Get the Most Out of Your Insurance: A Guide to Deductibles, Copays and Coinsurance
What is the difference between deductible vs copay vs coinsurance? Insurance can be confusing, especially when you are trying to figure out how much of the bill you will end up paying. Before we get into details, let’s go over some definitions. A deductible is an amount that must be paid before your insurance company starts covering your medical expenses. Copays refer to a fixed dollar amount (or percentage) that you pay for care before your insurance covers most of it. Coinsurance refers to the percentage of total cost shared with your insurer after meeting a deductible or after using certain types of coverage like copays.
So, which one to choose? The answer is not so black and white. It depends on your financial situation, as well as how much you are willing to pay out of pocket in exchange for more coverage from your insurer (and vice versa). For example, if you’re not a big spender and have been responsible with your money, then you might be better off going for the highest deductible that is reasonable to you. If however, this was an unexpected event or something different from what you usually expect of yourself financially, copay may be a good option as it will keep costs under control without breaking the bank.
Here are some examples: A hospital bill can run up thousands of dollars if there were many tests done over several days in the ER. In such cases having 100% coverage after meeting a high deductible may mean paying more than expected – lot’s of out-of-pocket expenses! On other hand if one has been taking antibiotics at home but had elevated temperature for few days which made doctor send them to the ER for overnight IV antibiotics and few tests – there is no reason not to join a health insurance plan with low deductible. Another example: one could be dealing with an ongoing condition and on any given day, depending on how their body responds, they may need $100 of blood test or $1000 worth. It’s reasonable in this case to pay some amount first (copay) until you hit your yearly out-of-pocket maximum limit after which insurer covers 100% of all expenses associated with that diagnosis each year regardless copays/deductibles applied during those 12 months .
As we can see even though deductibles vs copays vs coinsurance are different things they do overlap sometimes and make sense together as part of financial strategy.
Another thing to keep in mind is that copays and coinsurance may not apply for all services you receive so don’t forget to check your policy! ou can do this by checking the section marked as “co-insurance, co-payment & deductible” or “limitations and exclusions”.