What is Coinsurance

Tamsen Butler
Medical Professionals

What is coinsurance? This term is used in more than one context when it comes to the realm of insurance. The definition of coinsurance varies depending on the type of insurance.

Coinsurance and Health Coverage

Coinsurance pertaining to health insurance is the amount of money you will have to pay after your deductible has been met. For example, if your deductible has already been met and your coinsurance level is 20%, you will be responsible for $20 of a $100 charge for any medical expenses covered by your insurance policy. In this particular scenario, the health insurance policy might be referred to as an 80/20 policy. This is not the only ratio that occurs with health insurance, but it is common.

Coinsurance as it pertains to deductibles can vary from policy to policy. It's important to understand the level of coinsurance on your health insurance policy. You don't want to be surprised by an unexpected expense. If you think you are fully covered for a costly procedure and then later discover that you are responsible for a percentage of the bill, it can be a costly and unwelcome surprise. If you aren't prepared for this expense it can be devastating.

Understanding Coinsurance and Your Policy

Coinsurance is not something that your health insurance company tries to trick you with. It is usually presented in a very straightforward manner. Review your health insurance documents if you're not sure about whether or not coinsurance pertains to your policy, or contact a representative from your health insurance company and inquire about coinsurance on your policy. A representative from the Human Resources Department at your place of employment may be able to answer questions about your health plan like "What is coinsurance" if your policy is provided through work.

Lower Coinsurance

Depending on the policy, you may be able to lower your coinsurance liability by paying a higher premium. If you want to have the best coverage with the lowest coinsurance possible you should not be surprised at the higher premium you will need to pay. You should weigh your options to figure out which direction you should take with your money and health insurance.

Coinsurance and Structural Insurance

Insurance attached to business buildings, offices, and other structures must be adequate in order to cover a total loss. If a business owner does not adequately insure a business structure and a claim is made for a total loss, a coinsurance penalty may apply. A building insured for a lower amount of money than it should have been may not receive the full amount of coverage after a coinsurance penalty is imposed. Coinsurance may not apply to all claims.

To find out if your insurance policy carries a coinsurance clause, review your insurance documents or consult your insurance agent. If you have not yet purchased insurance be sure to ask if there is a coinsurance clause before buying. The best way to avoid a coinsurance clause for your business structure is to make sure you adequately insure everything. If you aren't sure about the value of your business structure then you can either trust the insurance company's assessment or commission an appraisal on your own.

What is Coinsurance Cap?

Some policies feature caps on how much money a policyholder will potentially have to pay in coinsurance fees. A cap is the maximum amount of money which you will ever have to pay for out-of-pocket costs. Caps assist health insurance policyholders when unexpected illness demand large payouts to hospitals and doctors. Read your policy or check with your insurance provider to find out if there is a coinsurance cap on your policy.

You should about the coinsurance featured on your policy, whether for health insurance or for insurance covering a business structure. Contact a representative with your insurance company for more information.

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What is Coinsurance