What is Coinsurance?
Coinsurance refers to the portion of your insurance bill that you're responsible for paying after you've met your deductible. Typically, coinsurance operates on a fixed ratio, meaning you will always be charged the same percentage of the total bill each time.
How does coinsurance work?
When you file a health, dental, or vision insurance claim after you’ve reached your out-of-pocket annual deductible, you are responsible for a portion of the total bill. Most often, insurance companies operate on an 80/20 coinsurance plan.
Understanding coinsurance documentation
Coinsurance amounts are often represented by a ratio or percentage, outlined in your insurance policy documents. For example, in the typical ratio format of an 80/20 coinsurance plan, the first number in the ratio, 80, refers to the portion your insurance company will pay, and the second number, 20, represents the percentage of the cost you will be responsible for.
Insurance companies list percentages in coinsurance plan descriptions (e.g., 20% coinsurance, 0% coinsurance, etc.) to refer to the part of the bill that you, the insured party, will be responsible for. The most common percentages are:
- 20% coinsurance: you are responsible for 20% of the total bill
- 100% coinsurance: you are responsible for the entire bill
- 0% coinsurance: you aren’t responsible for any part of the bill — your insurance company will pay the entire claim
Coinsurance vs. Copay vs. Deductible
Outside of your premium payments, your biggest insurance-related expenses are coinsurance, copays, and deductibles. We’ve already covered what coinsurance is, but the other two are:
- Copay: The flat out-of-pocket fee you pay for services
- Deductible: The set amount you’re expected to pay for services before your insurance covers a larger portion of the costs.
Coinsurance—what’s the bottom line?
Coinsurance is a cost-sharing system insurance companies use in which you are responsible for a portion of your total bill, but only after your annual deductible is met. Knowing what coinsurance is and how it works can make a huge difference in understanding how your insurance policy is used and can help you better plan for the future of your health.