What is co insurance is one of the most common questions with health insurance. It’s common because its one of the more confusing aspects of a health insurance policy. Most health insurance policies have some sort of co insurance built in, but not all. Generally, your major medical, short term medical, and Medicare plans will have co insurance in them. Type of health insurance policies that usually don’t have a co insurance are fixed indemnity plans, or “limited medical”.
What is Co Insurance?
Co insurance is a shared responsibility of medical costs, represented by a percentage. Co insurance usually starts after you have satisfied the deductible on your medical plan. Then you pay a percentage and the insurance company pays a percentage of the medical bills. This split percentage between you and the insurance company is what is called co insurance.
Co insurance usually appears on your policy as a percentage or a split number:
- 50/50 (50%)
- 60/40 (40%)
- 70/30 (30%)
- 80/20 (20%)
- 90/10 (10%)
- 100/0 (0%)
The most common of all co insurance percentages is the 80/20. Which means, after you have met your deductible, then the insurance company pays 80% of your medical bills and you pay 20%.
Does Co Insurance Last Forever?
Once the co insurance on your health insurance policy starts (after you met your deductible), it only lasts for so long. Health insurance policies that have a co insurance percentage on them, also have what’s called a “max out of pocket”, sometimes referred to as “moop”. This max out of pocket limit, protects you financially and is the max amount you would have to pay in a given year (or term, if different than a year).
How Does Co Insurance Work?
Co insurance starts after you have met your deductible. Let’s use the following as an example:
- Deductible: $5,500
- Max Out of Pocket: $8,150
- Co-Insurance: 80/20 (20%)
For medical services that are subject to your deductible, you would be responsible for the first $5,500 of medical bills. Then you only have to pay 20% of the medical bills until you have paid a total of $8,150, or an additional $2,650. The additional $2,650 you are paying is the 20%, so the medical bills would actually be $13,250. After adding the the deductible that was your responsibility first, the total medical bills would have to be at least $18,750 in this example for you to hit your max out of pocket.
What Happens if I Hit the Max Out of Pocket?
If you hit your max out of pocket limit, then your co insurance percentage changes to 100/0, or 0%; and the insurance company then covers 100% after that. Even though the insurance company pays 100% of the medical services subject to your deductible and co insurance; there might still be some medical services that you need to pay for.
Which Co Insurance is The Best?
The co insurance that is the best for you really depends on your preference. There is no co insurance percentage that is best for everyone. Generally, a lesser co insurance, like 50/50, will be on a lower priced plan. Health insurance plans that have 90/10 or 100/0, if they are even available where you live, will be a higher price. There are advantages and disadvantages of both low and high co insurance percentages. Monthly premium price and out of pocket medical costs are the two main factors that should be considered when deciding on which co insurance amount is the best for you.
Do I Have to Pay Co Insurance?
Technically, if your health insurance policy has co insurance on it, then you have to pay the co insurance according to your policy coverage’s. Is there a way around paying for co insurance? There might be. If your policy is a 100/0, then the insurance company pays 100% after your deductible is met. You also might be able to get additional insurance policies that would pay your deductible and/or your co insurance for you. These additional insurance policies are commonly referred to as ancillary coverage’s or “deductible protection”. Depending on what’s available in your area, what you qualify for, and what your budget allows; the options to financially protect you from the deductible and co insurance will look different. Consult with a health insurance broker by requesting a health insurance quote to see what your options are.