What is Coinsurance?
Coinsurance, commonly used in health insurance, is the percentage that the insurer pays for a medical claim on behalf of the insured patient after the deductible has been met.
Property coinsurance specifies a minimum percentage of the property’s assessed cash or replacement value that it must be insured for (perhaps 80%). If the insured does not maintain that level of insurance on the property and there is a claim, the insured may be asked to pay a portion of the claim.
Coinsurance vs Copay
In health insurance, coinsurance is similar to the idea of a co-payment or copay, except that the coinsurance amount is expressed as a percentage of the claim, while a copay is expressed as a specific amount.
For example, let's say you need to see a doctor for a medical condition and the bill for the consultation is expected to be $150. Your health insurance plan may ask that you pay a $30 copay for the doctor visit, while the insurance company would pick up the remaining balance, or $120 in this case.
We'll talk about how coinsurance works in the next section.
[Also check out Everything You Need to Know About Health Insurance]
Coinsurance After Deductible: How it Works
Many health insurance plans will pay coinsurance after the deductible has been satisfied.
For example, let's say an insured customer broke their arm and received a hospital bill for $3,000. If their insurance plan had a $1,000 deductible, the customer would need to pay $1,000 out of pocket to meet that deductible.
After that point, if the customer has 20% (or 80/20) coinsurance, that means they will pay 20% of the after-deductible cost of the healthcare claim while the insurance will pay the remaining 80%. So with a remaining balance of $2,000 after the deductible, the customer would pay 20%, or $200, while the insurance company would pick up the remaining 80%, or $1,800 in this example.
Depending on the insurer, 100% coinsurance or 0% coinsurance means that the insurer will pay for the entire medical claim, usually after the insured customer's deductible has been met.
