A traditional health insurance plan operates on the system of copayments (copays) and coinsurance. You will pay a monthly premium for the coverage. In addition you will pay a copay for every doctor visit, as well as trips to the hospital and emergency room. The copays are set, and usually increase when you see a specialist or go to the emergency room.
You may also be required to pay coinsurance on certain procedures such as tests or hospital stays. The coinsurance is the percentage of the bill that you are responsible for in addition to the copayment for the procedure. For example is you have 80/20 coinsurance, the insurance company will pay eighty percent of the cost and you will be responsible for the other twenty percent. This coinsurance applies after you have reached any deductible set by your insurance policy.
Many policies have a maximum out of pocket payment limit. Once you reach this limit the coinsurance no longer applies, although you do need to continue to pay your copayments. You will also pay coinsurance on the amount that your insurance has contracted to pay for procedures with the hospital and doctor. For this reason it is important to pay attention to both your doctor’s bills and the insurance statements that you receive outlining the payment amount.
It is important to understand how much a procedure could cost you. For example if you had to undergo surgery and stay overnight, you would have to pay your hospital copayment amount, pay the deductible amount if you have not already met it, and then pay your coinsurance amount on the remaining balance of the bill. You can call and talk to a representative at your insurance agency to learn the estimated costs of the procedures before you have them done. Additionally you should make sure that you get preapproval for most tests and surgeries before you have them done. This is one reason why it is very important to go with a reputable insurance company and not a discount plan. Most hospitals work with all the of the major insurance companies therefore they will already know what is covered and not covered.