Co-payment and co-insurance help insurance companies afford to provide the best medical coverage, and must also meet the financial needs of the individual taking out the policy. Taking a closer look at co-payment and co-insurance might be a good idea when shopping around and subsequently purchasing your individual health insurance.
Co-payment, also known as your co-pay, is the amount of payment you must provide at each visit. For example, when you go to the doctor’s office and have to pay twenty dollars before you can be seen, that money is a co-pay, and helps to pay part of the doctor bill before the insurance company even sees an invoice.
The co-payment amount may vary based on the plan that you choose. For some policies, there may be a twenty-dollar co-payment while others may be upwards of fifty dollars.
Co-Insurance, on the other hand, is the amount of the total bill that both you and the insurance company are responsible for, adding up to 100%. An example of this would be a 20% in-network co-payment. What this means is, after you have paid the deductible and any overages not covered by the policy, any visit to a doctor who accepts the insurance policy (in network) will cost you 20% of the total bill while the insurance company would pick up the other 80%.
Insurance companies will usually pay a higher percentage of co-insurance with in-network visits rather than those out of the network. There are some out-of-network policies which may have the insured paying around fifty percent of the bill; depending on the health insurance company. Also, the insurance agencies will pay a higher percent, generally, if your deductible and co-pay are higher.
The difference between how co-pay and co-insurance work is a vast expanse; one you pay before any work is done and the other is a percentage paid of the final bill, but they both work together to help the insurance company to keep up with the cost of paying all of the physicians for their excellent work.
Co-payment and co-insurance are two factors to consider heavily when pricing your insurance plan because they represent the money that will be coming out of your pocket for each doctor visit and every procedure. These two payment types are inversely related but both have the same outcome for the insurance company; they help to pay the bill while you get the health care you need.
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