Glossary of Health Insurance Terms To Know

Co-insurance is the percentage of a covered medical charge that insureds are required to pay. Co-insurance percentages vary from 10% to as high as 25%. . For example,  if there is a charge for a treatment in the amount of $2,000 and your co-insurance is 20%, the insurer will pay is $1,600. You will be required to pay $400.

The concept underlying co-insurance is to encourage insureds to use medical care only when necessary. 

Relationship between Co-Insurance and Deductible: If you also have a deductible which has not yet been paid, reimbursement for a medical expense is first reduced by the amount of the deductible before the co-insurance is calculated. For example: If you have a $250 deductible and an 80% co-pay, with medical expense of $2,000, the calculation would look like this: 

• You pay: $250 deductible plus 20% of the remainder ($1,750 x 20% = $350) for a total of $600 ($250 deductible plus $350 co-insurance). 
• The insurance company pays: 80% of the amount due after the deductible $1,750 x 80% or $1,400).

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