{Health & Finances} What is the difference between a Co-pay and Coinsurance?

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I will admit that the topic of “health insurance” is NOT SEXY; however, when that moment comes where you are sick or injured, knowing that you will not have to come 100% out of pocket does sound attractive. Between the deadline of the Healthcare Reform Act this past March and the realization that I was no longer on my parent’s insurance, hit the reality that it is not only my financial responsibility, but also my duty to myself to figure out what it all means for my health and finances. I found myself getting frustrated during the process of picking a plan that is right for me because I was not familiar with the terminology that everyone else seemed to throw around so freely. Since my mother works in healthcare, she always took the lead in handling my medical and insurance matters for me…leaving me stressed and clueless when it came time for me to do it for myself.  I wanted to know how to read my bill and what to budget for doctor’s visits.  I figure, it starts by speaking the lingo.
Photo Credit: Stockphoto4u/istock.

Copayment
If you have a managed-care health insurance plan, your copayment “copay” is the fixed amount you pay for each in-network doctor’s office visit or approved medical treatment. In some plans, the copayment to see a specialist to whom you’re referred is higher than the copayment to visit your primary care physician. If you see an out-of-network provider, you are likely to be responsible for a percentage of the approved charge, called coinsurance, plus any amount above the approved charge.

Coinsurance
When your healthcare insurance has a coinsurance provision, you and your insurer divide the responsibility for paying doctor and hospital bills by splitting the costs on a percentage basis. With an 80/20 coinsurance split, for example, your insurer would pay 80%, or $80 of a $100 medical bill, and you would pay 20%, or $20. Some policies set a cap on your out-of-pocket expenses, so that the insurance company covers 95% to 100% of the cost once you have paid the specified amount.

{source: Yahoo Finance}

The Take-Away
Unfortunately, there are no one-size-fit all insurance plans for the masses. When deciding on a plan you must take into account how you regularly you see the doctor and how much you can afford should something unfortunate happen. If you see the doctor regularly, it may be beneficial to find a lower co-pay plan.  The good thing is you no longer have to budget things like birth control, preventative tests, or physicals into your budget.

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