Choosing the right health care policy requires understanding how the premium, deductible, copays and coinsurance all affect the costs you will have to cover yourself. Usually there is a trade-off among all those factors. Your coinsurance level, combined with your deductible, determines how high your costs can get before the insurance company will cover the full cost of your medical care.
Definition
For a given insurance policy, the coinsurance is the percentage of costs the insured is responsible for paying once the deductible has been met. For instance, an individual with a $500 deductible and 20 percent coinsurance would pay for the first $500 of medical care costs, and then would pay 20 percent of subsequent costs until reaching the out-of-pocket maximum for that policy. At that point the insurance company pays 100 percent of costs up to the annual or lifetime coverage maximum.
Range
Most coinsurance levels are in the range of 0 to 30 percent. Depending on how you obtain your policy, you may have a choice of different coinsurance levels for the same type of plan, such as a preferred provider plan (PPO) with either 0 percent or 20 percent coinsurance. The Kaiser Family Foundation's 2009 employer health benefits survey reported that 96 percent of PPO plans and high-deductible plans (HDHPs) featured coinsurance rates between 10 percent and 25 percent.
Variables
For some policies, usually those that use a PPO structure or are high-deductible plans, the coinsurance is higher for out-of-network care. Thus you may pay only 20 percent coinsurance when you use an in-network doctor or facility, but as high as 50 percent or more for services obtained from an out-of-network provider.
Exceptions
Usually once someone has both exhausted the deductible and paid coinsurance up to the maximum amount, he does not incur additional costs. This generally applies up to the point at which the total costs paid by the insurance company reach the annual or lifetime maximum. However, the Bureau of Labor Statistics cautions that an insured may also have to pay costs that the insurance company determines are beyond the "usual, customary and reasonable" amount. This is most common when services are obtained from providers outside the network.
Considerations
When comparing policies with different options for coinsurance, figure out in which areas you might have to sacrifice to have a better rate of coinsurance. For instance, you may have to pay a higher premium, accept a higher deductible, or choose a policy that does not cover preventive care until the deductible is exhausted. Then you can decide whether you are better off with the more attractive coinsurance or if the relative cost is too high.
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