Coinsurance – What Is Coinsurance in Health Insurance Medical Billing?


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Coinsurance is an amount that an insured has to pay toward a claim after the deductible is taken care of. It is expressed as a fixed percentage. Let us understand the coinsurance meaning and other details in this post. 

The coinsurance is an amount that is directly paid to the insurance company. It is frequently paid and expressed in terms of a percentage that is pre-fixed. If a policyholder opts for a health plan with coinsurance, they need to pay a particular part of the healthcare bill, while the remaining expenses are covered by the health insurance company.

The health insurance company gives the choice of co-insurance to the policyholder at the time of buying a policy. The policyholder can decide to either select or avoid the coinsurance as per their need.

However, if you select coinsurance under your health insurance plan, it lowers the claim amount paid by the insurance provider and thereby reduces the premium of the plan as well.

Let us walk through the various aspects of coinsurance in health insurance, in this post.

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What is coinsurance in medical billing?

Coinsurance in medical billing is the amount of claim of your health insurance that you raise for a certain health condition.  The insured shared this amount with the insurer to pay the health care bills claimed by you. So, coinsurance in medical billing comprises cost sharing and paying a predetermined amount of price by the insured for settling a claim with the hospital.  coinsurance in medical billing is generally paid after completing the yearly deductibles are taken care of.

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Functioning of Coinsurance in medical billing

As discussed above, coinsurance in medical billing means an amount of a healthcare cost that the insured is responsible for paying after meeting the required deductible. As we know, deductible is the sum that an insured has to spend every year to pay for the approved healthcare services before the health plan starts covering these expenses. Once the deductible amount is met, the insured and the insurer can divide the remaining expenses as per the terms of coinsurance in medical billing to meet the required need. This might turn out to be half the cost of the claim made by you, which can be too much. However, you get to pay much less for your health insurance in terms of paying the annual premiums.

For instance, if the coinsurance in medical billing predetermined under your health plan is 20%, you must pay that cost after meeting the deductible amount. On the other hand, the health insurance company would be paying the remaining 20% coverage of your health claim.

However, you may note that coinsurance in medical billing is just one way of paying the health insurance claims. In addition, there are other ways such as deductibles, copays etc. Besides, there is another option called ‘out-of-pocket maximums’, which means the highest amount paid by the insured from his/her pocket over the 1-year policy tenure. In this case, once the insured uses up the maximum amount of the plan, the insurer will pay the rest 100 percent of the expenses on their own.

It is important to note that if you opt for coinsurance, your insurer will not pay for the entire amount of your health claim. The payment option will be decided as per the coinsurance in medical billing factor. Further, in this case the deductibles are also paid by the insured, while the rest is divided between the insured and the insurer.

Unless you understand the coverage and the advantages of your policy including coinsurance in medical billing and tax deductions under section 80D, it will be difficult to choose a plan effectively.

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When is it required to pay for coinsurance?

Once the policyholder meets the deductible amount, he/she has to pay for the coinsurance. The deductible payment is tracked by your health plan and it can be seen in the Explanation of Benefits (EOB) that your insurer offers you after every claim. Hence, the required payment of coinsurance that needs to be paid is indicated on the EOB, which is directly paid to the hospital or other healthcare service providers as required.

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Benefits of Coinsurance to the policyholder

Buying a health insurance plan with coinsurance might offer some benefits as mentioned below:

  • The key benefit of purchasing a coinsurance in healthcare is that the you get the insurance plan at low rates
  • Hence, you would be paying low premiums for the health policy by choosing coinsurance in health insurance
  • It makes people to be more careful about their health since they have to pay a portion of their medical bills from their own pocket
  • But you will have to pay a certain percentage of your medical expenses under the plan
  • Also, you must consider the costs that you have to incur from your pocket every time you file for an insurance claim in case of coinsurance plan

To Conclude 

Choosing the option of coinsurance might result in paying low health insurance premiums. However, the cost-sharing option that you must share with the insurer might result in paying high amounts from your pocket for availing medical care.

Hence, it might turn out to be expensive at the time of raising claims for emergency situations. Thus, it is important to observe the various health insurance plans available and compare policies before purchasing a policy. Also, study all the terms of the plan before you decide on the final product.

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FAQs: Coinsurance in Health Insurance Medical Billing

What is the difference between copay and coinsurance in medical billing?

A monetary contribution that the policyholder pays towards a particular healthcare expense is called a Copay. This contribution can be a fixed amount or a certain percentage of the total bill/claim. The remaining amount is paid by the insurer. On the other hand, Coinsurance is a fixed percentage of a medical/healthcare bill that the insured is required to pay for every claim they make. 

The copay clause is levied only on specific healthcare services, while coinsurance is paid as a percentage of the expenses of a healthcare service. Hence, coinsurance vs copay are two different aspects of health insurance and they apply in different situations.

What is the difference between copay, coinsurance and deductible?

A copay is a definite amount that the insured pays for different purposes like doctor visits, prescriptions etc. Deductible is a fixed amount that a policyholder pays to cover health costs before their health insurance plan starts contributing. On the other hand, Coinsurance is the percentage of costs you the insured pays after meeting the deductibles. So, under Coinsurance in medical billing, you share the expenses of bills with the insurer.

What are the benefits of coinsurance?

Here are some advantages of coinsurance:

The key benefit of purchasing a coinsurance health insurance plan is that the you get the insurance plan at low rates 
Hence, it helps to control costs. You can pay low premiums for the health policy by choosing coinsurance in health insurance
But you will have to pay a certain percentage of your medical expenses under the plan.

What is the difference between reinsurance and coinsurance?

Reinsurance is the insurance or coverage of an insurance company. An insurer purchases reinsurance to insure the company against large losses. The insurer shifts the risk of large losses by purchasing insurance from a Reinsurer. Coinsurance, on the other hand, is a percentage the policyholder pays for medical expenses. In coinsurance, the policyholder shares the expenses or bills to be paid with the insurer.  

What is coinsurance in medical billing?

Coinsurance in medical billing refers to the percentage of cost of treatment that has to be paid by the insured after paying the deductibles.

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Feb 01, 2023
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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