed rates. For example, every time you look at your primary doctor and every generic drug you purchase, your scheme could require a copy of $25 and a copy of $10.

Out-of-pocket maximum: This is the most amount you will have to pay during an insurance plan year for covered health services. Once this amount is reached, including deductibles, copayments and coinsurance, the health insurance will cover 100% of the remainder of the year.

How Do You Calculate Coinsurance Costs?

A few quick steps will be taken to calculate the coinsurance costs:

Know the cost of coinsurance. Please check with your insurance coverage details to see if your share of insurance for each bill is different.

Search the treatment costs. If you see a provider in the network of your contract, it is the reduced rate negotiated by your health insurer. This is a "allowed number" on your Explanation of Benefits (EOB).

Convert the expense percentage to a decimal point. 20% of coinsurance, for example, is identical to 0.20.

Multiply your coinsurance rate by the total allowed costs. If the costs are required to be $1,000 (20%), multiply 0.20 to $200 by 1,000 ($200).

Remember that coinsurance only applies after you’ve paid your deductible.  You would be responsible for 100% of the permitted costs before you exceed the deductible.

An Example of Coinsurance

Imagine you have a plan with the following parameters:

• Deductible: $2,000
• Coinsurance: 20%
• Out-of-pocket maximum: $8,500

Here’s what would happen if you had a medical procedure that cost $5,000:

• You pay the first $2,000 (your deductible)
• You pay 20% of the balance of $3,000, which is $600
• Your total out-of-pocket costs would be $2,600

Once your gross out-of-pocket expenses hit $8,500, your insurance coverage covers 100% of the balance of your plan year.

When Is Coinsurance Common?

A common part of many health insurance policies is coinsurance. Even if copayments are available to the plan for some programs, coinsurance will apply after you have reached the deductible.

If you’re purchasing an Obamacare health insurance plan from the Affordable Care Act Marketplace, the coinsurance varies by plan level. There are four plan levels: Bronze, Silver, Gold and Platinum:

• Bronze: 40% coinsurance (insurance company pays 60%)
• Silver: 30% coinsurance (insurance company pays 70%)
• Gold: 20% coinsurance (insurance company pays 80%)
• Platinum: 10% coinsurance (insurance company pays 90%)

Next Steps 

Coinsurance enables you to break health care expenses into a fixed formula with your provider. You can use the healthcare.gov tools to choose the anticipated medical use of each family member – low, medium or large. To consider how much co-insurance will cost you in a market plan. Then, when you see your plans, the platform will offer you a cost estimate based on the anticipated use of healthcare.

These amounts are a figure, so you can compare plans. Call the insurers if you have any concerns about how co-insurance functions with various health plans. In either situation, it is helpful to learn how you or your family use healthcare before registering.