January 21, 2018


Understanding Insurance Benefits: What Is The Difference Between a Copay and Co-Insurance?

It is important to equip yourself in regards to understanding your insurance benefits. The saying “knowledge is power” holds true when it comes to insurance companies. Simply knowing how your benefits work may help save time and money throughout the years. There are many questions that may arise when looking at insurance benefits that I am going to tackle in the following months.
The first topic that I am going to discuss is the difference between a copay and co- insurance. Often these two terms are confused because they both have to deal with the patient responsibility portion of the claim. In all reality, these two terms have very different definitions. If overlooked, this could result in unexpected expenses.
The co-insurance is a percentage of the claim that will be the patient’s responsibility. The percentages can range anywhere from10%-30% depending on the patient’s specific policy. Because the co-insurance is based on a percentage of the cost of each claim, it can vary depending on the services provided for that specific date of service. One thing to consider regarding benefits based on a co-insurance is whether or not the deducible has been met. The patient can be left with the burden of an unplanned balance if it is not realized that they will be responsible for 100% of the expense until the deductible is satisfied. The positive aspect of a benefit plan based on a co-insurance is that once the out of pocket is met, the insurance is likely to cover 100% of the medical expenses.
The copay is a fixed amount that is paid by the patient during each visit. This rate will remain consistent regardless of the total expense of the claim. Unwelcomed surprises will be avoided with the copay because it is easy to determine the expected expense. One benefit of having a copay is that it is not subject to the deductible being met. One aspect that varies depending on the insurance plan is whether or not the copay goes towards the out of pocket. The knowledge of this information is important because if the copay goes towards the out of pocket, it will be waived once the out of pocket is met, resulting in 100% coverage from the insurance company.
Each type of cost sharing has its advantages and disadvantages. Having an understanding of these terms is helpful when deciding the insurance plan that is the best fit for you along with determining what the expense will be for the medical services you receive in a given year.

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