Understanding California Health Plan Coinsurance

First, what is the official definition of co-insurance?

Coinsurance

Once you have met your deductible, you pay coinsurance for additional medical care. It’s a percentage of the billed charge. Consider this example, your insurance carrier might pay 80 percent, and then you would pay 20 percent. It’s similar to a co-pay, but is a percentage instead of a dollar amount.

Now, let’sdig a little deeper. With California health care insurance, it’s common to speak of their plan as an 80/20 plan or a 70/30 plan. They are essentially referring to the co-insurance part of it. With the 80/20 example, the medical carrier is picking up 80 percent of the charges and you are picking up the remaining 20 percent. If there is any type of deductible, you must pay that first at 100 percent until met.

Let’s take an example and see how California health care insurance plans essentially break down into three primary stages.

Stage 1 – The deductible you pay 100 percent

Let’s say you have a $500 deductible. Except for services that are separate from the deductible (normally office visits and prescriptions…see COPAYS), you will pay the lowercharges at 100 percent until you meet your deductible. You’re able to find more information on deductibles.

Stage 2 – The co-insurance you share a percentage

Once the deductible is met, you then start sharing the price with the carrier. Let’s say our plan is 70/30 and the charge is $1000. You pay the first $500 (deductible) and then you pay 30 percent of the remaining $500…or $150. Of the first $1000 charge, you would pay $650 out of it. If you have another $1000 charge in that same calendar year, you would pay 30 percent of the 1000 (or $300) since your deductible was already met. When do you stop paying the 30 percent??

Stage 3 – The Max Out of Pocket THE CARRIER PAYS 100 percent

Once you have met your Max out of Pocket (sometimes called the Copay Maximum), the carrier will then pay 100 percent of covered benefits, in-network. For our plan example, let’ssay we have a $500 deductible, 70/30 co-insurance, and $5000 max out of pocket. If we get a $50,000 bill in a calendar year, you pay the first $500, then 30 percent until you reached another $5000 out of pocket. For that $50K, you would pay $5500 and the carrier would pay $45,500. Coinsurance is nice but the real reason to have health care insurance is the max out of pocket.

Coinsurance normally applies to services outside of the office visit and prescriptions. you will typically see the same co-insurance percentage for hospital, lab, surgery, emergency (sometimes has separate additional copay) and medical provider services.

It’s critical to stay in network for PPO plans. Let’s say you have 70/30 plan and you see a medical provider out of the PPO network on a non-emergency basis for $1000 of services and your deductible is already met (you are in Stage 2). Two things will probably happen. The health care insurance plan will probably have a separate percentage for out of network…let’ssay 50/50 instead of 70/30. Also, the carrier will apply this lesser percentage to what they would pay an in-network provider. Consider this example with the $1000 charge, perhaps the contracted PPO rate is $600 (discount is normally 30-60 percent). The carrier would then pay 50 percent of the $600 or $300 of the total $1000. You pay $700. Compare this with the 30 percent of 600 you would pay for an in-network provider. $700 versus $180 out of your pocket. Use in-network providers!