Generally expressed as a percentage amount and outlined in your policy documents, coinsurance allows you to share the cost of the insured service with the insurance company—your insurance company pays the portion of the cost of the service that is insured, and you pay the remainder. Coinsurance only applies once you’ve paid your deductible. Once you’ve met your deductible for the year, your coinsurance percentage will be charged to you, along with any copays that apply. Coinsurance amounts typically aren’t split evenly between you and your insurer. The insurance company generally bears a higher burden, paying the majority of the covered cost (the greater percentage) of a covered health care service. The first number in a coinsurance split is what your insurer pays and the second number is what you pay. Coinsurance is typically applied to the insurer’s allowed amount for a covered health care service, which is the maximum amount the plan will pay for that expense. Common coinsurance divisions are 70/30 or 80/20—your insurance company would pay either 70% or 80%, and you would pay the remaining 20% or 30%, respectively, out of pocket, after the deductible is met.
Out-of-Pocket Maximum
You’ll continue to pay your coinsurance throughout the year unless you’ve hit your out-of-pocket maximum. Once you reach your out-of-pocket maximum, you won’t be charged any costs for health insurance aside from premiums, out-of-network services, and any other costs that your plan doesn’t typically cover.
Example of Coinsurance
Say you met your deductible in the spring and, in the fall, you break a finger and go to the emergency room. Your bill is $2,000 (within the allowed amount), and your coinsurance is 80%/20%, which means you’re responsible for 20% of the bill. You’ll pay $400. That $400 is known as your “out-of-pocket” expense. The insurance company, paying the majority of the cost at the higher percentage, would pay the remaining $1,600.
Health Insurance Marketplace Coinsurance
Marketplace health plans come in four categories. These categories define the percentage of costs the insurance company pays for your health care needs and the percentage of coinsurance you must pay. These percentages kick in once the deductible has been met.
Bronze: With a bronze plan, you pay 40% coinsurance, and the insurance company pays 60%. Although bronze plans offer the lowest monthly premiums, they have high deductibles and the highest coinsurance percentage.Silver: Silver plans require you to pay 30% coinsurance, while the insurer pays 70% of costs. Silver plans offer more moderate health care costs than bronze plans, with lower deductibles and moderate premiums.Gold: Gold plans require you to pay 20% coinsurance, while the insurance company pays 80% of the costs. Although these plans feature low deductibles and out-of-pocket costs, they have higher monthly premiums than bronze or silver plans.Platinum: These plans pay 90% of your health care costs and you pay 10%. They offer very low deductibles but have the highest monthly premiums.
Coinsurance vs. Copayment
The terms “coinsurance” and “copayments” sound similar, but they are two very different health care costs. A copayment is a fixed dollar amount you must pay when receiving health care services after meeting your policy’s deductible. Unlike coinsurance, copayment amounts can vary by service. With marketplace policies, both coinsurance costs and copayments are subject to annual out-of-pocket limits.
The Bottom Line
Coinsurance is a standard feature in health insurance plans. The cost is required after paying your deductible, except for services fully covered by your plan, such as preventive care. Marketplace health insurance plans cap annual out-of-pocket coinsurance costs as well as deductible and copayment costs. Choosing a health plan requires striking a balance between what you can afford to pay in premiums and how much you can afford to pay in health care costs. Plans that offer low premiums typically require you to pay a higher percentage of coinsurance, while plans with higher premiums pay a higher percentage of health care costs.
