It is highly probable that you have come across the terms copayment (also referred to as copay) and coinsurance if you have ever had the chance of getting health insurance. The kind of health insurance policy you are applying for does not matter; it is still important for you to know what is the difference between copayment and coinsurance.
Knowing more about these terms and what they entail will only help you improve your understanding regarding the cost of health insurance plans (including any extra charges you might have to pay). Once you figure this out, you can choose the most feasible healthcare plan for you and your family.
Copayment and coinsurance are both types of cost sharing. If you require any aid or assistance, you along with your health insurance provider will each add their share to a part of the expenditure needed for your care. The major difference that lies between copayment and coinsurance is how the expenses are divided.
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What Is The Meaning Of Copayment?
A copayment is a defined amount that the patient (or anyone applying for health insurance) is expected to pay in return for some definitive medical services and benefits. The way to go about with paying a copayment is that you do it along with your monthly premium. Copays are decided in advance and should be mentioned in your health insurance plan. Usually, $10 is the starting amount and then based on the kind of care and services you are receiving, it can increase from there. The services include (but are not limited to), going to a doctor for a general check up, visiting a specialist, immediate care, prescription drugs, and trips to the emergency room. It is likely that each of these will have their own copay charges.
As soon as you have paid your copayment expenses for any of the abovementioned (or any other) qualified services, the rest of the expenses for that particular service are then the obligation of your health insurance provider. Many people who do not want to put a lot of pressure on their pockets or they simply want to know the charges of a service beforehand, will welcome the predictability that copayment provides.
Regardless of whether you have been able to meet your deductible or not, your copayment can still be applied. Let us assume that you have a $75 specialist copayment, but you have not met your deductible, you would not have to worry at all because you would still be able to visit your specialist. Usually, copayment is measured independent to your deductible, but it still adds onto your annual maximum out-of-pocket limit.
What Is The Meaning Of Coinsurance?
Contrary to copayment, coinsurance is the percentage of your covered medical charges that you pay once you have been able to meet your deductible. You can even think of it as the percentage of the expenses of your healthcare services that are divided between you and your insurance provider where each one is responsible for a particular amount out of the total. At the end of the day, both you and your insurance provider need to pay an appropriate share that sums up to 100 percent. For example, if you have an “80/20” plan, it means your plan covers 80% and you pay 20% till you reach your maximum out-of-pocket limit (which is the amount you could pay for covered medical expenses annually). Typically, medical insurance providers pay 70-90% of the total expenses, while the patient pays the rest of the 10-30%.
As compared to copayments, coinsurance is more unpredictable because although the percentage divide is already established, the expenses that you are in charge of are solely dependent upon the overall cost of service. Another reason for this unpredictability is that knowing how much a specific medical service will cost is not possible until and unless you have visited a doctor or a specialist. Nevertheless, coinsurance is only limited to the services that your health insurance covers. The charges for any benefit or service that is normentioned in the plan, will be your own responsibility. Therefore, it is always advised that you either get in touch with your insurance provider, or go over your benefits booklet.
As an example for coinsurance (in order to understand it better), let us assume that your coinsurance is 10%, which means that you are responsible for 10% of your total covered medical expenses. The remaining 90% would be paid by your health insurance plan. Supposing that you have met your yearly deductible by May June, and due to some emergency you require a CT scan inJune, your coinsurance will cover it. If the total cost for your CT scan is $3,000 and your coinsurance is 10% of the total, then you would have to pay $300 ($3,000 x 10%); the remaining $2700 would be the responsibility of your insurance company or health plan.
The coinsurance percentage you receive is directly proportional to the amount you would have to pay. If the percentage you receive is higher, then so would be your share of the total cost. Moreover, any costs that are not covered by the health plan will also fall under your umbrella. These include expenses that go over the plan’s Maximum Reimbursable Charge.
Quick Overview Of The Difference Between Copayment And Coinsurance
- Applicability: It is a predetermined amount that cannot be changed. You can either receive it as an unchangeable amount or percentage.
- Payment procedure: Any time you require a healthcare service, a part of the payment needs to be made by you.
- Time of payment: The payment time needs to be the same as when you are undergoing treatment.
- Effect on Deductibles: It mostly does not require for you to have met your deductibles.
- Applicability: It is not a fixed amount and can vary. However, the percentage of the cost that you have to pay by the end of the services is fixed.
- Payment procedure: You need to pay for your coinsurance after you have paid for your deductibles.
- Time of payment: Your part of the bill needs to be paid directly to the insurance provider.
- Effect on Deductibles: Coinsurance can only be paid after the deductibles have been covered.
What Is 0% Coinsurance
0% coinsurance is typically when you have reached your deductibles and the insurance provider then has to pay 100% of the reduced or contracted rate for specific services. For example, you have a deductible of $450 and 0% coinsurance, and one of your medical services cost $5000. You would pay $450 while the rest of the contracted rate (which is usually less than the actual billed amount) for that particular service, will be paid by the insurance company. As far as you are concerned, you would only have to pay your deductible amount.
A typical health insurance plan usually mentions all of the premiums, copayment, deductibles and coinsurance limits. It is essential for you to have a clear understanding of what these terms mean and offer. It is always a great idea to thoroughly review the healthcare plan before making any decision concerning it. Afterall, understanding how it works can save you a lot of time and money.