Health insurance usually pays for most — but not all — of a medical service. If you pay for a percentage of a covered medical bill, then your payment is called coinsurance.
For example, if your health plan advertises 70% coinsurance, then your share of coinsurance is 30%. If you submit a $100 bill to that health plan, your plan would pay $70 and you’d pay $30.
Coinsurance can also mean the payment or the percentage of a bill that’s paid by your plan. But it’s different than paying a fixed dollar amount – that’s a copayment.
You’ll be able to see your coinsurance rate before you select a health plan. You can also check your coinsurance in health plan documents after you sign up.
Medical coinsurance is more common for expensive issues like surgeries or ER visits. Routine services like checkups will usually require a simple copayment instead.
Your coinsurance rate should be the same for most procedures, but it can vary based on which type of doctor or service you use.
Consider this coinsurance example.
|Payment Steps||Remaining Balance||Plan’s Payment||Melanie’s Payment|
|1. Bill Received||$2,000||–||–|
|2. Plan Pays 80% Coinsurance||$400||$1,600||–|
|3. Melanie Pays 20% Coinsurance||$0||$0||$400|
*This example assumes that Melanie has already reached her deductible, and is not near her out-of-pocket maximum. If Melanie hasn’t yet paid her deductible, she will first pay that deductible in full. Once Melanie reaches her out-of-pocket maximum, her health insurance will pay in full.
Here, Melanie receives a medical procedure which totaled $2,000. All her services came from her plan’s doctor network, so she’s using the full financial benefits of her plan.
Melanie’s health insurance has 80% coinsurance, so it covers $1,600 (80% of her final bill). Melanie is responsible for the remaining 20% of her bill ($400).*
Melanie will probably pay her medical provider directly, but she could be charged by her insurance company instead. She’ll usually pay after the procedure, unless it’s a smaller procedure with fixed costs.
Affordable Care Act plans (known as ACA or Obamacare) are the most common type of health plan you can get on your own. These plans are sorted by coinsurance level – called “metal levels” – and they provide a good guideline to typical coinsurance amounts:
- Bronze / Catastrophic: 60% of covered services paid by your plan
- Silver: 70%
- Gold: 80%
- Platinum: 90%
Silver is the most frequently available plan type, and the easiest to find. Platinum plans are actually somewhat hard to come by.
Coinsurance is a form of cost sharing. The less coinsurance you’re responsible for, the more expensive your monthly premiums will be.
Different Names for Coinsurance: Your coinsurance may be listed as a percentage (like 80%), or it may be written like “80/20” (80% paid by your insurer, 20% paid by you). In some cases, the numbers will be reversed. If you read “coinsurance 40% after deductible”, that document is focusing on your share of coinsurance. Your health plan will still pay 60%.
Finding and Calculating Your Coinsurance
You’ll need two things to calculate your coinsurance payment for a specific medical visit.
- Your coinsurance rate: Most documents about your insurance plan will list your coinsurance rate. Healthcare helpers like your plan’s phone line, your doctor’s office or a hospital chargemaster should also know your rate.
- Your final bill: You need to know the full price of a medical service to figure out the amount you’ll pay. Your coinsurance responsibility is simply a percentage of that amount.
The more complex that a medical procedure is, the less likely you are to know an estimated bill before going in. Hospitals should be able to give you price estimates, but final prices will be determined by a billing department over weeks or months. This is especially true for inpatient care or emergency room treatment.
Some medical conditions will come with a mix of copayments, coinsurance, and even free preventive care. Coinsurance is still a good way to estimate your full costs in these situations, since larger bills tend to be paid with coinsurance.
Your health insurance plan can tell you whether a procedure will be subject to coinsurance or a fixed copayment.
Formula for Your Coinsurance Payment:
If you have a plan that comes with 60% coinsurance on a $1,400 bill, then you’d figure out what 40% of that bill is ($560). In this example,
AMOUNT OF CLAIM x YOUR SHARE OF COINSURANCE = your coinsurance payment ($560)
$1,400 x .40 = $560
Or you can take the easy way – simply use a percentage calculator to determine your share of the cost.
Coinsurance doesn’t apply before you reach your deductible, and it doesn’t apply after you reach your out-of-pocket maximum. Learn more about those below.
What’s an Average Coinsurance Amount?
About 31% of healthcare spending in a typical household goes to coinsurance. Average yearly coinsurance payments rose from $149 in 2006 to $249 in 2016.
Most people who join health insurance on their own have a plan that covers 60% or 70% coinsurance. With these plans you’d pay 30% or 40% coinsurance, respectively. About 9 out of every 10 people with Affordable Care Act coverage have these plans.
For employer-provided plans, the average coinsurance rate in 2018 was 81%, better than ACA coverage.
Coinsurance below 60% or above 90% is not permitted for ACA plans, and is very uncommon elsewhere.
How Coinsurance Interacts With Other Common Healthcare Terms
Coinsurance vs. Deductible
Most insurance plans have a deductible, which is an amount that you pay before your plan kicks in. Coinsurance works after your deductible is paid.
If your plan has a $1,000 deductible, then you’d have to pay $1,000 entirely on your own before thinking of coinsurance. Once you “reach” that deductible, then normal payment rules for coinsurance apply.
Imagine that you have hand tendon repair surgery for $4,000 on the first day of your health insurance plan. If that plan has a $1,000 deductible and 70% coinsurance, then you would pay $1,900. That’s the full deductible, and 30% of the remaining bill.
Maximum Out-of-Pocket (coinsurance maximum or out-of-pocket limit) and Coinsurance
Eventually, your coinsurance will give way to your out-of-pocket limit. After your combined out-of-pocket spending for doctors, drugs, and other services reaches a certain amount, your health plan will pay all of your remaining bills.
Reaching your coinsurance maximum basically turns your plan into a 100% coinsurance plan for the remainder of the plan year.
Your co insurance payments count towards your out-of-pocket limit. What your insurer pays will not count towards that limit.
So, if you had a $600 specialist visit and paid 30% coinsurance, then the $180 you paid would go towards your out-of-pocket limit. The $420 that your insurer paid would not count towards your out-of-pocket limit.
Coinsurance and your out-of-pocket limit can work together. If you have to pay 20% of a $250,000 procedure – and your coinsurance maximum is $7,900 – then instead of paying $50,000 (20% of the bill) you’ll only have to pay the $7,900 coinsurance maximum (and less if you’ve already paid for different services).
Coinsurance vs. Copays (Copayments)
Copayments and coinsurance are frequently confused. Copays are fixed amounts – like $50 for a checkup, no matter what. Copays are usually reserved for simple procedures that cost the same for everyone.
Unlike coinsurance, the price of the copayment does not depend on the final cost of the service. You could pay $50 for a checkup that billed your insurer $20 or $200.
You can’t choose whether to pay coinsurance or a copayment. Your plan sets these rules before you join.
Premiums and Coinsurance
Your premium is what you pay each month to stay enrolled in your health plan. As a general rule, the better coinsurance you have, the more your monthly premium will cost.
If your employer pays your premium in full, lucky you. However, you can’t shift any premium payments towards your coinsurance.
Plan Types and Coinsurance
Vision and dental-only policies frequently have coinsurance. Even car insurance may use it.
A few plan types, like fixed indemnity coverage, give you a predetermined amount of money if something happens. These plans generally avoid coinsurance.
Paying Less Coinsurance
Although 4 out of 5 employer-sponsored PPO plans use coinsurance for inpatient hospital care, only about 1 in 5 HMO plans do.
HMO networks are known to be more restrictive than PPOs, but they are a potential way to avoid coinsurance. A plurality of HMOs ask for inexpensive copayments instead of coinsurance during hospital visits. That applies to basic services, as surgeries are usually still handled with coinsurance.
Other general advice for saving money on healthcare applies to lowering your coinsurance. Check to make sure you are billed properly, price compare procedures if you can, and stay in your plan’s network to avoid surprise bills.
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Think of coinsurance as your co-pilot. Coinsurance makes expensive medical services a little less intimidating. Your health insurance shoulders most of the bill, leaving less of the risk to you.