Published by Guerrilla Group, LLC

Insurance terminology can be confusing—coinsurance, copay, and deductible. If you currently have health insurance you have likely heard these terms, and if you are looking into purchasing health insurance these terms have most likely complicated the process for you, or at least made you pull up Google to find a better understanding.

We are here to assist your understanding of the meaning of these important insurance terms—to minimize any confusion and heighten your understanding of insurance.  

Deductibles

What is a deductible? A deductible is the amount of money that you will pay for the covered health care services prior to your insurance plan paying. For example, if your policy was a $1,000 deductible, you would be responsible for paying the first $1,000 out of pocket for the covered services on your own.

After you reach your deductible, you will typically only be responsible for your copayments or coinsurance for services that are covered under your plan. The insurance company would cover the rest of the bill.

• Many insurance plans pay for certain medical service such as checkups or disease management programs, prior to meeting your deductible. You should become familiar with your plan to determine what services may be covered by the insurance company. 
• Some insurance plans have separate deductibles for certain services like prescription drug plans. 
• Family insurance plans often have both an individual deductible, which applies to each recipient of the plan as well as a family deductible, which applies to the entire family.

Copays

What is a copay? A copay is a fixed dollar amount you would pay for a medical service that is covered by your plan after you have paid your deductible.

For example, if your health insurance plan’s allowable cost for a doctor’s office visit is $200 and your copayment for the doctor’s office visit is $25:

• If you have already paid your deductible for the year, you would be responsible for paying $25 for the office visit.
• If you have not met your yearly deductible, you would be responsible for the total $200, the full allowable amount for the doctor’s visit.

Coinsurance

What is coinsurance? Coinsurance is the percentage of costs of a covered health care service that you are responsible for paying after you have paid your deductible.

For example, if your health insurance plan’s allowable cost for a doctor’s office visit is $200 and your coinsurance for the doctor’s office visit is 20%:

• If you have already paid your deductible for the year, you would be responsible for paying 20% for the office visit, which would equate to $40, and the insurance company would pay the remaining balance.
• If you have not met your yearly deductible, you would be responsible for the total $200, the full allowable amount for the doctor’s visit.

As a second example of a service that exceeds the amount of your deductible, consider that you must have treatments for a serious condition and allowable costs are $12,000. If your deductible is $3,000, your coinsurance is 20% and the out-of-pocket maximum is $7,000:

• You would be responsible for paying the first $1,000 which is your deductible.
• You would then pay 20% of the remaining balance after the $1,000 for your coinsurance.
• Therefore, your total out-of-pocket costs would be $2,200.

We understand that these terms might not be a part of your everyday vocabulary like they are for us however, we hope that these descriptions and examples help further your understanding of insurance terminology.

Need more clarification? Contact Us.