![]() If you have an 80/20 coinsurance plan, that means you’ll be responsible for $500, and your health insurance will take care of the rest. After all the treatment, the total cost of all the new health services received is $2,500. Ouch.Īfter a trip to the emergency room, you get an X-ray and they put a cast on your broken leg. Let’s say you’ve already hit your deductible earlier in the year and, during a flag football game this month, you take that “break a leg” advice a little too literally. Here comes the cavalry! At this point, your health insurance will come in and help you pay for a big chunk of your health expenses for the rest of the year while you pay your coinsurance rate. Once you hit that deductible, you’ll enter the next phase. One way to remember how deductibles and coinsurance work together is to memorize this phrase: “coinsurance after deductible.” That way, you’ll always remember that coinsurance doesn’t start until after you meet your deductible. Having a fully funded emergency fund or consistently putting money into a health savings account (HSA) if you have one could help you cover health costs during this deductible phase. That’s why it’s important to have enough money in savings to cover your deductible if you need to. So, if you have an insurance policy with a $1,000 deductible, that’s how much you’ll spend on medical expenses before you get help from insurance. How much you’ll pay depends on what phase you’re in.īefore your insurance kicks in, you’re going to have to pay for all of your medical costs until you hit your deductible. ![]() Okay, to fully understand coinsurance, it may help to think of how you pay for health care expenses in phases. So, if you’re mostly healthy and have a good emergency fund in place, it might be a good idea to look for a health plan with higher coinsurance. So you’ll find that most health plans with 70/30 coinsurance have lower premiums than an 80/20 plan. That’s because you’re taking on more risk. Here’s how it works: health plans with higher coinsurance usually have lower monthly premiums. Now, it’s important to remember that your coinsurance ratio directly affects your monthly premium. This is your coinsurance after you reach your deductible. Most folks are used to having a standard 80/20 coinsurance policy, which means you’re responsible for 20% of your medical expenses, and your health insurance will handle the remaining 80%. When you look at your policy, you’ll see your coinsurance shown as a fraction-something like 80/20 or 70/30. In the simplest terms, coinsurance is the percentage of health care services you’re responsible for paying after you’ve hit your deductible for the year. With coinsurance, you’re splitting the cost of medical services with your health insurance until you reach your out-of-pocket maximum. If you’re one of those puzzled folks or if you just need a refresher, don’t worry-we’ll make it simple. One of the most common questions we hear from people who are trying to understand health insurance jargon and all the different cost factors is, “What does coinsurance mean?”
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