Most people we talk with are not even aware that they have a coinsurance factor that affects how much they must pay for hospital visits and other expenses that go toward the deductible. Briefly, coinsurance is the amount you must pay after you have paid your deductible. For example, your hospital stay is $28,000 for an appendectomy. If you have a $2,000 deductible and an 80/20 coinsurance on the first $10,000, you would pay $2000 in coinsurance. Your total out-of-pocket would be the $2000 deductible and $2000 coinsurance totalling $4,000.
Here is how it works. Of course, you understand that the $2,000 is your deductible, so you will pay that. Then, there is your responsibility for 20% of the first $10,000 which equals $2,000 of the $28,000 total. Therefore, your out of pocket expense is the total of your deductible and your coinsurance…$4,000. That is your total risk! The insurance company will pick up the balance owed to the hospital and doctors, or $24,000 in this example.
Most insurance policies have the 80/20 coinsurance on the first $10,000. However, look carefully. It may be 100/0, (Yes, 100/0 is that the insurance company pays 100% after you have met your deductible.) 70/30 or 60/40 or 50/50. Also, make sure that it is based on the first $10,000. It could be based on the first $20,000 – or even some other amount. . Coinsurance can be confusing. That is why many agents don’t even mention it to you. WE DO mention it. It is our responsibility to explain to you your total risk, so that you can make an intelligent, informed decision.