First, Let’s Understand Coinsurance
There are a lot of terms as regards healthcare that are quite complicated and can make securing the right coverage a nightmare. Things like deductibles, co-pays, PPO, HMO, ACA, Medicaid—really, there’s a whole lexicon of vocabulary that one must study before understanding what’s really being bought. But these things aren’t as complicated as they seem.
In this writing, we’ll focus specifically on “coinsurance”, a term you’ll hear a lot in healthcare circles. Essentially, this is how much of a given medical bill a healthcare service sends you that you’ll be responsible for after your insurance provider. If you’ve got a coinsurance rate of 20%, then for a $10,000 bill, you would pay $2,000.
This is a bit different than a deductible, in that the percentage remains constant regardless of the size of the medical bill. With a deductible, after a certain threshold, your insurance company handles the rest. So if you’ve got a deductible of $5k, after $5k, your insurance company pays for everything else. This is convenient with a $100k bill, but not for a $6k bill.
When it comes to coinsurance, you get a better deal with the “small” bill. So if you were on the hook for $5k, and you had coinsurance, you would pay $1k and your insurance option would cover the other $4k. But if the bill were $50k, you’d pay $10k, and the insurance company would cover $40k.
Implications of This Relationship
The higher the bill, the less valuable coinsurance is. The lower the bill, the more valuable it is. Here’s where the wrinkle comes. There are plenty of situations where insurance providers operate from coinsurance and a deductible.
This means that you’ve got, say, a deductible of $2k, and after that, coinsurance kicks in. So say your bill is $10k and you pay the $2k deductible. Now there’s $8k left, but owing to coinsurance, you’re still responsible for $1,600. So out of $10k, you’d pay $3,600 total in that scenario. Sometimes the coinsurance may be subtracted from you after the deductible; this isn’t the rule, though.
Where deductibles and coinsurance come into play on your plan will in some part depend on which insurance provider you decide to go through. Sometimes they have both, sometimes they have one or the other. A good rule of thumb is that a more expensive provider will cost you less when actual medical procedures are necessary, but this rule isn’t always accurate.
Just Because You Pay More, Doesn’t Mean You Get More
There are insurance groups that charge more and deliver less effective service, so be aware of that, and carefully research before you sign up for anything long-term. What makes the most sense is using multiple means of protecting your health to avoid being impacted.
For example, it’s well and good to have insurance through an HMO or PPO. But you might as well use employer insurance as well, and only pay extra for that which insurance through your place of employment won’t cover.
Then there are copays to consider. An insurance provider that has a copay scenario will want a flat fee every time you head to a doctor for the fulfillment of a given prescription. Copays are generally printed on the ID card of a given health option.
Not all plans use copays, not all plans are involved with deductibles, not all plans incorporate coinsurance. Most plans involve one of these three at a minimum.
Further Resources to Explore
This article can be an excellent resource for differentiating between copays, coinsurance, and deductibles. There are different advantages to medical options in all three categories; which is best for you will depend on your unique situation. What’s definitely advisable regardless of your situation is to do the research beforehand.
For example, if you want to go a little bit more in-depth on a specific topic, you might examine this article about coinsurance. If, after you’ve looked at this and other resources out there, you’re still not satisfied, it may be in your best interest to seek alternative insurance options. Medicaid is aimed at the poor, elderly, or congenitally sick.
Meanwhile, options like Medi-Share allow people to pay into a sort of shared fund that sick people withdraw help from when they need it.
Basically, everyone in the plan shares everyone else’s medical expenses. So at the end of the day, you’ve got a lot of options to work with, and you don’t necessarily have to stick with traditional health insurance solutions.