Unless you are a superhuman or a Wolverine (yes, the mutant whose wounds automatically heal and who never ages), you need insurance. If you are opting for an insurance policy for the first time, it is essential that you understand all the associated lingo and other concepts. Without understanding all the details of your health insurance plan, it is foolish to sign on the dotted line.
You need to know what you are covered for and what you are not covered for. There are various types of insurance schemes and there is a part called 'out-of-pocket expenses' that is not paid for. Two types of these expenses that your insurance policy doesn't cover, are coinsurance and copay.
A deductible is the amount of health care expense that you must pay for, on your own. When the amount exceeds the deductible limit, the insurance company will pay for it. However, deductible is just one of the out-of-pocket expense types.
The Difference Between Coinsurance and Copay
One dilemma that haunts everybody, when choosing affordable health insurance, is the question of how costly a policy should be opted for. The amount of premium to be paid is directly proportional to the price of the whole insurance policy. Many companies offer a lower premium if you agree to share health care expenses, in the form of copay and coinsurance facilities.
Coinsurance is just what the term suggests. It is an insurance component whereby, you pay a small percentage of the health care expenses, while the rest is covered by the insurer. This is usually a percentage split deal like 80/20 or 70/30, where you either pay 20% or 30% of the expenses, while the rest is paid by the insuring company. This is only after your health care expenses have exceeded deductibles. It is a standard feature in most health insurance schemes.
Copay or copayment is a feature that is a part of HMO (Health Maintenance Organization) plans, whereby the insured must pay a fixed amount for every visit to a doctor, to the insurance company. You may also have a copayment for prescription medicines and visits to specialist doctors.
Both copayment and coinsurance cover a partial amount of health care costs for you. They are generally clubbed with a low insurance premium and are opted for by people with low health risks. Check out all the terms and conditions, before opting for a health insurance policy. You don't want to end up with a health cover which is flimsy, as then you will mostly be paying out of your pocket.
Opting for a low insurance premium could be risky as you will largely have to pay for your health care on your own, through copay and coinsurance. Unless you are in the very pink of health, going for insurance with a larger premium is a better option, as it offers wider coverage. The choice, of course, is up to you.