You’ve probably seen the word “coinsurance” mentioned in your health-care policy…or perhaps you’ve been told by the pharmacy or doctor’s office that you owe a certain amount in coinsurance. What exactly what is coinsurance? And how is it different from a co-pay?
Bottom Line Personal asked Caitlin Donovan, senior director of the Patient Advocate Foundation, to explain.
What does “coinsurance” mean?
Coinsurance refers to a certain percentage of the cost of a medical service or product that you are required to pay despite having insurance. It’s considered an “out-of-pocket cost” alongside copays and your policy’s deductible. Depending on your policy, you may have to pay coinsurance on office visits and surgeries, although it is generally most relevant in the context of high-cost pharmaceuticals.
How does coinsurance work?
Each policy specifies the percentage you’re required to pay for certain services or products. The most common arrangement is for the insurance company to pay 80% and you to pay 20%. Example: If a visit to your doctor costs $100, you would pay $20 and the insurance company would pay $80. Typically, you’ll pay a higher percentage if you receive care “out of network.”
What is “coinsurance after deductible”?
Your deductible is the amount you must pay out of pocket toward your health care before your insurance benefit kicks in. So “coinsurance after deductible” is just another way of saying “coinsurance.” If you haven’t yet met your deducible, you’re required to pay 100% of the cost of a health-care service or product, so there is no coinsurance. You only start paying coinsurance after you’ve met your deductible.
Also: Your policy has an annual out-of-pocket maximum. Once you have met your deductible and paid enough in copays and coinsurance, your insurer should cover 100% of all subsequent health-care costs. But: Insurance companies often manage to find ways to continue “cost-sharing” even after you’ve crossed this threshold—you may have an out-of-network max…or some procedures or treatments may not be covered at all.
How is coinsurance different from a copay?
People often confuse these two terms. A copay is a fixed amount, not a percentage. Copay amounts usually are structured in tiers—the lowest amount for primary care…higher for specialists…and highest for hospital care. For drugs, you’ll often see the lowest copay for generics…higher amounts for intermediate-cost medications…and a coinsurance requirement for specialist or biological drugs.
Important: When you’re selecting or renewing a health insurance policy, pay attention to the coinsurance requirements. This is especially crucial if you’re on an expensive medication that you must take regularly. Look up the drug in the insurer’s formulary and figure the coinsurance into your calculations when determining whether you have the best policy for your needs.
