Co-Payments vs. Coinsurance
What Does an Insured Pay When They Have Health Insurance?
The health insurance industry uses many different terms and understanding them is key to understanding what you are required to pay and what the insurance company will pay. Going to the doctor when you are sick can involve lab tests as well as prescriptions and sometimes being referred to a specialist. Each place you go, you will be required to pay something.
- Co-payments are normally found in managed care plans, such as an HMO (Health Maintenance Organization). They are specified amounts of money that you will pay for each doctor visit. Some have different co-payments for primary physician visits and specialists. Co-payments can vary in amounts, depending on the terms of your policy, from $5, $10, $20, up to $40. Each time you visit the doctor you will be required to pay this amount. In an HMO, the insurance company will pay the balance directly to the physician.
- In addition to doctor’s visits, prescriptions usually carry a co-payment and often there are several levels depending on the type of medication and whether the medication is available in generic form. There can be up to three levels of co-payments for prescription medication. It may be listed in the format 15/25/40. This generally means that for generic drugs, you would be required to pay $15. Other prescription co-payments would depend on the medication being prescribed. Your insurance company can supply you with a list of which medications will require a $25 co-payment and which would require $40 to be paid.
- Other services, such as emergency room, laboratory tests and specialists may have their own co-payment. Your policy will have each listed.
- Coinsurance is sharing the cost of medical care between the insured and the insurance company. This is found in major medical policies. Coinsurance would be paid after the insured has satisfied their annual deductible. The most common coinsurance would be 80/20. In this case, the insurance company would pay 80% of the medical costs and the insured would be responsible for the remaining 20%. Sometimes 70/30 or 90/10 coinsurances are seen in policies.
- Since a large medical bill, such as a hospitalization, could lead to a large bill for the insured (20% of a $20,000 hospital bill would amount to $4000), most policies include a stop-loss or maximum out-of-pocket amount annually. This may be $1000, $2000 or a different amount, depending on your policy. Deductibles do not count toward your out-of-pocket maximum, however, each time you pay 20% of your bill, it will count toward it. With this maximum, you will know the most you can pay for medical bills in any given year.
- Some people will use the terms co-payment and coinsurance interchangeably, however, there are distinct differences and meanings to both. Understanding the difference can help you to better compare insurance plans and determine what is best for your needs and your family’s needs.