Co-Insurance
A co-insurance is often referred to as a share-of-cost. The co-insurance is a percentage of the insurance company’s allowable charge for a service. For example, if an insurance company’s allowable charge for a brace is $100 and the insurance plan imposes a patient co-insurance of 20%, the patient would pay $20 and the insurance company would pay $80. This, of course, is assuming that the co-insurance is the only patient financial responsibility portion for the service. A co-insurance can be paired with otherpatient responsibility portions, such as a deductible.
Many insurance companies possess contracts with ‘preferred providers’, who are considered ‘in network’. Many plans offer ‘in network’ and ‘out of network’ benefits. Often times, the ‘out of network’ benefits include a larger patient co-insurance percentage. These contracts with ‘preferred providers’ or ‘in network’ providers often include special rates or discounts for such providers. In this case, the co-insurance percentage for an ‘in-network’ provider may be less because the percentage is based on a discounted rate.
For example (these amounts are hypothetical & only for the purposes of this example):
The normal charge for a leg brace: $100
The charge for a ‘preferred provider’ or ‘in network’ charge: $80
Patient ‘in network’ co-insurance: 10%
Patient ‘out of network’ co-insurance: 20%
If the patient uses an ‘in network’ provider, the co-insurance would be $8.
If the patient uses an ‘out of network’ provider, the co-insurance would be 20% of the normal charge: $20.
Many plans only have ‘in network’ plans, where no benefits will be paid to an ‘out of network’ provider.
Co-insurances can be limited if the patient’s plan includes an out of pocket maximum for that particular service. An out of pocket maximum, or OOP, limits the amount patient responsibility.
For example:
A patient has a 40% co-insurance for a prosthesis that costs $10,000.
The patient’s ‘out of pocket maximum’ of $500 applies to prosthetic services.
In total, the patient would only owe $500.