Understanding Coinsurance, Deductibles and Co-pays

Unless you have any familiarity with health insurance co-pays, deductibles and coinsurance, you’ll find yourself at a total loss when it comes to shopping for new health insurance, or even understanding an existing plan you might already have. Lots of people realize this only at the point they receive their first medical bill, when they learn that their health insurance company won’t pay what they thought it would.

You need to know the fine print and ask specific questions. Research the terms and educate yourself before even attempting to purchase a new plan. We spend so much time researching the latest television or new computer purchase, yet we fail to educate ourselves regarding one of the most important commitments and purchases you will ever make.

Generally, people who search for a health insurance plan, have no concept whatsoever regarding what they need or want, or have a basic understanding about their present coverage, including what they are responsible to pay and what the company is responsible to shell out.

Unless you understand the language of health insurance, going online, or looking through insurance pamphlets and brochures, will most likely leave you in a state of shock and in total darkness.

Here are some simple terms to help you out. This whole process doesn’t have to be confusing at all. Just having some knowledge about a few simple Health Insurance terms, will empower you to finally come to a full understanding, and feel totally secure when picking out a plan that you understand, and are comfortable with, one that covers your needs and is affordable.


The Deductible is simply the amount of money you are responsible to pay for before the company starts paying. Most people have automotive insurance with a collision deductible. If your collision deductible is 750.00 let’s say, this simply means, if you ever get into an accident and your car is damaged, you will have to pay the first 750.00 of the total amount it will cost to fix your car. The insurance company will then pay the rest, no matter what the total bill was in the first place.

The higher your deductible, the lower your Health Insurance premiums. Health Insurance deductibles work basically the same way as your auto insurance collision deductible does.


This tends to be the most confusing for nearly all people, so don’t feel bad if you don’t understand it the first time around. If your Health Insurance Plan’s deductible is 2,500.00 and your hospital bill for example was 25,000.00, you’d have to pay 2,500.00 out of pocket first before the Health Insurance Company begins to pay. By this point, you still have 22,500.00 left to pay. If the insurance company pays 80% of your next 10,000.00 (this is known as 80/20 coinsurance) you then would be responsible for 20% of the next 10,000.00. In the very end, you’ll end up paying 4,500.00 and the company would pay out 12,500.00 in this particular example.

The company will (unless otherwise stipulated) pay every single penny, no matter the amount of the bill, as long as you have covered the deductible and coinsurance amount. ( 2,500.00 and your 20% part). There are all different percentages when dealing with coinsurance payments. You can opt for 20/80, 30/70 and so on. Just remember to always be aware of the total amount you’re responsible for.

The Co-pay:

There are some advantages and benefits that come with some health insurance plans. Some will allow you to have to meet a certain deductible amount before this feature kicks in. Co-pays are known in the insurance world as, ‘fixed amounts’ that are usually associated with any services, from medical prescriptions to a doctor’s visit. If your Health Insurance Plan states you have a 35.00 co-pay for doctor’s visits, you can actually see your doctor for only 35.00 as soon as your coverage kicks in.

Most plans offer a fixed co-pay for prescriptions. If your co-pay is 10.00, you just pay 10.00 when picking up your medicine, no matter what the total bill for your prescription is. Now, there might be exceptions in the area of brand named drugs and or specialty medications that are extremely expensive and specific. At this point, these medications will have their own separate deductible that has to be met before your co-pay advantage plan comes into affect.

This particular deductible has absolutely nothing to do with the general health insurance plan deductible. Don’t make a big deal regarding the co-pay amount listed on your individualized plan. Unless you plan on going to the doctor every single time you feel the slightest discomfort, it doesn’t matter whether your co-pay is 10 or 100 dollars. A higher deductible/co-pay is much better for your budget than a lower one, enabling you to keep your total premium amount lower and more affordable.

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