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How do Copays, Deductibles & Coinsurance Work
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How Copays, Deductibles and Coinsurance Work

What is coinsurance?

Coinsurance (or a copayment) is your share of the cost when you get a medical service, like a doctor’s visit, hospital outpatient visit, or a prescription. Coinsurance is usually a percentage amount (for example, 20% of the total cost). So, for example, if your insurance benefits cover 80% of x-ray charges, you will need to pay the remaining 20%, even if your annual deductible is already met. That 20% is considered coinsurance.

What are the maximum out-of-pocket costs?

When considering a new health plan, the maximum out-of-pocket cost sets a limit to your annual financial liability. Once you have paid out of pocket to the “maximum” amount (typically through deductibles and coinsurance), the insurance company pays the full charges for any additional in-network covered medical services rendered that year.

What is health insurance copay?

Copays are what you pay when you visit the doctor, to share the costs of your healthcare. Copays vary by policy, and can change if you see a specialist instead of a regular doctor, or seek treatment out of your provider’s network. Prescription drug coverage also uses copays, which can increase for specialty medicines, and decrease for generic drugs. In most cases there are no copays for preventive care.

What is a deductible?

The deductible is what you have to pay each calendar year before your insurance starts to pay for larger services such as hospitalization. Many smaller charges like doctors’ visits are covered by a copayment for many plans.

  • An example: let’s say you have a $750 deductible. You go to the hospital and the total cost of service is $5,000. You pay the first $750 to cover the deductible, and then your insurance starts to pay its share on the remaining balance.

When you’re choosing a health insurance plan, you’ll want to look at more than the premiums and deductibles. Take a look at the coinsurance amount, too, and then decide which deductible, premium and coinsurance mix is the best option for you and your finances. If you visit your doctor often, you might want to choose a plan that has low copays. For instance, you might choose a plan that has a higher monthly premium but no copay for doctor’s office visits. However, if you don’t visit the doctor often, copays will probably be less of a concern when you’re shopping for coverage.