Copay vs Deductible vs Coinsurance
Health insurance covers many medically necessary items, but it also comes with financial responsibilities for the patient. In addition to paying for the actual insurance, the premium, the patient may have a copay, coinsurance and/or deductible.
Health insurance covers many medically necessary items, but it also comes with financial responsibilities for the patient. In addition to paying for the actual insurance, the premium, the patient may have a copay, coinsurance and/or deductible.
Definitions
Premium – the monthly amount paid to the insurance company to buy health insurance.
Copay – a predetermined amount to pay at the time of service. Different services may have different copays. For instance, a patient may have a $25 copay for an office visit, a $50 copay for an urgent care visit, and a $10 copay for medications. Typically, insurance companies will pay the remaining fees after the patient pays the copay.
Deductible – an amount the patient must pay out of pocket before the health insurance begins covering bills. For example, patient may have to pay the first $1,500 of costs before the insurance company will accept financial responsibility for claims.
Coinsurance – a percentage of the medical charge the patient must cover. If the patient has an 80/20 plan, this means the patient must pay 20% of the charges and the insurance company is responsible for the remaining 80% of charges.
Example
Phineas has insurance through his employer. Every pay period, $250 is deducted from his check to pay his portion of the insurance. This is the premium.
The health insurance plan his employer has selected has a standard $25 copay for every office visit. Phineas has a $1,000 deductible and a 90/10 plan.
Phineas injures his knee while hiking. His doctor orders a rehab knee brace. The charge for the brace is $2,800.
What does Phineas owe?
$1,000 for the deductible PLUS
10% of the remaining amount for the coinsurance
Total to be paid to the brace provider: $1,180
The health insurance company will consider payment, according to the contractual fee schedule, for the remaining amount.
What does this mean for you?
Understand patient financial responsibility and collect from the patient. The patient owed amounts are a part of your overall reimbursement.
For more information on contract payments, read Charge vs Allowed vs Reimbursed.