What is Coinsurance & How Do Medical Claims Work? | eHealth

November 8, 2022

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what is coinsurance?

Coinsurance is the amount you must pay for a medical claim, in addition to any copays or deductibles your health plan may have. in 2021, 68% of covered workers had coinsurance.

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Health insurance plans generally have cost-sharing features. Cost sharing means that you pay a portion of your medical expenses and the health insurer pays its share of your medical expenses. coinsurance is a way of sharing costs. deductibles and copays are two other common ways to share costs.

Reading: What does coinsurance mean for medical insurance

Deductibles are a dollar amount you must pay for most covered medical services before your health plan pays any amount.
A health insurance copay is a dollar amount you must pay each time you receive a covered medical service.
coinsurance is the percentage of the medical expense that you and the insurer pay for services covered by the plan.

In coinsurance agreements, the percentage the insurer pays is usually higher than your share. For example, if you read that a health plan has 80%/20% coinsurance, that means the insurer pays 80% of the allowed medical expense and you pay 20% of the allowed medical expense.

The same principle applies if the coinsurance is different. For example, if a plan provides 50%/50% coinsurance, the insurer pays half of the allowed medical expense and you pay the other half. Obviously, in this case, your out-of-pocket expenses are higher than in the scenario where the plan covers 80% of medical expenses.

Consider this scenario. If your health insurance plan has an 80%/20% coinsurance requirement (and no additional copay or deductible requirements), then a $100 medical claim would cost you $20 and the insurer would pay the remaining $80.

Watch our video on coinsurance

nts), then a $100 medical claim would cost you $20 and the insurer would pay the remaining $80.

how coinsurance & other insurance cost sharing jobs

Coinsurance is a cost-sharing measure similar to copayments and deductibles in that all three features involve specific costs you pay for medical services covered by your health insurance. Many health insurance plans have all three cost-sharing features. For example, you may have a health insurance plan that has a $1,000 annual deductible, 80%/20% coinsurance that applies to all covered services, and a $6,000 maximum out-of-pocket limit on your annual expenses for covered health care and services.

To illustrate how the coinsurance and other cost-sharing features of your health insurance plan work, assume that the first time you use your health insurance during the year is when you are admitted to the hospital. You incur $50,000 in medical expenses from the hospital.

you pay your $1,000 deductible. that leaves you with $5,000 of financial responsibility for covered medical expenses before you reach the plan’s maximum out-of-pocket cap of $6,000 per year.
With 20% coinsurance, you pay $1,000 for every $4,000 the insurer pays. that means for the next $25,000 in covered medical expenses, you pay $5,000 and your insurer pays $20,000.
Once you’ve paid your $1,000 deductible and $5,000 coinsurance, you’ll have reached your $6,000 out-of-pocket maximum per year. In total, you pay $6,000 with this medical bill and your insurer pays $44,000. You probably won’t have to pay coinsurance for covered services for the rest of the year.

Because cost sharing varies from one health insurance plan to another, you’ll want to make sure you understand the details of your health insurance plan before you need to use your coverage. By doing so, you can anticipate how much you will have to pay for your health care.

coinsurance & prescription drugs

Coinsurance also applies to prescription drugs. For example, if you have 80% coinsurance/20% split with your health insurance company, you will be responsible for 20% of the total cost of your prescriptions.

This means that if you go to the pharmacy and have to pay $100 for your medicine, the insurance company will cover $80. then you will be responsible for paying the other $20. It’s important to review your health insurance policy carefully to make sure you have a good understanding of when to pay for your prescription drugs and how much money to pay.

when do you pay coinsurance?

Generally, your coinsurance kicks in once you’ve paid your deductible. For example, if you have a $1,500 deductible, you’ll start paying coinsurance after you’ve paid that amount in medical costs.

Many insurance companies have different deductibles and copays that apply to outpatient visits compared to hospital stays and other types of care. Make sure you understand the details of each component of your health insurance, and don’t hesitate to contact a professional if you have questions.

do you have medicare? Read our article that answers, “What’s the difference between Medicare coinsurance and copays?”.

Does coinsurance count toward your out-of-pocket maximum?

You may be wondering, “How does my out-of-pocket maximum work?” this refers to the maximum amount of money you have to pay out of pocket. coinsurance counts toward your out-of-pocket maximum.

Once you’ve reached your out-of-pocket maximum, you shouldn’t have to pay any more coinsurance. your health insurance company should be responsible for all remaining costs. If you have questions about coinsurance and your out-of-pocket maximum, you should contact a professional affiliated with your insurance plan.

If you use eHealth to find health insurance, our licensed insurance agents are available to help you before, during and after to make sure you understand your policy.

How can you find out what your coinsurance costs will be?

There are several ways to find out what your coinsurance costs will be, but first you need to check and see what percentage of your medical bill you are responsible for. you can find those details in your insurance plan documentation. this number will be used to calculate your individual medical costs.

For example, if your policy says your coinsurance is 20%, that means you are responsible for 20% of the bill. remember that coinsurance will only kick in after you’ve already met your deductible. then, you’ll continue to pay coinsurance until you reach your out-of-pocket maximum. Once you reach your out-of-pocket maximum, you should not be responsible for any other medical expenses.

In 2021, the average coinsurance rates for covered workers were 19% for primary care and 20% for specialty care.

It can be confusing to find this number in your health plan information, so contact a professional who can help if you need clarification.

coinsurance based on plan levels

ACA compliant health insurance plans are generally divided into metal tiers. depending on the metal tier your plan is on, it will vary how much your provider covers versus how much you are expected to pay. here’s an overview of how this normally works:

a bronze plan is expected to cover approximately 60% of your health expenses.
A silver plan should cover approximately 70% of your plan expenses.
a gold plan should be responsible for covering approximately 80% of your health expenses.
A platinum plan should cover about 90 percent of your medical expenses.

If you have questions about how health insurance and coinsurance levels work, we can help you find the right health care coverage to meet your needs. A member of our team is always ready to help, and we’ll work carefully with you to make sure you have the right health insurance coverage. contact us today.

pros and cons of high and low coinsurance plans

pros of high coinsurance plans

low monthly premiums. most health plans with high coinsurance tend to have lower monthly premiums. If you anticipate only needing preventive care, which is covered 100% in most plans when you stay in-network, then the lower monthly premiums that often come with high coinsurance plans can help you save money.

disadvantages of high coinsurance plans

Costly out-of-pocket medical expenses. If you choose a health plan with a high coinsurance, you will pay more out of pocket for covered health care services than if you choose a health plan with a low coinsurance. It’s common for high coinsurance plans to also have high deductibles, and if so, you may be paying 100% of health care expenses until you meet your deductible.

In addition, you could incur substantial expenses if you frequently visit your primary care physician and specialists for the treatment of a chronic condition or if you are hospitalized for an unexpected illness or injury. With a high coinsurance health plan, predicting and budgeting the health care expenses you’ll likely pay during the year is more challenging because your cost share is higher.

It’s important to consider your personal health needs and financial circumstances before deciding on a health plan with high or low coinsurance.

where to find affordable health insurance

At ehealth, we appreciate your desire for affordable health insurance that gives you the level of coverage you need. we’re here to help you find the right plan to meet your needs. explore your individual and family health insurance options and easily compare plans with ehealth. you will be able to compare premiums, cost-sharing, benefits, and out-of-pocket maximum limits. eHealth’s team of licensed insurance brokers are also ready to help you better understand your options.