Insurance Basics: Deductible & Coinsurance

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A lot of you may be confused with what is coinsurance after deductibles. It is true that many individuals purchase health insurance without knowing that co-payment and deductibles are two different things. If you are purchasing health insurance you must be aware of what the policy holds for you and clearly you must be aware of the different terms used and what they mean.

What is a deductible and co-insurance?

Deductible: This is the amount that you are responsible to pay before your insurance company starts paying when a claim is made. Your premium value is also determined by the deductible that you choose. The higher the deductible, the lower will be your premium.

Co-insurance: Say you have a deductible of 2000 and the hospital bill comes around at 20, 000. As a rule you have to pay off the deductible, i.e. 2000 out-of-pocket before the health insurance company begins to pay. So you still need 18000 to pay off the rest of the bill. If you have a 80/20 co insurance and the insurance company pays 80%, you need to make 20% of the remaining 18, 000. This means that your out-of-pocket costs would be deductible + the percentage of co-insurance you have agreed upon.

Co-insurance also has a stop loss clause that lets you pay your share of the co-insurance up to a certain limit for that year after which the insurance company bears 100% of the claim amount.

The difference between coinsurance and deductible is not clear to a lot of individuals. This may create a lot of confusion when you make a claim. But if your policy has this clause you must clearly understand what will be your contribution after a claim is made. Ask your agent to explain what portion you will have to pay and what portion your insurer would pay and how both co insurance and deductible would come into play.

What does coinsurance after deductible mean?

Coinsurance after deductible means that under a health insurance policy the insured will cover a fixed percentage of the covered expenditures after the deductible has been paid. This is almost similar to co-pay except that in co-pay the insured is supposed to pay a fixed dollar amount instead of a percentage when the medical service is delivered.

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PostPosted: Wed Aug 27, 2008 9:12 am   Post subject: Insurance Basics: Deductible & Coinsurance  

I was wondering whether its coinsurance after deductible or is it the whole insurance claim..Say I have a deductible of 500$ and a 70/30 coinsurance policy .When does the coinsurance come into play?After I pay the 500$ deductible or for the whole sum of the insurance claim?

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PostPosted: Wed Aug 27, 2008 9:40 am   Post subject:   

The deductible and coinsurance in a policy can be confused by many. However, the deductible comes off of your part if it's 70% then the deductible comes off that...(on all co-insurance claims I've worked anyway).



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PostPosted: Wed Aug 27, 2008 2:11 pm   Post subject: deductible and coinsurance  

Hi dear..when you have a policy with deductible and coinsurance it works this way: suppose you have a claim amount worth $ X with a deductible worth $500 & a Co-insurance of 70/30, over here you're all set to pay {(500 + 30% of (X-500)}.

I say this because co-insurance is calculated as the % of allowed expenses once the deductible is paid up. That's why I say you avail coinsurance after deductible is paid. Fatman

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PostPosted: Thu Aug 28, 2008 4:59 am   Post subject: coinsurance deductible  

I agree with what Fatman has said. In a policy that has deductible and coinsurance, deductible needs to be paid before the insurance benefits kick in and it is natural to have coinsurance after deductible. Its your must pay 'out-of-pocket' share and is determined in dollar terms.



Suppose, your insurer has promised to cover 80% of the medical expenses after you pay the deductibles. Hence, you should pay the deductible amount along with the remaining 20% of the costs.



Normally, the co-insurance is expressed as a percentage of the covered expenses.



Hope it clarifies Very Happy



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PostPosted: Thu Aug 28, 2008 7:06 am   Post subject:   

So what is the use of deductible then ?If there is an agreement of sharing in co-insurance is it really necessary to have deductibles also in your policy? Is it wise to get a policy with deductible and coinsurance both?

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PostPosted: Fri Aug 29, 2008 8:38 pm   Post subject: coinsurance and deductible  

In a policy with deductible and coinsurance the deductible must be met before the insurer will pay anything. It's normal to have coinsurance after deductible. Covered expenses in excess of the deductible, in your case, will be paid @ the 70/30 co-insurance rate, up to any "stop-loss" limit that may apply in your policy.



To answer this question:

Quote:
So what is the use of deductible then ?If there is an agreement of sharing in co-insurance is it really necessary to have deductibles also in your policy? Is it wise to get a policy with deductible and coinsurance both?




It's impossible to find a major-medical insurance plan that does not contain a deductible, and has been so for decades. HMOs generally have no deductible, they have "co-pays." PPO plans will commonly have deductibles which will vary with the plan. The purpose of a deductible in medical expense coverage is no different than those found in car insurance. They are primarily intended to eliminate small claims, and force the insured to retain part of the cost of the loss. You may be able to change the amount of the deductible, depending on whether it's a group or inidvidual plan. Just remember, the lower the deductible, the higher the premium costs will be.



With many plans, the deductible is waived for certain services, but applied to others. Hope this helps to understand the importance of coinsurance and deductible in some way...



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PostPosted: Mon Sep 01, 2008 12:55 am   Post subject:   

Some HSAs have no coinsurance after deductible has been met.

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PostPosted: Tue Sep 02, 2008 3:48 am   Post subject:   

The purpose of the deductible is to reduce the costs the insurer has to pay.



It keeps people from over using their policies. It also shifts the smaller expenses to the insured and this means that the insurance company doesn't have to pay administrative people to handle the claims for the small stuff.



A zero deductible policy with no coinsurance would not be cost effective. It is more efficient to have the insured pay for the smaller stuff. There's nothing wrong with getting your coinsurance after deductible is met.



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PostPosted: Tue Apr 27, 2010 8:52 pm   Post subject: Bill ?  

Help QUESTION I called the hospital to see what was the remaining balance they said zero they even sent me a zero balance and showing what the insurance paid and what credit they gave and at the balance it said -20.32.now I recieve a bill 7 months later saying I owe them $481.60 claiming that i owe co insurance and deductible is that possible after they sent me a receipt showing-20.32?should I pay?????


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PostPosted: Fri Apr 30, 2010 3:32 pm   Post subject:   

You could owe money now if the hospital had not included all of the services in the last bill you had seen with the credit balance. Chances are that they failed to bill the insurance company for something, or the insurance company inadvertently failed to make a payment. Or . . . you actually owe some money to the hospital -- it wouldn't be a first, since most health insurance does not cover "everything" you may be billed for.



But before you fly off the handle and get mad at everyone, take it one step at a time. Contact the hospital billing department and your insurance company's claims department and ask each for an accounting of the hospital/doctor charges and claims payments. If those two documents do not match, then something is wrong beyond your control. It will become evident that something was not billed or not paid. When you identify that, and bring it to the attention of the proper party, then the matter may take care of itself.



If everything billed has been paid, and there is a balance due, you may need to discuss the claim with the insurance company to make sure they paid everything they are liable to pay. Claims departments are staffed by human beings, and they sometimes make legitimate mistakes. And, yes, occasionally they deliberately don't pay for things they are supposed to pay for. But if the insurance company has paid all that your contract obligates them to pay, then you owe the difference to the hospital.



The good news is that the hospital will probably agree to negotiate a payment in full that is less than the few hundred dollars you may owe. At the very least, they'll agree to a payment schedule, even if you can only afford $50 per month. They would much rather collect anything than collect nothing.



So talk to people calmly and with respect, and you should get answers you can understand. If not, come back here for more advice.



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PostPosted: Fri Apr 30, 2010 3:41 pm   Post subject:   

Quote:
Some HSAs have no coinsurance after deductible has been met.




It's not the HSA that has no coinsurance or deductible, it's the "High Deductible Health Plan" (HDHP) that is required in order to have the HSA that has the deductible and coinsurance.



And yes, many HDHPs offer 100% coverage after the deductible has been met. But expect the deductible to be the maximum allowable by law. In exchange for a lower deductible, expect to pay up to 30% of the covered charges. There will be other limiting language in the policy to end your out-of-pocket & coinsurance expenses at a relatively low level beyond the deductible. Raising the out-of-pocket limit, like raising the deductible, will lower the cost of the insurance.[/quote]


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PostPosted: Tue Jun 08, 2010 9:22 pm   Post subject: scripts  

what does it mean on prescriptions when it says your cost is the greater of $15 or 40% of coinsurance?


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PostPosted: Tue Jun 08, 2010 10:49 pm   Post subject:   

Quote:
what does it mean on prescriptions when it says your cost is the greater of $15 or 40% of coinsurance?




I think you are mistaken in your question. You may be confusing COPAY and COINSURANCE. Copays are normally expressed as $$ amounts ($15 or 40% of $?? is actually a dollar amount, not a percentage). Coinsurance is normally expressed as a percentage sharing arrangement -- as in 80/20 (80% insurer / 20% insured). Therefore, it makes no sense to say "40% of x%".



You prescription plan probably says "Your prescription copay is the greater of $15 or 40% of the actual cost". If that's true, any prescription valued at $37.51 or more will cost you 40% of the actual charge, which will be more than $15.00 ($15 = .40 * $37.50).


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PostPosted: Tue Jun 22, 2010 2:59 am   Post subject: Secondary Billing/Colledtions  

When processing 2nd claims and there is a deductible and coinsurance on both primary and secondary does insured have to meet both deductibles and both coinsurances in order to have the 2nd claim paid? And if there is a balance left after the secondary has paid is that supposed to be the insured's responsibilty?


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PostPosted: Tue Jun 22, 2010 7:49 am   Post subject:   

If there is primary coverage and secondary coverage, each of which has a deductible, then, yes, the deductible normally must be satisfied in each policy before coinsurance would apply. There can be language in a policy that waives the deductible under certain circumstances, so regardless of what's said here, one has to follow the contract language, and the claim must first be presented to the primary insurer.



Whenever there's a doubt as to what is or is not covered, or how the payment and coordination of benefits clauses work together, the safest bet is to contact the agent or insurer for clarification.



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