The basic concept of coinsurance, also known as percentage participation, is that the insured member and the insurance company share the risks of health care expenses. In Texas health insurance, this usually translates into the insurance company paying a certain percentage of your health care expenses, while you pay the remaining percentage. The coinsurance provision helps to keep health insurance premiums affordable by sharing in an equitable manner those costs above the deductible.

Under an 80%/20% coinsurance provision, the carrier pays 80% of eligible medical charges above the plan deductible. The insured member is required to pay the remaining 20%. Other coinsurance arrangements can include 50%/50%, 70%/30%, 85%/15% or 90%/10%. Over time, the coinsurance rate has slowly shifted more to the insured to offset further rate increases. 90/10 at one point was pretty common but it is fairly rare on the individual and family market these days.

Example: Mary has a 20% coinsurance rate on her new Texas health insurance policy. She just received a bill for her recent surgery from her health care provider. The total of the bill is $2,000. Her health insurance deductible is $1,000 for the year, and none of her deductible has been met since this is her first claim. This means that Mary would need to pay her full deductible ($1,000), and then 20% ($200) of the remaining amount of the insurance bill, which is $1,000. In this example her total out-of-pocket expense (deductible plus her share of coinsurance) is $1,200 ($1,000 deductible and $200 coinsurance).

In the event of large or catastrophic medical expense(s), an insured might suffer significant financial exposure due to the provisions of the coinsurance clause. To compensate for this possibility, many major health insurance plans contain a coinsurance maximum or stop-loss limit. This provision places a limit on the insured\’s out-of-pocket costs in a given year that may result from claims subject to coinsurance. The amount of the coinsurance maximum generally ranges from $2,000 to $3,000 per person, depending on the plan, although limits as low as $1,000 are sometimes available.

Co-pays and coinsurance are often incorrectly used interchangeably. A co-pay is a specific amount that you are required to pay for a doctor’s visit or a prescription. It is not a percentage of the doctor\’s fees, like coinsurance is. Depending on the medical service, an insured member may have to pay a co-pay for both the physician consultation and the additional services provided. Additional services such as laboratory fees or x-rays may be subject to deductible and not covered by the plan co-pay. If the plan deductible has been met, then the plan coinsurance would apply until the coinsurance maximum is met. Once you meet the total out-of-pocket expense, Texas health insurance plans pay for 100% of your health care costs until the lifetime maximum is met.

A lifetime maximum basically amounts to how much the Texas health insurance company is committed to spend on your health care while a policy is active. Therefore, once you reach the lifetime maximum, the financial obligation of the insurance carrier has been met. These caps are often in the millions and only in the most extreme circumstance is the lifetime maximum ever reached.

Texas Jarvis is a licensed Texas health insurance agent with extensive experience regarding Individual Texas health insurance plans . Texas health insurance quote

Tim Jarvis is a licensed Texas health insurance agent with vast knowledge of the Individual health insurance market in Texas. More Texas health insurance information can be found at http://www.texasplans.com

Author Bio: Texas Jarvis is a licensed Texas health insurance agent with extensive experience regarding Individual Texas health insurance plans . Texas health insurance quote

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