Difference between deductible and copayment and coinsurance?

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PostPosted: Thu Mar 20, 2014 9:40 am   Post subject: Difference between deductible and copayment and coinsurance?  

Could you please tell me about the difference between deductible and copayment and coinsurance?

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PostPosted: Thu Mar 20, 2014 1:16 pm   Post subject:   

Ded: Amount you pay before insurance pays anything.

Co-Pay: portion of the cost you pay while insurance pays everything else

Co-Insurance: Amount of insurance you are required to carry on the risk.

Information on all of these things can be found on Internet. I don't do people's home work so I'm brief.


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PostPosted: Fri Mar 28, 2014 5:18 pm   Post subject:   

Co-Insurance: Amount of insurance you are required to carry on the risk.
Actually, this is a Property & Casualty explanation.

In health insurance, coinsurance is the portion of every claim that you pay (after satisfying any deductible). Most insurance companies will state that the coinsurance is 20% or 30% or 50% meaning that's the patient's portion of a bill that the insurance company does not pay. But one must read the details carefully, because some insurance companies, like Assurant, state it in the reverse. When they say coinsurance is 80%, it means they pay 80% of the bill and leave the remaining 20% for the patient to pay -- it's still the same concept, but if you put Assurant's outline of coverage next to Blue Shield's outline of coverage you would see one at 80% and the other at 20% and might make a purchasing decision based on a misunderstanding, when in fact both pay the same.

This is why it is almost always best to use the services of a licensed agent when purchasing insurance. You don't pay an agent anything to help obtain your insurance, the insurance companies pay us commissions based on what you purchase. Agents cannot even charge you $25 to help you fill out an application.

When it comes to deductibles, Obamacare has managed to create considerable confusion. Bronze plans have "individual deductibles" which means the deductible applies to all expenses incurred by an individual. Silver plans do not have an individual deductible, but they have a "medical" deductible which applies to things like emergency room visits, hospitalization, and, possibly, outpatient surgical procedures or diagnostics such as MRIs or CT scans.

Misunderstanding the difference can be costly. And it's the reason that I have only enrolled two persons in Bronze plans, and all but one other person (who chose a Gold plan) in Silver level health plans for 2014. They are not the most ideal plans, but they are more reasonable compared to Bronze plans because the additional premium is easily offset by the $2850 or more in reduced medical deductibles that most persons will not pay compared to the $5000 Bronze deductible which means all of your out-of-pocket expense is on your dime until you have paid $5000 in medical bills (including prescription drugs). Then you and the insurance company share the next $1350, which means that out of $6350 in maximum expenses for the year, a person enrolled in a Bronze plan will have paid $5270 out of pocket + premiums.

A person with a Silver level plan will obtain much more health care if they actually reach the $6350 out of pocket limit, because the insurance company pays a much greater share of expenses up to that point. For example, Silver 70 plan copays are 1/4 lower than those of the Bronze plans ($45 vs $60) -- which means you could see the doctor 33% more in a Silver plan than in a Bronze plan for the same amount of out of pocket expense (15 visits = $900 at $60 each in a Bronze plan, 20 visits at $45 = $900 in a Silver plan). A Silver plan is not 33% more expensive than a Bronze plan.

In Southern California, for example, the lowest cost Bronze plan for a person age 60 is $399, and the lowest cost Silver plan is $476, a difference of less than 19.3%. $924 in additional premium saves $3000 in medical deductible compared to $5000 individual deductible, a net savings of over 41.5% -- a better than 2-to-1 "return on investment" possibility, not to mention lower copays and coinsurance which translate into more health care.


CA-licensed Life & Disability Analyst. CA Insurance Lic #0596197. Also investigating insurance company abuses, and providing litigation support/expert witness services. Send me your questions, and I'll send you my answers.
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