Difference Between Coinsurance and Deductible

Coinsurance vs Deductible
 

Coinsurance and deductible are payments made by a patient towards the cost of a medical bill under a medical insurance policy. These payments require the patient to share the cost of the medical bill with their insurance company, as insurance companies in certain countries do not cover the total medical cost. The only time an insurance company covers the total medical bill is when the out of pocket maximum is met. The out of pocket maximum is the total medical payments a patient pays out of their own money for a year. The article offers a clear overview coinsurance and deductible and explains the similarities and differences between the two.

What is Coinsurance?

Coinsurance is a method used to share the cost of the medical bill between the insurance company and the patient. While the patient pays a percentage of the medical cost, the insurance company pays the rest. For example, the coinsurance ratio is 20/80, where the patient is required to pay 20% of the total medical bill. The patient gets the flu and visits their doctor which results in a medical bill worth of $200. 20% of this bill, that is $40, is paid by the patient from his/her own money and the rest is paid by the insurance company. Coinsurance payments are not fixed costs and can vary with the cost of the procedure, tests and total medical bill. This means that if the medical bill is very steep the patient ends up paying a large amount as their coinsurance, which can be quite risky.

What is Deductible?

Deductible is the amount that the patient has to pay towards their medical bills before the insurance company starts sharing the cost. When the annual deductible is paid in full, the patient does not have to make any more deductible payments until the next year of medical insurance coverage. However, full payment of the deductible does not free the patient from sharing the medical cost with the insurance company. The patient still has to make coinsurance and co-payments towards their medical bill until the out of pocket maximum is met. A higher deductible would reduce the amount that the insured pays as premium. However, for preventative health checks the insurance company covers the total cost even when a cent of the deductible has not been paid.

What is the difference between Coinsurance and Deductible?

Coinsurance and deductible are both payments that are made out of the pocket of a patient who takes out a medical insurance cover. A deductible is paid only a few times a year until the total deductible is met, whereas coinsurance payments are made every time an individual pays a visit to a health care provider. The only time coinsurance payments stop is when the policy’s out of pocket maximum has been met. A deductible is a fixed amount, where the patient only has to make a fixed payment per year. On the other hand, a coinsurance is a variable payment and varies with the cost of the medical services obtained. Higher the medical bill, the higher the cost of the coinsurance payment. Another benefit available to both deductibles and coinsurance payments is that they are both eligible for discounted rates the insurance companies negotiate with the health care providers in their network. This results in the patient paying a lower amount as deductible and as coinsurance payments.

Summary

Coinsurance vs Deductible

• Coinsurance and deductibles are payments made by a patient towards the cost of a medical bill under a medical insurance policy.

• Coinsurance is a method used to share the cost of the medical bill between the insurance company and the patient. While the patient pays a percentage of the medical cost, the insurance company pays the rest.

• Deductible is the amount that the patient has to pay towards their medical bills before the insurance company starts sharing the cost.However, full payment of the deductible does not free the patient from sharing the medical cost with the insurance company.

• A deductible is paid only a few times a year until the total deductible is met, whereas coinsurance payments are made every time an individual pays a visit to a health care provider until the out of pocket maximum is met.

• A deductible is a fixed amount, where the patient only has to make a fixed payment per year. On the other hand, a coinsurance is a variable payment and varies with the cost of the medical services obtained.

 

Further Reading:

  1. Difference Between Excess and Deductible
  2. Difference Between Copay and Deductible 
  3. Difference Between Deductible and Out of Pocket Maximum