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The 5 Basics of Health Insurance: Coinsurance


What is Coinsurance? Coinsurance can be described as “your share of the costs of a health care service.” This is a tricky process that is commonly heard and understood as an 80/20 plan. When you hear an insurance policy being described as an 80/20 plan or a plan having 80/20 coinsurance, that means that the insurance company is paying for 80% of your medical bills and you are paying for the remaining 20%. But first before coinsurance kicks in, you have to pay the deductible first. This is an example of how your coinsurance would cover a medical bill If you had a plan with $5000 deductible, and 80/20 coinsurance. Once the $5000 deductible is paid out of your own pocket, then the coinsurance will kick in, meaning you would pay 20% of your medical expenses until you reach your out-of-pocket maximum (OPM). In other words, after your deductible you’re splitting the cost of medical services with your health insurance until you reach your out-of-pocket maximum. Then after you reach your OPM, your health insurance would cover 100% of the rest of your medical bills. So the deductible plus coinsurance will equal the OPM. 

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