Coinsurance means you, as the insured person, pay a portion of some medical care you receive from doctors, clinics and hospitals. It is one of three common payment considerations people have when on a health care plan. The others include the deductible amount you pay before benefits begin, and the co-payments commonly made for office visits.
Coinsurance is so-named because you and the insurance company share in the costs of treatment. The most common coinsurance is known as 80-20 coinsurance. This means that when you receive covered treatment, the insurance company pays 80 percent of your post-deductible balance, and you pay the remaining 20 percent. Policies can often range from 50-50 coinsurance to 80-20 coinsurance. Normally, you pay higher premiums if the insurer's portion is higher.
Coinsurance is typically applied after you meet your deductible requirement. If you have a $500 deductible and undergo surgery, you must pay this $500 at the time of service or as a balance due after the claim is filed. If the surgery was $10,000 total, and you have an 80-20 coinsurance, you would also pay 20 percent of the remaining $9,500. Thus, your total bill would be $500 plus $1,900, or $2,400. Once you meet your annual deductible, you only pay 20 percent of treatment costs on subsequent care.
100 Percent Coinsurance
Not all health care policies have coinsurances. These are known as either zero coinsurance plans, referring to your perspective as the insured, or 100 percent coinsurance, referring to the fact that the insurer pays all post-deductible costs. Premiums for a policy in which you pay no coinsurance are often higher. However, you can offset this by electing a higher deductible amount.
Network vs. Out-of-Network
Employer-sponsored group policies are usually preferred provider organization (PPO), or health-maintenance organization (HMO) plans. These are network-based health insurance plans with provider networks. In some cases, insurance companies offer zero or lower coinsurance costs if you use in-network providers. These are doctors and facilities that agree to lower, contracted rates of care for covered members. The point is to create a win-win scenario in which you pay lower costs in-network and the insurer saves because of the cheaper contracted rates with those providers. The providers agree to accept the contracted rates in exchange for promotion into the insurer's network of policyholders.
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