There are many terms in health insurance that you need to understand. Some include deductibles, premiums, copays, and coinsurance. A lot of people confuse copay and coinsurance and think that when they pay one, the other does not apply. Depending on which insurance plan you have, you might have a coinsurance, and you might not. Knowing the difference can save you a lot of headache, and money.
What Are Copays?
A copayment is a set amount you pay whenever you use a specific type of healthcare service. You can have a copay for your primary doctor visit, specialist doctor visit, ER visit, and pharmaceutical copays on prescription drugs. For example, when you go see your primary doctor, you are asked to pay a copay of $20. This copay will be the same every visit, unless your insurance plan changes.
As long as you stay within the network, and make sure you have followed any other rules of your insurance plan, once you pay the copay, your insurance company will pay the rest of the bill. A copay is not like a deductible. There is no set amount to reach in order to fulfill and no longer pay copayments.
What Is Coinsurance?
Once your deductible is met, any insurance-covered procedure, treatment or service will result in a medical expense. This is called coinsurance. Your insurance company will pay a large portion of any bill (after your deductible is met), and you are responsible for the rest. There are different breakdowns for how the coinsurance is paid for.
The divisions in coinsurance policies are usually broken down into 70/30 or 80/20. What this means is the insurance company will pay 70% or 80%, and you will pay the remaining 30% or 20% out of pocket. The most common coinsurance breakdown is 80/20.
This will only apply once your deductible is met. If you have a $1500 deductible, then you must pay this off first before activating the coinsurance.
For example, If your medical bill is $2,000 and you have a $1,000 deductible, then the portion of the bill that the coinsurance will apply to is $1,000. With a 20% coinsurance, you will pay $200 extra. In total, the $1,000 deductible plus the $200 remaining of the coinsurance will equate to $1,200 out of pocket.
How Copays & Coinsurance Work
When you visit the doctor, you will have a copay, for example $20. If your doctor asks you to get some blood work done, then you will most likely have a coinsurance payment.
Now let’s say you go to the hospital for an emergency. You might have a $100 copay for an ER visit, but the copay can be waived if you get admitted into the hospital. However, whatever services you receive in the hospital will follow up with a bill. Your insurance company will pay the majority, after you fulfill your deductible and coinsurance.
What To Consider When Choosing A Plan
When deciding on a health insurance plan, everyone’s health insurance needs are different. Everyone’s financial situations are different as well. If you want to have lower coinsurance payments, then higher monthly payments are the way to go.
Copays do not count towards your deductibles or out-of-pocket maximums. When choosing a plan, make sure you are aware of how much the deductible is, the out-of-pocket max is, and if there is a coinsurance, how much that is as well.