Generally expressed as a percentage amount and outlined in your policy documents, coinsurance allows you to share the cost of the insured service with the insurance company—your insurance company pays the portion of the cost of the service that is insured, and you pay the remainder.
Coinsurance Percentage Breakdown
Coinsurance amounts typically aren’t split evenly between you and your insurer. The insurance company generally bears a higher burden, paying the majority of the covered cost (the greater percentage) of a covered healthcare service. The first number in a coinsurance split is what your insurer pays and the second number is what you pay. Coinsurance is typically applied to the insurer’s allowed amount for a covered health care service, which is the maximum amount the plan will pay for that expense. Common coinsurance divisions are 70/30 or 80/20—your insurance company would pay either 70% or 80%, and you would pay the remaining 20% or 30%, respectively, out of pocket, after the deductible is met. Say you met your deductible in the spring and, in the fall, you break a finger and go to the emergency room. Your bill is $2,000 (within the allowed amount), and your coinsurance is 80%/20%, which means you’re responsible for 20% of the bill. You’ll pay $400. That $400 is known as your “out-of-pocket” expense. The insurance company, paying the majority of the cost at the higher percentage, would pay the remaining $1,600.
Coinsurance When You Have Coverage From Two Plans
If you are fortunate enough to have coverage under two health insurance plans (for example, under a spouse or domestic partner plan), one plan generally acts as the primary plan when filing your health insurance claim. In most cases, the primary plan’s coinsurance will apply to your expenses first, and the secondary plan’s coinsurance usually applies to anything your primary plan hasn’t paid for. The process of using two insurance plans to cover a cost is called “coordination of benefits.” It’s important to note that those enrolled in Medicare may want to check with their providers and coverages first, as the coordination of benefits may be different across different scenarios and to ensure your bills are sent to the right payers, in the right order.
The Bottom Line
Understanding how coinsurance, coordination of benefits, and deductibles work on your health plan can save money each year. It’s important to fully read all conditions of a policy before you make your choice or sign a waiver of health insurance, for any policy. If you have questions, speak to your representative to fully understand your options.
