Insurance can be complicated, but the word itself isn’t about to send anyone running for a dictionary. Once you start tacking things on, though, it can get messier. For example, what is coinsurance? Don’t let the co- rattle you — everything you need to know is right here.
Whenever you use your benefits, you’ll typically pay 100 percent of your costs out of pocket until you reach your deductible amount. Who covers the costs after you’ve reached your deductible? In some cases, you and your insurance carrier each cover a certain percentage, adding up to the total cost. That’s why it’s called coinsurance.
Typically, your insurer will pay somewhere between 60 and 90 percent of the total cost, leaving you to cover the remaining 10 to 40 percent — that is, until you hit your out-of-pocket maximum. Fairly self-explanatory, this is the most you’ll have to pay on your own for care in a given year. After you hit this limit, your insurance carrier covers 100 percent of your costs.
Getting to the point where you’re just paying coinsurance — not to mention where you’ve hit your out-of-pocket maximum — can be expensive. This is where supplemental plans step in. Supplemental plans can offset specific costs associated with things like critical illnesses or hospital stays, and you may be able to use supplemental insurance payouts to cover out-of-pocket medical expenses like deductibles and coinsurance, among many other things.
So as you fine-tune your health insurance budget, ask yourself: What is coinsurance’s role in your plan? Do you have the ability to pay for your share of your medical expenses until you reach your deductible or out-of-pocket maximum?