• Dave Ramsey Blog

What is Coinsurance?


You know the old saying, “Sharing is caring?” When it comes to paying for health insurance, the same rule applies. While your car insurance, homeowner’s and renter’s insurance will often cover 100% of your costs once you hit your deductible, health insurance is a little different. Instead, most health plans split the costs for medical care between you and your health insurance for a brief period of time after you hit your deductible—usually through a cost-sharing method called coinsurance.

Before We Talk About Coinsurance

Health insurance is very complex and difficult to understand—kind of like your doctor’s handwriting. It’s easy to get lost in a maze of jargon and lingo that makes your eyes glaze over.

Before we dive into coinsurance, here’s a quick list of terms to help you as we navigate how it ties in with your health insurance plan:

  • Deductible: This is how much you’re expected pay for medical expenses during the year before your health insurance kicks in.

  • Out-of-pocket maximum: This is the most you’ll have to spend on health care in a year before your insurance plan picks up 100% of the rest.

  • Copay (or copayment): This is the flat rate you pay for specific health care services like walk-in clinics, doctor visits or prescriptions.

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  • Premiums: This is how much you pay each month for your health insurance. It’s important to remember that your premiums do not count toward your deductible or out-of-pocket maximums.

Got it? Okay, let’s go! Read More

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