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What is coinsurance?

Coinsurance is a percentage of your health care costs that you pay after meeting your deductible. The percentage is determined beforehand in your health insurance policy and is based off the total cost of health care. If you have met your deductible and are required to pay coinsurance, you pay it straight to your medical provider. Coinsurance is often calculated by the “allowed amount” that a health care provider could charge for a particular service. These allowed amounts are agreed upon by the doctors in the network. If you visit a doctor outside your network, you may be required to pay more than the coinsurance your plan outlines.

An additional purpose of coinsurance is to avoid inequity and to encourage building (or home) owners to carry a reasonable amount of insurance in relation to the value of their property. It is well established that most building property losses are partial in that they do not result in the total destruction of the structure involved. Coinsurance clauses are found in many insurance policies, such as commercial property, dwelling forms, homeowners, federal flood, and even sometimes directors and officers insurance policies. But while each type of policy labels the requirement as “coinsurance,” the use or effect on the insured may be very different to reflect the insurer’s or insured’s specific need(s).

 


Learn more about coinsurance

When do I need to be aware of coinsurance?

Anyone who is expecting to visit a health care provider should be aware of coinsurance because it may be required at the time of service. For example, if someone has a health plan with 80/20 coinsurance, it means the insurance will cover 80% of the medical costs after the individual reaches his or her deductible, and the individual would be required to pay 20%.

Anyone who is purchasing property insurance should also be aware of coinsurance because it may become a significant reason for insurance recovery that is less than the policyholder expected if the limit of insurance purchased is not at least equal to a specified percentage (most commonly 80 percent) of the value of the insured property.

What is important to know about coinsurance?

When you understand coinsurance, you are more financially prepared for medical costs throughout the year. An understanding of coinsurance also There are some other things you should be made aware of concerning coinsurance:

  • Most insurance plans have an out-of-pocket maximum that includes both the deductible and coinsurance amounts, and once that maximum is reached, the insurance company pays for health costs in full until the year has concluded.
  • Each time you receive an explanation of benefits, it should detail where you’re at in reaching your deductible so you know when the coinsurance portion will kick in, and if it has already kicked in, the EOB should detail the coinsurance you need to pay for that service.
  • If you receive services not covered by your health insurance plan, coinsurance does not apply, and you’ll probably be responsible for the entire bill.
  • Property coinsurance clauses may differ by insurer, especially if using an independently filed policy form, although coverage intent may be the same.