There are plenty of people who mix up the terms coinsurance and copay. Another term to throw into the mix is deductible. While all three terms refer to the portion of the medical bill patients are responsible for paying out of pocket, there are some differences between them.
Deductibles are most often a fixed out-of-pocket dollar amount paid prior to the insurance policy covering the remaining eligible costs. The deductible can vary greatly, with the premium usually going down as the deductible goes up, and vice versa.
For example, if you have a deductible of $1,500, the patient pays all of their medical expenses until it reaches the $1,500 mark. At that point, you share medical expenses with your insurance company by paying copays and coinsurance.
Copayment is likely the most familiar term related to patients’ out-of-pocket expenses. It’s usually a fixed dollar amount insured patients have to pay every time they use insurance related to a medical consultation or procedure.
Copays are similar to deductibles, since they are usually a fixed amount of money paid each time you use your insurance plan. However, copays tend to be smaller than deductibles and are applied at each visit.
Coinsurance is defined as your share of the costs of health care, usually a percentage. This kicks in after you finish paying the deductible. The percentage paid by the patient can also vary a good amount depending on the plan. For instance, if your coinsurance is 80/20, your insurance company would pay 80 percent of the expenses after the deductible is met. You are responsible for the remaining 20 percent.
Most insurance plans will employ some combination of a deductible, copay and coinsurance. It’s up to you to check into the specific rules of the policy to adjust the numbers within the rules to fit your budgetary needs.
While it will be more involved than this, here’s a very basic summation of what to consider with each element we’ve discussed:
Deductible – A plan with a high deductible will offer more affordable monthly payments. Try your best to figure out how often you need care to see if the deductible works for you. Keep in mind that some insurance plans may cover certain services before you pay the deductible.
Coinsurance – In most cases, the lower your monthly payments are, the higher the coinsurance payment will be.
Copays – If you have several prescriptions and need to visit your doctor and pharmacy frequently, it might be best to choose a plan with a low copay.
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