Ah, health insurance jargon!
What's the difference between a copay and coinsurance? I have been asked this question many times through email, but after being asked the same question by a friend at a party last night, I decided a blog on the subject was a good idea.
Although you may be paying a hefty monthly premium for your health insurance (or a percent of what your employer pays), your health plan most likely does not cover 100% of the cost of your healthcare. Additional costs (or out-of-pocket expenses) that you may be responsible for include an annual deductible, copayments, and co-insurance.
Copayments
A copayment (or copay) is a fixed-dollar amount that you pay each time for certain services. Most commonly, you will be responsible for a copayment each time you have a doctor's visit and for each prescription medication you fill. For example, with my health insurance, I pay a $15 copayment for each primary care physician visit, $25 copayment for a specialist visit, and $20 for each brand-name prescription.
Coinsurance
Coinsurance is a percent of the cost of your care. You are responsible for paying the co-insurance amount. For example, if a doctor's visit is $100 and you have a 20% coinsurance, you will pay the doctor $20 and your health plan will pay the doctor $80.
Copayments are most often used in HMOs and for services you receive from a network provider in a PPO. Coinsurance is often used when you get services from an out-of-network provider in a PPO. This can be quite costly, especially if you use an out-of-network hospital for a surgical procedure.
Please leave a comment below or in the Health Insurance Forum.
..............................................
Photo © istockphoto.com
Best Health Insurance Companies http://www.itigresa.com/health-insurance/
An excellent description! Many thanks for taking the time to ’splain it to me!
So do you have to pay the copay and co-insurance? Given the doctor example above, do you end up paying $15 for your PCP visit and then $20 (20% of $100)? Or rather, $15 copay and the $17 (20% of the remaining $85)?
In the example given you wouldn’t be charged both a copay and a co-insurance, it would one or the other depending on your benefits outlined in your insurance policy.
“Copayments are most often used in HMOs and for services you receive from a network provider in a PPO. Coinsurance is often used when you get services from an out-of-network provider in a PPO.”
Based on the above I would not expect to pay a coinsurance and would pay a copay if I see an “in network” provider. Conversely, If I see an “out of network” provider then I would pay the coinsurance and not a copay.
Do I understand this correctly?