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What is Coinsurance?

Coinsurance in health insurance is when a policyholder chooses to share the cost of their hospital expenses with multiple parties including their health insurance plan. Coinsurance is an option you can select when you buy or renew a health insurance policy. As an example, suppose you purchase Health Insurance for yourself. You can purchase another policy from a separate company, which will help take away the financial burden when the sum insured from your first policy is completely depleted.

How does Coinsurance Work?

Based on the coinsurance set by you, in case you have multiple health insurance policies, you can use them to reimburse your relevant treatment costs. The complete claim amount — also known as sum insured — cannot be reimbursed more than once, however, it will be divided among both policies and you will accordingly receive reimbursement. To illustrate this better, here is an example that explains how coinsurance in health insurance works. Suppose you opt for a 70–30 coinsurance plan between two separate health insurance plans by companies A and B. 

This means that company A is liable to pay 70% of your health insurance claim, while company B is liable to pay the remaining 30%. Let’s say you file a claim of ₹10 lakhs which you want both policies to pay for via coinsurance. As long as the sum insured from your coinsurance does not exceed ₹10 lakhs, this entire amount can be reimbursed. It will be paid out in the aforementioned ratio. Hence, policy A from company A will pay out ₹7 lakhs, while policy B from company B will pay out ₹3 lakhs.

Keep in mind that both policies will not pay the entire claim amount. They will collectively pay which is pre-decided based on the coinsurance option you select. Another crucial thing to note is that you have to pay two deductibles in this case, as you own two policies. These deductibles will be paid towards your policies who will then handle claim settlement. Hence, you are also paying part of the claim amount through deductibles.

There is another scenario where coinsurance allows you to fulfill the role of company B. This simply means that you can choose to opt for a health insurance policy with 70–30 coinsurance, the insurance provider will pay 70% of your claim amount, while you pay 30%.

How does Coinsurance Help Me?

If you are considering getting coinsurance in health insurance, here are some ways it can help. In general, there are three main benefits of opting for coinsurance over one standard health insurance. The first benefit is lower premiums. If you opt for coinsurance where you pay a percentage of your medical costs and your health insurance policy only pays the remainder, then your monthly premiums towards the policy will be lower. 

Another benefit of opting for coinsurance over singular health insurance is extensive coverage. If you are willing to pay for higher coverage by opting for more than one policy, you enhance your protection. Different policies have different terms and conditions and may cover different illnesses. By adding another policy to your portfolio, you are expanding your coverage, leading to less risk. 

The third benefit of coinsurance is that having a back-up health insurance policy can serve to cushion you from medical costs in case your first policy cannot provide coverage for a certain reason. Perhaps there are certain terms and conditions in place that prevent one policy from settling your claim. In this case, coinsurance with a second policy can pay off some of the medical bills and ease your financial burden.

Copay vs Coinsurance

The difference between copay vs coinsurance is that copays are the mandatory minimal costs paid towards covered health services at the time you avail of these services. Coinsurance, on the other hand, is your share, or the share of a company B, that has to be paid when you file a claim with your health insurance provider company A.

As an example, take the following scenario. Suppose Radhika has taken a health insurance policy with Company A and B at 80–20 coinsurance. One year into her policy term, Radhika has a stroke and needs urgent medical care. She is hospitalized in the ICU for her treatment. While these costs are covered by her health insurance, she has to pay a certain minimal amount for receiving a doctor’s consultations, medical tests, and prescription medication. This is Radhika’s copay.

Now, Radhika files a claim requesting her insurance provider to cover her medical bills through coinsurance. As per her coinsurance policy, Company A is liable to pay 80% of this bill, provided the amount does not exceed her sum insured from Company A. Radhika had chosen to split her coinsurance between two companies; hence, Company B will reimburse her with the remaining 30%. Radhika’s medical bills for her stroke are therefore split between two insurance providers.

Now that you are well-versed with the concept of coinsurance in health insurance, it’s time you secure your health with the right plan of your choice! Browse the Health Insurance plans available only on Finserv MARKETS. You also get a host of special benefits when you choose Health Insurance plans on Finserv MARKETS. Get a sum insured of up to ₹50 lakhs, with no medical checkups required for those under age 55, and cashless claim facility across over 6500+ hospitals across India.

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