Co-Insurance and Co-Payment-Choosing the Best Option

co-insurance and co-paymentCo-insurance and co-payment are two forms of cost sharing that insurance companies utilize. It is important to understand how they work. Understanding this process will help you save money on your health care expenses. In this article, we will define co-insurance and co-payment and go into how they work. Once you are armed with this knowledge you will be able to choose the best health insurance option for you and your family.

Co-Insurance Policies

Co-insurance refers to a portion of medical expenses that you, as the insured, are responsible for paying for. This is represented in percentages. Co-insurance policies typically offer three different levels of coverage. The first is 70/30. If you have one of these policies you will be responsible for paying for 30% of the costs and the insurance company will cover the other 70%. There are also 80/20 and 90/10 policies available.

Your co-insurance does not kick in until your deductible is met. Until you have met your deductible you are responsible for 100% of costs. You are also responsible for 100% of costs for services you receive that are not covered by your policy. This typically includes things like chiropractic visits or acupuncture. To demonstrate how much you may end up paying, consider these scenarios. To start, let’s say your policy has a $2,000 deductible, you have 80/20 co-insurance, and you receive a hospital bill for $1,800.

  • Scenario 1: You receive your $1,800 bill. You have not met your $2,000 deductible. In this case, you will be responsible for the entire $1,800.
  • Scenario 2: You have already paid $1,500 towards your deductible. Of your $1,800 bill, you will pay $500 to satisfy the remainder of your deductible. You will then be responsible for 20% of the remaining $1,300. So, you will pay $260 and your insurance provider will pay $1,040. This means you will pay a grand total of $760.
  • Scenario 3: You have already met your deductible. You will be responsible for 20% of the $1,800, or $360. Your insurance will pay the remaining 70% or $1,440.

As you can see, figuring out how much you may be responsible for paying for is not straight forward. Understanding how co-insurance works and the possible scenarios will help you to calculate your expenses more accurately.

Co-Payment Policies

A co-payment is a set amount you pay for healthcare services at the time they are rendered. Typically, co-payments start around $25 and increase depending on the service provided. Co-Payments apply to such services as office visits, prescriptions, specialist visits, urgent care visits, and emergency room visits. Just like co-insurance, you will be responsible for satisfying your deductible before your co-payments kick in. However, this may differ from policy to policy. Some policies have co-payments even before you deductible is met. The following scenarios will help demonstrate what you can expect to pay. Let’s say you have a $2,000 deductible and a $1,000 bill from the hospital for an ER visit. Your co-pay for an ER visit is $75.

  • Scenario One: if you have not paid off your $2,000 deductible you will be responsible for the entire $1,000 bill.
  • Scenario Two: You have paid $1,500 of your $2,000 deductible. You will have to pay $500 to satisfy the remainder for your deductible. You will also have to pay your $75 deductible. This means you will have to pay a total of $575 for your visit.
  • Scenario Three: You have fully met your deductible. You will only be responsible for the $75 co-pay.
  • Scenario Four: You have a policy that allows you to make a co-pay only for this service, even if you have not met your deductible, you are only responsible for the $75 co-pay

Importance of Knowing the Differences

Understanding the differences between co-insurance and co-payment policies could mean the difference of thousands of dollars. You need to know what to look for to ensure that you are getting a good deal. Before you purchase a policy, you should carefully add up all potential costs. This would include your deductible, premiums, co-insurance, and co-payments. Carefully weighing the costs will help you find the best-priced policy that will give you ultimate coverage.

Questions or want to schedule an appointment? Contact us by clicking here.