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What Is Coinsurance In Health Insurance?

Coinsurance in a health insurance plan refers to the amount that you’re required to pay towards a medical treatment after paying the out-of-pocket deductible cost. It is usually denoted as a fixed percentage and is often paid directly to the health insurance provider. 

 

In a health insurance plan with coinsurance, you need to pay a fixed percentage of the treatment cost out of your pocket. The remaining cost of treatment will be borne by the health insurance provider. 

 

You can opt for coinsurance at the time of purchasing your health insurance policy. By doing so, you can reduce the health insurance premium since you’re effectively reducing the amount of claim that the insurance provider has to pay out.

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How Does Coinsurance Work?

Coinsurance is the percentage of the treatment cost that you have to bear before the insurer starts covering the medical expenses. It is a form of cost-sharing between you and the insurance provider. The coinsurance is usually a fixed percentage of the treatment cost. However, the coinsurance terms only apply after you (the policyholder) have surpassed the deductible amount applicable under your plan. Let’s understand how coinsurance works with an example. 

Understanding Coinsurance With an Example

Let us assume that the coinsurance term of your health insurance plan is in the 80/20 ratio and that your plan has an annual out-of-pocket deductible of ₹2,000. Now, say that you suddenly require an urgent surgery early in the year that will cost you ₹50,000. Since you may not have met your deductible amount this early in the policy period, you will first pay the ₹2,000 of the total bill. 

After meeting the deductible of ₹2,000, you will then be responsible only for the coinsurance payment i.e., 20% of the remaining bill amount, which will be ₹9,600 (20% of ₹48,000). Your health insurance provider will cover the remaining 80% of the treatment cost. Later in the year, if you need to undergo another medical treatment, your coinsurance clause will come into effect immediately as you have already met your annual deductible.

How Does Coinsurance Benefit the Policyholder?

If you are considering buying a health insurance plan with coinsurance, the main benefit it offers you is lower premiums. If you opt for coinsurance in health insurance, where you pay a fixed percentage of your medical costs, your insurance premiums towards the policy will be lower. But it is recommended to consider the out-of-pocket expenses that you might have to bear every time you raise an insurance claim while opting for a plan with coinsurance.

How to Calculate Coinsurance Payments?

To calculate the coinsurance payment that you must bear, you need to understand the coinsurance rate applicable under your health plan. If the coinsurance is 20% of the medical costs, then you can first convert the percentage into a decimal. Hence, coinsurance of 20% would become 0.20 and coinsurance of 15% would become 0.15. Then, you can estimate the coinsurance payment in the following way:

 

Coinsurance Rate x (Total Cost of Bill - Deductible) = Amount to be Paid

Let’s take the example discussed above, with a coinsurance of 20%, a deductible of ₹2,000 and a total medical cost of ₹50,000.

0.20 x (₹50,000 - ₹2,000) = ₹9,600

 

Thus, the amount you are required to pay after covering the deductible is ₹9,600. However, you must remember that you need not consider the health insurance deductible component after you have cleared it during the policy term.

Wrapping Up

Even though opting for coinsurance offers you lower health insurance premiums, your out-of-pocket expenses during medical treatments will go up with such a cost-sharing clause. This can lead to an unnecessary financial burden during medical emergencies. Hence, you must compare health insurance plans available in the market before buying a policy, read all the terms of the health insurance plan you are opting for, and make an informed decision.

Now that you are well-versed with the coinsurance meaning in a health insurance plan, it is time you secure your health with the plan of your choice! Browse the health insurance plans available on Bajaj Markets which come with a host of benefits.  

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FAQs on Coinsurance in Health Insurance

✔️Is coinsurance a mandatory policy requirement?

No, coinsurance in health insurance is not mandatory. To explore more, you can browse through health insurance plans at Bajaj Markets.

✔️Does the coinsurance amount vary while availing different services?

Coinsurance is usually a fixed percentage of the treatment costs. The amount may vary as per the total cost of the treatment. Read the terms and conditions carefully to understand the implications.

✔️What is the impact on premiums in coinsurance plans?

Health insurance policies with a coinsurance clause tend to have lower health insurance premium amounts associated with them.

✔️Can health insurance have coinsurance and deductible clauses at the same time?

Yes, in fact, coinsurance terms are usually added to insurance plans with deductibles involved.

✔️What does a deductible mean in health insurance?

A deductible in health insurance is the fixed sum of money that you (the policyholder) have to pay before your insurance provider starts contributing to the cost of your medical treatments.

✔️What is coinsurance in health insurance?

The coinsurance definition simply is a fixed percentage of the insurance claim that you need to pay while the rest is covered by the insurance provider.