What is Coinsurance in Medical Billing? Read on


What is Coinsurance in Medical Billing? Read on

When it comes to modern healthcare, health insurance is fundamental. Ever-increasing medical inflation, rising prices and awareness about well-being have focused everyone’s attention on health insurance. When it is imperative to invest in the right kind of insurance policy, it is equally important to understand the various elements of a health insurance policy.

One such element is coinsurance. A cost-sharing mechanism, you may have come across quite a few health insurance plans with is coinsurance, if not all. Without an understanding of coinsurance meaning in medical billing, you may not get a clear understanding of the health plan that you have. Read on as we discuss what is coinsurance in insurance, the importance of coinsurance in health insurance and the difference between copay and coinsurance.

What is Coinsurance in Insurance?

To understand the  definition of coinsurance, let us first learn about deductibles. Deductible in health insurance is the fixed amount of money that you, as a policyholder, agree to pay before the coverage of the policy starts.

For example, you choose a health insurance plan with a deductible of INR 10,000. Then, in case you are hospitalised, you will have to pay the medical costs up to INR 10,000, only after which your insurer will cover the expenses over and above the deductible of INR 10,000. This way, the health insurance company can safeguard themselves against unnecessary or small claims. As a policyholder, when you choose a deductible, you can reduce the amount of premium that is payable.

Now, let us come to what is coinsurance in insurance. Coinsurance meaning in medical billing is the percentage of medical bills that you need to bear from your pocket, over and above the deductible. To understand this better, let us take a look at this coinsurance example:

Suppose Rohan Khanna, a 32-year-old software developer, has a health insurance policy of INR 10 lakhs. The chosen deductible is INR 5,000. When Rohan had to undergo medical treatment for dengue fever,  his hospital bill was INR 20,000. Once he pays the INR 5,000 as the deductible, the insurance company will cover the remaining INR 15,000. However, Rohan has a coinsurance of 10%, and so out of this INR 15,000, he will have to pay INR 1,500. The remaining INR 13,500 will be the final amount payable by the insurance company.

Features of Coinsurance in Health Insurance

Here are some of the highlighting features of coinsurance in health insurance:

  • As a policyholder, you need to pay the percentage of coinsurance over and above the deductible.
  • The percentage of coinsurance that you choose remains the same throughout the policy term.
  • With coinsurance, health insurance companies can avoid the occurrence of small or fraudulent claims.
  • With coinsurance in medical billing, the company also avoids taking the full burden of paying the bills. This further helps in making health insurance sustainable for the company and affordable for the policyholder.  
  • By choosing coinsurance, you can reduce the health insurance premium that you pay.

Difference Between Copay and Coinsurance in Health Insurance

Another cost-sharing element  related to your health insurance is co-payment, also called co-pay. While it may sound similar, co-pay and coinsurance are two distinct concepts. Co-payment is a certain percentage or a fixed amount of money that you as a policyholder, need to pay when a claim is raised. The amount that remains will be paid by the insurance company.

Let us understand this with an example. You have a health insurance plan with a sum insured of INR 5 lakhs. When you need to undergo treatment,  the medical bill was  around INR 50,000. Your co-payment amount is INR 10,000. So, out of the total bill, your share would be INR 10,000, whereas the company will pay INR 40,000. If you had opted for a 5% or a 10% co-payment, then your share out of the INR 50,000 bill would have been INR 1,000 or INR 5,000, respectively.

>> Also Read: Boost your Health Insurance Coverage with Add-on Covers

To Conclude

When the insured and the insurance company share the financial aspect of medical bills, the policy becomes beneficial for both parties. While, as a policyholder, you may have to bear a chunk of the hospital bill, the coverage you receive will be worth it. Coinsurance, therefore, enables more cost-effective healthcare choices.

In the ever-evolving landscape of health insurance, the onus of understanding your policy is on you. Make sure you are thorough with all the terms and conditions that the policy comes with. Read the offer document carefully for any clarification. If you feel you need more help, do not hesitate to contact the  insurance company. You can get answers to all your queries and concerns.

At Care Health Insurance, we offer customised health insurance solutions. There is a wide range of products available, and you can choose the one you prefer the most.

Disclaimers: The above information is for reference purposes only: Policy Assurance and Claims at the underwriter's discretion.

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