What is Coinsurance?
Unlike your car insurance, homeowner’s and renter’s insurance which often cover 100% of your costs once you hit your deductible, health insurance is different – coinsurance.
Instead, most health insurance plans split the costs of your medical care between you and your health insurance for a brief period of time after you hit your deductible—usually through a cost-sharing method called coinsurance.
Coinsurance is the percentage of health care services you’re responsible for paying after you’ve hit your deductible for the year. With coinsurance, you’re sharing the cost of medical services with your health insurance plan until you reach your out-of-pocket maximum.
When you look at your policy, you’ll see your coinsurance shown as a fraction—something like 80/20 or 70/30. Most folks are used to having a standard 80/20 coinsurance policy, which means you’re responsible for 20% of your medical expenses and your health insurance plan will handle the remaining 80%.
Health plans with higher coinsurance usually have lower monthly premiums. That’s because you’re taking on more risk. So you’ll find that most health plans with 70/30 coinsurance have lower premiums than an 80/20 plan.
So, if you’re mostly healthy and have a good emergency fund in place, it might be a good idea to look for a health plan with higher coinsurance.