The Basics of Coinsurance in Health Insurance
Decoding Coinsurance: Sharing the Cost of Your Care
While copays are straightforward, coinsurance introduces another layer of cost-sharing in health insurance. But what exactly is coinsurance, and how does it affect your medical bills?
What is Coinsurance?
Coinsurance is a percentage of the cost of a covered healthcare service that you pay after you've met your deductible. Unlike a copay, which is a fixed amount, coinsurance is a variable cost based on the price of the service.
How Does Coinsurance Work?
Once you’ve met your deductible, coinsurance kicks in. Here’s an example:
Percentage Payment: If your plan has 20% coinsurance, you’ll pay 20% of the cost of a service, and your insurance will cover the remaining 80%.
Service Cost Example: For a $1,000 medical service, you would pay $200 (20%), and your insurance would pay $800 (80%).
Benefits of Coinsurance
Cost Distribution: Shares the cost of healthcare between you and your insurer.
Encourages Cost-Effective Choices: Promotes consideration of service costs since your share is a percentage.
Budget Awareness: Helps you be more aware of healthcare costs, promoting better financial planning.
Next, we’ll delve into how deductibles fit into the health insurance equation.