What Are Copays and Coinsurance?
Whether you're already covered or looking for the perfect plan, this article is your key to understanding the difference between copays and coinsurance.
When shopping for a health plan, you may have seen the words copay and coinsurance and wondered what’s the difference between them. Both are payments you’ll need to make, but the difference could amount to thousands of dollars. So, it’s important to understand how they work and what they apply to – in the health plan you already have or one you’re considering.
Copay is a Fixed Amount
A copayment is a set amount that you’ll pay when using a medical service. For example, when visiting a doctor’s office, you may be asked for a copayment up front. The actual amount of the copayment varies depending on the plan you have – you can see what it is on your Blue Cross ID card.
Coinsurance is a Percentage
On the other hand, coinsurance is a percentage of the cost that you’ll have to pay. For example, you may have 30 percent coinsurance for outpatient hospital services. After paying the coinsurance, the remaining 70 percent is paid by your health plan. The actual percentage of coinsurance varies depending on the plan you have – some plans have no coinsurance.
What About Deductibles?
Another thing that factors into how much you’ll have to pay is your plan’s annual deductible amount. That’s a set amount you’ll need to pay per year before your insurance benefits kick in.
Depending on the plan, you may have to pay your deductible amount before your coinsurance or copayments begin to apply.
An Example Situation
Let’s use a hypothetical situation to see how copays, coinsurance, and deductibles come into play.
Andy is single and self-employed. He has purchased our Silver Standard Plan to cover himself. There is a $4,000 annual deductible, and an out-of-pocket maximum of $9,100, which means that Andy won’t have to pay any more than that for services in a year. Andy’s plan has a $40 copay to see his primary care physician and a $90 copay to see a specialist.
Returning from a vacation out of the country, Andy isn’t feeling well and decides to visit his primary care physician. At the doctor’s office, the receptionist sees on Andy’s Blue Cross ID card that he has a $40 copay and asks him to make the payment up front. Andy is happy to do so because he knows that with the $40 copayment taking care of, Blue Cross will be paying for the rest of the visit’s cost.
The primary care physician examines Andy but is uncertain about what is causing his illness and decides to refer Andy to a specialist. Luckily, there is a doctor in a nearby town who has an opening the next day, so Andy is able to get in quickly. At the doctor’s office, he’s asked to make the $90 copayment that his plan requires for seeing a specialist. Again, Andy knows that with the fixed copayment, his health plan will cover the rest of the cost of seeing the specialist.
The specialist believes Andy has an infection picked up during his travels in another country. This infection is serious enough that the doctor wants Andy to go to the hospital for treatment. He heads to his community’s hospital and stays a couple of nights there as an inpatient. After being discharged, he returns several times for follow-up outpatient care.
After a few weeks, Andy has fully recovered and receives the hospital’s bill. The total charges are $12,700. So far this year, Andy only has paid $1,500 against his plan’s $4,000 annual deductible, so he must pay another $2,500 to satisfy the deductible.
After the deductible is reached, Andy’s plan has a 50 percent coinsurance for outpatient and inpatient hospital services. That means of the remaining $10,200 hospital bill, Andy will pay half and Blue Cross will pay the other half. Once Andy has paid his coinsurance, he will have reached his plan’s $9,100 out-of-pocket maximum for the year, and Blue Cross will pay in full for other eligible medical services used during the rest of the year.
Know Your Plan
If you don’t know what your plan’s copays and coinsurance are, you can easily find them. When you signed up for your Blue Cross plan, you should have received an Outline of Coverage document listing the copayments and coinsurance for various services. The Outline of Coverage also shows your plan’s deductible and out-of-pocket limit.
If you don’t have your Outline of Coverage, you can log into our Member Resource Center or give our customer service team a call at the number on the back of your ID card and we’ll be glad to help.