If you’ve ever had health insurance, you’re probably familiar with the terms copayment (or copay) and coinsurance. Understanding these terms will help you better understand your out-of-pocket expenses for the health insurance plans you are considering so you can choose a plan that is best for you.
Copayment and coinsurance are both forms of cost sharing. When you need services, you and your health insurance provider each pay for a part of the cost of your care. The difference between a copayment and coinsurance is how the costs are split up.
What Is a Copayment?
A copay is a fixed fee that you (the patient) are required to pay for specific medical services. You pay a copayment in addition to your monthly premium. Copays are predetermined and should be outlined in your health insurance plan. Fees vary depending on the service provided. For example, doctor’s visits, specialist visits, prescription drugs, and trips to the emergency room will probably each have their own copay fee.
Once you pay the copay for a qualified service, your health insurance provider is responsible for the remaining costs of that service. If you’re on a tight budget, or you simply want to make sure you have a good idea of what a service is going to cost beforehand, you will appreciate the predictability of a copay.
Copays typically do not count toward maximum out-of-pocket expenses, but you should always review a plan’s benefits summary for specifics.
What Is Coinsurance?
Coinsurance is another example of cost sharing, though in this case the fees are not fixed. After you have reached the deductible for your insurance plan, coinsurance is the percentage of the costs of your services that are split between you and your insurance provider, with each being responsible for a certain percentage of the total cost. In most cases, health insurance providers pay 70-90% of the costs, leaving you (the patient) with the remaining 10-30% of the bill.
While the percentage split is predetermined, the amount that you are responsible for is based on the total cost of service. This makes coinsurance less predictable than copayments, since you may not know how much a service will cost until you have seen a doctor or specialist.
One benefit a coinsurance model is that many health insurance companies will count these fees as part of your maximum out-of-pocket expenses. Again, you should review a plan’s benefits summary to confirm whether or not coinsurance goes toward maximum out-of-pocket expenses before choosing the plan.
At HealthMarkets, we understand that shopping for health insurance can be confusing; it’s more than just choosing the plan with the lowest monthly premiums. If you’re in the market for a new health insurance plan, consider contacting us. We’ll walk you through the process, answer all of your questions, and help you find the best plan for you at a price that fits your budget. Best of all, our assistance is available at no cost to you.