Health Insurance Articles
The Difference Between Co-payment And Coinsurance
2010-01-23
The terms co-payment and coinsurance may seem to be referring to the same type of health insurance plan. There are actually some differences in these two types of health insurance coverage, although they do work in very similar ways sometimes. The following are the ways that co-payments and coinsurance differ.
To better understand how co-payments differ from their cousin coinsurance, both terms must first be defined. A co-payment is usually made as part of a managed health care coverage plan like a HMO. The co-payment is a set amount of money, which can vary by plan but will usually be from about $5 up to $50. Regardless of the total cost of the doctor visit or prescription medication, this is the only amount that the managed care plan participant will be required to pay. People who participate in a managed care plan will not typically be required to meet a deductible, and the co-payment will usually be the same amount every time.
Coinsurance sounds very much the same in definition but is actually different in practice. A coinsurance payment is a portion of the medical bill that the patient is responsible for. The patient will pay only part of the bill, which is a set percentage, while the insurance company will pay the remainder of the cost. The most common health insurance plan is an 80/20, meaning that the insurance company pays 80% of the medical bill, and the patient pays the other 20%. Other coinsurance plans may be 90/10 or 70/30, with the first number always representing the insurance company's portion of the bill, and the second number being the amount the patient must pay. Coinsurance does work very much like co-payments, since the patient must pay only a portion, and the insurer pays the rest.
However, there is one significant difference between co-payments and coinsurance. With coinsurance, the shared payments do not start until the insured has reached a set deductible. For example, if the insured person has 80/20 coinsurance health care coverage with a $5000 deductible, that person will need to pay the first $5000 of all medical expenses each year in full before they will be able to get their health care coverage benefits. Once the deductible has been met, the insured will be able to begin making the partial payments that are similar to co-pays. Coinsurance may be a good choice for people who rarely visit the doctor and are unlikely to ever meet their deductible, while those who need to see the doctor or get medications regularly will often find that a managed health care plan with co-payments is a good option.
