Health insurance doesn’t pay all of your health care expenses. Instead, you’re expected to foot the bill for part of the cost of your care through your health plan’s cost-sharing requirements like your deductible, copayments, and coinsurance.
Since deductibles and copayments are fixed amounts, it doesn’t take a lot of math to figure out how much to pay. A $30 copayment to fill a prescription will cost
you $30 no matter how much the total bill for the prescription was. Your health insurance picks up the rest of the tab.
However, calculating your health insurance coinsurance payment is trickier. Since coinsurance is a percentage of the total cost for the service, you’ll owe a different amount of coinsurance for each service you receive. If the health care service you received was cheap, your coinsurance won’t be much. However, if the health care service was expensive, your coinsurance could wind up being hundreds or even thousands of dollars.
You need to understand how to calculate your health insurance coinsurance payment so you’ll know how much you’ll owe for coinsurance and you can budget for it.
First, Find Your Coinsurance Rate
First, you’ll need to find your coinsurance rate for the type of care you’re getting. You should be able to locate this in the Summary of Benefits and Coverage you got when you enrolled in your health plan. Sometimes you can even find it on your health insurance
Be careful; in some health plans, coinsurance can be the same percentage no matter what type of service you get. For example, 30% coinsurance for hospitalization and 30% coinsurance for specialty drug prescriptions. In other health plans, you might have a low coinsurance rate for some services and a higher rate for other types of service. For example, you could have 35% coinsurance for hospitalization, but only 20% coinsurance for surgery at an out-patient surgery center.
Next, Find the Cost of Your Care
Once you know your coinsurance rate, you need to determine the total cost of the health care service you received. If you’re using an in-network provider, your health plan has already negotiated discounts from that provider. Calculate your health insurance coinsurance payment based on the discounted rate, not the standard rate charged to people who don’t belong to your health plan. Find this in-network discounted amount on your Explanation of Benefits listed as “allowed amount.”
If you haven’t gotten the health care service yet, you won’t have an EOB to check. You’ll need to ask your provider what the in-network rate for that particular service is. Alternately, your health insurer’s website may have a cost-estimator that will help you determine the cost of the service depending on which provider you use. If neither of these options works for you, see more options in “Find Out How Much Your Medical Care Should Cost.”
Last, Calculate Your Coinsurance
To calculate the coinsurance you owe, you’ll first convert your percentage figure into a decimal figure by moving the decimal point two spaces to the left like this:
|Percentage:||Corresponding Decimal Figure:|
Now, multiply this decimal figure by the total cost of the health care service:
Coinsurance rate (as a decimal figure) X total cost = coinsurance you owe.
Antoine’s health plan requires 20% cost-sharing to fill a prescription. His total prescription cost is $150.
0.20 X $150.00 = $30.00
Coinsurance rate X total cost = coinsurance Antoine owes.
Antoine owes $30 coinsurance for this particular prescription.
Kinsey’s health plan requires 35% cost sharing for hospitalizations. The total cost for her hospital stay is $12,850.00
0.35 X $12,850 = $4,497.50
Coinsurance rate X total cost = coinsurance Kinsey owes.
Kinsey will owe $4,497.50 in coinsurance charges for her hospitalization.
Factors Affecting Your Coinsurance Amount
Don’t forget that you must also pay your deductible. In many health plans, you’ll have to pay the entire deductible before your health plan begins to pay part of the cost of your care. Only after you’ve paid your full deductible will you be sharing the cost of your care with your health plan by paying coinsurance. Learn more in, “Deductible—What It Is & How It Works.”
If you have a really big health care bill, your out-of-pocket maximum might kick in and protect you from some of the cost. Once the deductibles, copayments, and coinsurance you’ve paid this year add up to the out-of-pocket maximum, your cost-sharing requirements are finished for the year. Your health plan picks up 100% of the cost of your covered in-network care for the rest of the year. You don’t have to pay coinsurance, copays, or deductibles again until next year…usually. Learn more in, “Out-of-Pocket Maximum—How It Works and Why to Beware.”Thanks to the Affordable Care Act, most preventive care must be covered by your health insurance without requiring coinsurance, copayments, or even a deductible. This means you won’t have to pay coinsurance on things like your yearly physical exam, yearly mammogram, and routine immunizations. Although it may seem like preventive care is free, it’s not. Instead, the cost of that preventive care is included in your monthly health insurance premium whether or not you actually use the care.