What’s the difference between insurance deductible, coinsurance, and copay?
Many people are confused about the differences between an insurance deductible, co-pay and coinsurance. What are they and how do they differ from each other?
In short, all three represent the portion of the medical bill that you are responsible for in case you get sick or injured – otherwise known as out-of-pocket expenses. However, there are some very unique differences between each one, and we are here to help guide you and understand what each word means in detail.
A deductible is usually a fix dollar amount that you have to pay out of your own pocket before the insurance will cover the remaining eligible expenses.Depending on the insurance plan, the deductible can range from $0 all the way up to thousands of dollars. It can also be paid per sickness/injury (per condition) or per certificate period. As a rule of thumb, the higher the deductible the lower the premium (price to buy the plan), and vice versa – but always be sure to choose the deductible that is appropriate for your circumstances when purchasing an insurance policy.
Coinsurance is usually a percentage, and represents the percentage cost that you will need to pay and the insurance plan will pay towards your eligible medical expenses. Some common coinsurance examples include: 100%, 80/20, 90/10 and 50/50 – so if you have 80/20 coinsurance on your insurance plan, it means that the insurance company will cover 80% of your medical cost and you are responsible for paying the other 20% yourself. A deductible is commonly use together with coinsurance. In this case you would pay the deductible amount first and after you would have the left over coinsurance amount.
Copays are similar to deductibles, in that it is usually a fixed amount of money you have to pay each time you need to use your insurance plan. Unlike deductibles, copays tend to be smaller dollar amounts and are applied on a per visit basis so that that you would have to pay it each visit.
With most insurance plans, you will typically see some combination of deductible, coinsurance and copayments – or in some cases your plan may not have any of them. It will very much depend on your specific insurance plan so be sure to check the policy details so you know what your out-of-pocket payments will be.