What is Co-Insurance Mean?

Co-insurance is a type of insurance in which a policyholder shares costs with the insurance provider. It is often used in health insurance policies but can also be found in other types of insurance policies such as property or casualty insurance. This article will explain what co-insurance means, how it works, and what you need to know before purchasing a policy with co-insurance.

What is Co-Insurance?

Co-insurance is the amount of money that a policyholder agrees to pay for covered services or benefits after a deductible has been met. The insurance company pays the remaining balance of the cost. The co-insurance percentage varies depending on the policy and the type of insurance plan. In general, the higher the co-insurance percentage, the lower the monthly premium for the policy.

For example, let’s say John has a health insurance policy with a $1,000 deductible and a 20% co-insurance rate. John gets into an accident and his medical bills add up to $10,000. John will first have to pay his $1,000 deductible before his insurance kicks in. After his deductible is paid, John’s co-insurance will be 20% of the remaining $9,000 ($1,800). His insurance company will pay the remaining $7,200.

How Does Co-Insurance Work?

Co-insurance works by sharing the cost of covered services between the policyholder and the insurance company. It is important to note that co-insurance only applies after a deductible has been met. Deductibles are the amount of money that a policyholder must pay before the insurance company starts paying for covered services. Once the deductible is met, the policyholder and the insurance company share the cost of covered services according to the co-insurance percentage stated in the policy.

Co-insurance can be confusing, especially when it comes to calculating how much a policyholder will have to pay for covered services. It is important to read the policy carefully and consult with the insurance company if you have any questions.

What You Need to Know Before Purchasing a Co-Insurance Policy?

Before purchasing a co-insurance policy, there are several things you should consider:

1. Co-Insurance Percentage

The co-insurance percentage determines how much you will have to pay for covered services after your deductible has been met. The higher the co-insurance percentage, the lower the monthly premium for the policy. However, a higher co-insurance percentage means that you will be responsible for more of the cost of covered services.

2. Deductible

The deductible is the amount of money that you must pay before the insurance company starts paying for covered services. A higher deductible generally means a lower monthly premium but also means that you will be responsible for more of the initial cost of covered services.

3. Out-of-Pocket Maximum

The out-of-pocket maximum is the maximum amount of money that you will be required to pay for covered services in a calendar year. Once you reach your out-of-pocket maximum, the insurance company will pay for 100% of covered services for the rest of the year.

4. Network Providers

Some insurance plans require that you use network providers in order to receive the maximum benefits. Before purchasing a policy, make sure that the providers you want to use are in the network.

FAQ

Conclusion

Co-insurance can be a confusing topic, but it is an important concept to understand when purchasing insurance. By knowing what co-insurance means, how it works, and what to consider before purchasing a policy with co-insurance, you can make an informed decision about which policy is right for you. Remember to read the policy carefully and consult with the insurance company if you have any questions.