Group and Private Insurance

In addition to sharing with you a health insurance coinsurance definition, I want to share with you 3 important things that you may not know about coinsurance. When it is time to buy a health insurance policy, an investment in information can reduce your investment in dollars. Not understanding how coinsurance works can cause you to under estimate or over estimate the value of a policy and buy the wrong health insurance policy.

Health Insurance Coinsurance Definition

What is coinsurance for health insurance? Coinsurance is one of the three major cost shares you can expect to find in most health insurance policies. The other two are deductible and copay.

Coinsurance is not found on every policy, however, on many policies you are expected to pay a certain percentage of your medical expenses. This percentage is called coinsurance.

There are three things that you may not know about coinsurance even if you are aware of the standard definition. Not having this information can cause you to buy a policy that is not as good as you think it is. It can also cause you not to buy a policy that is better than you think it is.

• Coinsurance Percentages Are Not Standard
• Out-Of-Network Coinsurance Is Usually Higher
• Out-Of-Pocket Maximum Limits Your Exposure

Coinsurance Percentages Are Not Standard

Although coinsurance has traditionally been 20 percent for the consumer, this is not the case with all policies. Some policies limit the consumer’s coinsurance costs to 10 percent. Other policies may require the policyholder to pay 50 per cent in coinsurance.

Out-Of-Network Coinsurance Is Usually Higher

Out-of-network coinsurance on a health insurance policy is usually much higher than in-network coinsurance. It usually pays to go to in-network doctors, hospitals and other health care providers.

(In addition to paying a higher coinsurance percentage when you seek care from out-of-network providers your other cost shares may be higher; your benefits may be lower as well. Your deductible may be higher. Your co-pays may be higher. Your out-of-pocket maximum may be higher. Your annual or lifetime benefit limit may be lower.)

Out-Of-Pocket Maximum Limits Your Exposure

Often people will have a fearful response when they hear that they will have to pay 20% or more for their medical expenses. They quickly do the math figure that if they have a $100,000 heart attack or stroke they will have to pay $20,000 towards their medical bills.

This is rarely the case. Your policy is likely to have an out-of-pocket maximum or stop loss provision that limits your exposure to a few thousand dollars. Not knowing this can cause you to undervalue a health insurance policy that has coinsurance and this may cause you to select the wrong plan.

Although it is important for you to understand the standard health insurance coinsurance definition, it is also important for you to know the other three things outlined above. Coinsurance percentages are not standardized, so you will need to know the exact percentage required for any policy you are considering purchasing. Out of network coinsurance is typically much higher than in network coinsurance. Your out-of-pocket-maximum or stop loss will probably limit your exposure to a few thousand dollars even if you have huge medical expenses.