What is coinsurance?
Coinsurance is the term used when an insurance company and the person that is being insured actually share the risk of insuring a person or family. Health insurance companies basically require you to pay a percentage when you file for a medical claim. This amount is separate from any co-payments or deductibles you pay also.
Common types of coinsurance are 80/20, 70/30, 90/10 and flat rates falling between $5 and $20 per doctor visit. With the split percentages your plan will pay for the larger number, i.e. 80%, of your medical expenses and you pay for the remainder. Oftentimes coinsurance also has a cap ranging from $2,000 to $3,000. This is to help prevent financial distress due to serious medical costs.
Coinsurance has some benefits such as lowering the cost of insurance for the insured. And it also helps ensure that an insurance company can pay all of its claims. But, coinsurance doesn’t take effect until after a deductible has been paid, which can lead to large amounts of money spent on your insurance throughout the year.
No matter what type of insurance you choose it’s always a good idea to understand the terms and conditions fully and to make sure that it is the best option available to you. Coinsurance in particular can be very confusing so ask as many questions as necessary or you could end up with a large bill.