Co-Insurance
A cost-sharing arrangement where the insured pays a percentage of covered medical expenses after meeting their deductible. The insurance company pays the remaining percentage until the out-of-pocket maximum is reached.
Example
“After meeting her $1,000 deductible, Sarah's health plan required 20% co-insurance, meaning she paid $400 of her $2,000 surgery while her insurer covered the remaining $1,600.”
Memory Tip
Think 'Co-Insurance = Co-pay a percentage' - you and your insurer split the bill by percentages, not fixed amounts.
Why It Matters
Co-insurance directly affects your medical expenses and helps you budget for healthcare costs beyond just premiums and deductibles. Understanding your co-insurance percentage helps you estimate potential out-of-pocket costs for medical procedures and choose appropriate health plans during open enrollment.
Common Misconception
Many people confuse co-insurance with copays, thinking they're the same thing. Unlike copays which are fixed dollar amounts, co-insurance is always a percentage of the total cost, and unlike copays, co-insurance only applies after you've met your annual deductible.
In Practice
Consider John's health plan with a $2,000 deductible and 30% co-insurance. He needs a $10,000 surgery. First, he pays his $2,000 deductible, leaving $8,000. Then he pays 30% co-insurance on the remaining amount: 30% × $8,000 = $2,400. His total cost is $4,400 ($2,000 + $2,400), while insurance pays $5,600.
Etymology
Combines the prefix 'co-' meaning 'together' with 'insurance,' reflecting the shared financial responsibility between insurer and insured that emerged in modern health insurance in the mid-20th century.
Common Misspellings
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See Also
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