If you’ve been looking out for a health insurance plan, one term you would have surely come across is ‘coinsurance’. But do you know the meaning of coinsurance?
Coinsurance refers to the fixed percentage of the medical treatment cost that you (the policyholder) have to bear after you have covered your deductibles. Coinsurance in health insurance is similar to co-pay, except that under co-pay you will have to bear the expenses when you are availing the medical treatments, while in coinsurance the amount is billed by your insurer, and you have to pay it to them directly. In this article, we will take you through the details of how coinsurance in medical billing works and how it can help you. Let’s get started.
Coinsurance, as mentioned earlier, is the percentage of the treatment cost that you have to bear. 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 reached your deductible amount. Let’s understand how coinsurance works 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 ₹2,000 deductibles, 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 expensive medical treatment, your coinsurance clause will come into effect immediately if you have met your annual deductible previously.
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 and your health insurance policy only pays the remainder, your monthly premiums towards the policy will be lower.
As we saw in the example discussed in the previous section, the coinsurance clause in your health insurance will begin only after you have met your deductible amount. This means that you will have to pay for your medical costs (excluding certain covered services) till you reach your deductible. Once you’ve reached your health insurance deductible, you will only have to pay the fixed percentage of the medical costs as per the coinsurance clause, and the rest will be covered by your insurance provider.
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.
No, coinsurance in health insurance is not mandatory. To explore more, you can browse through health insurance plans at Bajaj MARKETS.
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.
Health insurance policies with a coinsurance clause tend to have lower premium amounts associated with them
Yes, in fact, coinsurance terms are usually added to insurance plans with deductibles involved.
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.