What Is Coinsurance? 4 Questions Answered

africna american couple looking at the coinsurance paperwork

Let’s face it—health insurance can be difficult to comprehend. Between all the different terms and conditions, there’s a lot to know. Many people don’t have the right health insurance because they don’t understand it. 

One term you may have seen is coinsurance, which offers pros and cons for consumers. In this article, we’ll look at what it is, how it works, and other things you should know about this cost.

What Is Coinsurance and How Does it Work?

In a nutshell, coinsurance is the health care cost shared between you and your insurance company. It is the amount someone insured needs to pay against a health insurance claim after they have hit the deductible for that year. 

Coinsurance is usually a fixed percentage. It allows you to split the cost of medical services with your health insurance until you reach your out-of-pocket maximum.

For example, if your coinsurance is 80/20, 80 percent of your medical expenses are covered by your insurance plan. The 20 percent that is left is your responsibility as the insured. When your medical expenses reach your out-of-pocket limit, your insurance company pays all costs left.

Like health insurance policies, home property insurance policies contain coinsurance provisions. You can also get it for car insurance.

Is it Better to Have a Copay or Coinsurance?

agent talking to couple in office about what is coinsurance

A copay is a set dollar amount for when you receive healthcare services for prescription medications. Your insurance company determines these fees. 

Copays and coinsurance count toward your out-of-pocket maximum. Additionally, while copays differ according to the service you receive, the out-of-pocket percentage you pay for coinsurance is always the same.

Copay and coinsurance provisions are both ways for insurance companies to spread risk. So, which is better? Well, it depends on:

  • The cost of the premiums
  • Your family’s overall health requirements
  • The amount you anticipate spending on medical care

The good news is both copays and coinsurance count towards the out-of-pocket limit. Once your health care costs hit that limit, your insurance covers 100 percent of your medical expenses for the rest of the calendar year.

What Is the Average Coinsurance Percentage?

Are you asking, what is a good coinsurance percentage? The most common percentages are 80/20 and 70/30—you’ll pay 20 percent or 30 percent of what’s left of the health care bills after your insurance company pays 80 percent or 20 percent. 

Of course, that’s what you’ll pay after the deductible is met. Be sure to review your health plan twice a year so that you know your responsibility as far as copays are concerned.

Where can I Get More Information About Coinsurance?

InsureOne understands that the best insurance provides peace of mind, so we offer free insurance quotes to satisfy your needs and budget. We take the guesswork out of choosing a policy and easily find the perfect one for your needs and budget. 

Start your free quote online, over the phone, or at one of our offices near you.