Differences among Copays, Coinsurances, and Deductibles

Differences among Copays, Coinsurances, and Deductibles

Copays, coinsurance, and deductibles are some of the common insurance terms that you may have heard before. Each of them refers to a different portion you’ll have to pay for during your health care.

As a patient, you must know how copays, coinsurance, and deductibles work to be informed on how much you are going to shell out and prepare yourself accordingly.

What is a copay?

A copay is a fixed fee that you pay for a service as soon as you get it. It’s usually small and not part of the deductible or coinsurance.

Copays are paid each time, so if you see your doctor several times during the year, they may collect multiple copays from you. If it’s not clear whether or not an item or service will require a copay when using it, make sure to ask ahead of time.

What is coinsurance?

Coinsurance is what you pay for a covered health care service after paying your deductible. Unlike copayments, which are flat fees, your coinsurance payment will typically be a percentage of the cost of a service.

The out-of-pocket maximum is the most you will pay for covered health care expenses during a policy period, such as a year. 

Once you have paid your deductibles and reach your out-of-pocket maximum, your health plan may begin to cover 100% of your expenses.

What is a deductible?

Your health insurance deductible is what you need to pay before your benefits kick in. The more you’re willing to pay out of pocket, the lower your monthly premiums.

Each year, once you’ve paid your deductible, your insurer pays a more significant share of your medical costs—until you reach the out-of-pocket maximum. Once this limit is reached, they cover 100% of the cost.

Coinsurance vs. Copay

One of the most common misconceptions is that coinsurance and copays are one and the same. Coinsurance, however, is a percentage of the total cost of service, while a copay is a flat fee.

Let’s say your medical provider charges 400 AED for an office visit, and your health plan’s allowed amount for this visit has been determined to be 320 AED. If you have a 20% coinsurance, you pay 20% of that permitted amount or 64 AED, and your insurance company pays the remaining 80% or 256 AED.

Copay vs. Deductible

Your deductible is the amount you pay before your insurance applies. For example, if your deductible is 1900 AED, you’ll pay the first 1900 AED of your medical bills yourself.

As mentioned above, a copay is a fixed fee. For example, if you have a plan with a 50 AED primary care physician copay and visit a doctor for an annual checkup for your back pain, your insurer will require you to pay 50 AED for that visit—no matter what the actual cost of the service was.

Coinsurance vs. Deductible

Coinsurance is a percentage you pay for a healthcare service after you’ve met your deductible. It’s a percentage of the permitted amount.

You pay coinsurance plus any deductibles you owe. Your health insurance or plan pays the rest directly to your doctor or provider.

For example, if you have 80/20 coinsurance and go in for an office visit that costs 400 AED, your health insurance will cover 80% of that cost (320 AED). You’ll be responsible for paying 20% (80 AED), assuming that the office visit is after you’ve already met your deductible amount for the year.

If it were before meeting your deductible, then you’d be responsible for 100% of the cost.

Knowing the difference between the three insurance terms can help you when deciding to get health insurance.

To prioritize your health when an emergency arises and you must visit the doctor, you must be knowledgeable about the differences between copays, coinsurance, and deductibles.

Aside from health insurance, you may also think of getting other significant insurance plans such as travel insurance and car insurance.

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