What’s the Difference Between a Deductible, Copayment, and Coinsurance?
Understanding your insurance plan can be an art and a science. With new changes each year and a plethora of terminology, it’s easy to see why many people struggle to understand the details of their policy.
We want to clear the confusion and offer some insurance basics. Here are the definitions and differences between deductibles, copayments, and coinsurance:
What is a Deductible?
Your health insurance deductible is the amount you pay for healthcare services rendered before your insurance plan begins to pay. For example, if you have a $2,000 deductible, then you would pay for the first $2,000 of covered services out-of-pocket. After that, you would then only pay a copayment or coinsurance for services rendered. The insurance company would pick up the rest of the costs.
What is a Copayment?
A copayment is simply a fixed amount (often between $20-50) that you pay for healthcare services that are covered by your insurance after you’ve completely paid the deductible.
For example, you visit the doctor for a routine checkup. The total cost is $100. You’ve already paid your deductible. So you’re only responsible for the copayment for the visit. Let’s say your copayment is $20, then you’d only pay $20 for the visit, and the insurance would pick up the rest.
If you hadn’t hit your deductible, then the copayment wouldn’t matter. You’d end up paying the full $100 for the checkup.
What is Coinsurance?
Coinsurance kicks in after your deductible with certain plans, too. Coinsurance involves the percentage of health care costs you pay for after your deductible has been met.
For example, you visit the doctor, again. The bill comes out to $100. Your coinsurance is 10%. If you’ve met your deductible, then you only pay 10% of the bill. Out of the $100, you’d pick up $10 and the insurance company would pick up the rest.
If you haven’t hit your deductible yet, you’d be responsible for the full $100.
Comparing & Contrasting
There’s no comparing and contrasting that needs to be done. Typically, copayments and coinsurance will kick in once your deductible is met. Occasionally, you’ll have both a copayment and coinsurance after your deductible. This means you’ll pay a copayment and then use coinsurance for the rest of the bill.
What You Need to Know
Deductibles, copayments, and coinsurance shouldn’t be confusing any longer. By understanding what each is and how they are incorporated into your health insurance policy, you’ll be able to fully understand what you pay for regarding covered health care services.
