What Is Co-Insurance?

Before a health insurance company is obligated to pay for covered medical services the insured must first meet the deductible. After the deductible will be the co-insurance percentage, and then the maximum out of pocket figure.

The health insurance company and the insured share responsibility for paying for covered services after the deductible, but before the maximum out of pocket, through co-payments and co-insurance.  The co-payment will always be a dollar amount and the co-insurance is always a percentage. It is important to note that co-insurance percentages are based on the insurance company’s pre-determined negotiated rate with the provider, also known as the “allowed amount.” The co-insurance percentage may differ based on whether the claim is in-network or out of network.

Often, co-payment amounts are low, but some hospital admission co-payments can be hundreds of dollars, typically capped at a certain dollar amount.  The same goes for co-insurance. The more expensive the medical procedure the more dollars that will be spent by the insured meeting their co-insurance requirement.

Per federal law all ACA qualified health insurance plans may not charge deductibles, co-payments, or co-insurance for most well-care visits. Medicare Part D prescription plans often do not charge co-payments for inexpensive medications.

The out-of-pocket maximum is an aggregate of the deductible, co-payments, and co-insurance. This aggregate number includes monies spent on medications. To be clear the aggregate number is based on in-network covered services. When it comes to Arizona short term health insurance policies (which are not ACA qualified) the deductible typically does not count toward the maximum out of pocket.