Understanding Coinsurance

When you see the term "coinsurance" in your health insurance policy, it means that you are sharing the cost of your health care coverage with the insurance company. Coinsurance, not to be confused with a co-pay, is the amount that you are required to pay after your individual and family deductibles have been met. The standard coinsurance percentage is 80/20, with the insurer paying 80% of costs and the insured-you-paying 20%, in addition to any plan-specific copay.

Typically, you must cover 100% of the cost of health care until your individual or family deductible is met. After you have met the deductible, you will then pay a co-pay for prescriptions, office visits and other treatments, while the health care provider files a claim with your insurance company. Network providers and your insurance company have agreements in place which result in discounts for the charges incurred. The remaining balance, after discounts, is what is used to determine your coinsurance payment. The insurance company pays 80% of this amount and you are responsible for the remaining balance.

Coinsurance is one way in which premiums are kept at affordable levels. While 80/20 is standard, insurance companies may offer different coinsurance ratios for different levels of coverage and different premium amounts. Some insurance companies may have a 50/50 percentage while others will have no coinsurance requirements at all. The coinsurance percentage will also differ between network and non-network health care providers, with non-network percentages significantly raising the amount that you will be required to pay.

Read over your policies or benefits package to find out exactly what your insurance company requires, with regards to coinsurance, co-pays and deductibles. When choosing an insurance plan, weigh the benefits of a lower coinsurance percentage against the cost of coverage. Your employer's benefits administrator and insurance company representatives can answer any questions that you may have.