How Deductibles, Coinsurance, Copays & Premiums Work | What is the Difference Between Them? | Aetna (2024)

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How Deductibles, Coinsurance, Copays & Premiums Work | What is the Difference Between Them? | Aetna (2024)

FAQs

What is the difference between a deductible copay and coinsurance? ›

A copay is a set rate you pay for prescriptions, doctor visits, and other types of care. Coinsurance is the percentage of costs you pay after you've met your deductible. A deductible is the set amount you pay for medical services and prescriptions before your coinsurance kicks in fully.

What is the difference between a premium and a deductible? ›

Monthly premium x 12 months: The amount you pay to your insurance company each month to have health insurance. Deductible: How much you have to spend for covered health services before your insurance company pays anything (except free preventive services)

What is the difference between a copay and a premium? ›

Unlike copays and deductibles, premiums must be paid whether an insured person has medical expenses or not. For most American families, health care premiums are the greatest health care cost.

How does a deductible work? ›

The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself.

What's the difference between coinsurance and copay? ›

A copay is a fixed cost that an insurance policyholder pays for a specific service covered by their insurance. Coinsurance, on the other hand, is a percentage of the cost of a service. Copays and coinsurance apply in different situations, but both are expenses associated with your insurance plan.

How does deductible and coinsurance work? ›

Example of coinsurance with high medical costs

Allowable costs are $12,000. You'd pay all of the first $3,000 (your deductible). You'll pay 20% of the remaining $9,000, or $1,800 (your coinsurance). So your total out-of-pocket costs would be $4,800 — your $3,000 deductible plus your $1,800 coinsurance.

How do copays work? ›

A fixed amount ($20, for example) you pay for a covered health care service after you've paid your deductible. The maximum amount a plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.”

What is the difference between a premium and a deductible quizlet? ›

A premium is the amount of money paid for an insurance policy. A deductible is the amount of money you will pay out of pocket before the insurance company will make a payment. Explain the difference between a premium and a deductible. If you have a net worth higher than $500,000, you definitely need umbrella insurance.

How does coinsurance work? ›

Coinsurance is an insured individual's share of the costs of a covered expense (it usually applies to health-care insurance). It is expressed as a percentage. If you have a "30% coinsurance" policy, it means that, when you have a medical bill, you are responsible for 30% of it. Your health plan pays the remaining 70%.

Why is copay better than coinsurance? ›

Copays are fixed amounts for a certain type of service (like a specialist visit, doctor's office visits, prescription drugs, or a trip to the emergency room), while coinsurance is a percentage of the total medical costs. Your copay is also typically paid every time you see a provider or fill a prescription.

What are the disadvantages of copay? ›

Disadvantages
  • There could be times when policyholders who receive high copayment amounts from their insurance policies may be unable to obtain proper healthcare during times of need. ...
  • A higher copay may result in a lower premium, but you may end up paying more towards the costs of treatment than you save on premiums.

Do prescriptions count towards deductible? ›

Prescriptions typically count toward the deductible as long as they are covered under your plan. Your copay for a prescription may count toward the deductible, depending on your plan. Your health insurance agent can help you determine what type of deductible you have and which prescriptions your plan might cover.

How do copays and deductibles work? ›

A deductible is the set amount of money you pay out of pocket for covered services per plan year before your insurance starts to share costs. A copay is also a set amount of money, but it's a fixed fee attached to certain covered services. Copays don't always count towards your deductible.

What is the definition of coinsurance? ›

Coinsurance is the amount you pay for covered health care after you meet your deductible. This amount is a percentage of the total cost of care—for example, 20%—and your Blue Cross plan covers the rest.

What is coinsurance in healthcare? ›

Coinsurance is a portion of the medical cost you pay after your deductible has been met. Coinsurance is a way of saying that you and your insurance carrier each pay a share of eligible costs that add up to 100 percent. The higher your coinsurance percentage, the higher your share of the cost is.

Which is better coinsurance or deductible? ›

However, if you expect to have many health care costs, a plan with a lower deductible would be more cost-effective. A lower deductible means there will be a smaller amount that you will need to pay before the insurance carrier begins to pay its share of your claims: the coinsurance.

Is it better to pay copay or deductible? ›

Deductibles are cumulative annual amounts. While copays are fixed amounts paid per service. Additionally, copays are usually a predictable fixed cost, whereas deductibles can lead to more variable out-of-pocket expenses depending on the healthcare services used.

Do you still pay coinsurance after deductible? ›

Coinsurance is a percentage of a medical charge you pay, with the rest paid by your health insurance plan, which typically applies after your deductible has been met. For example, if you have 20% coinsurance, you pay 20% of each medical bill, and your health insurance will cover 80%.

What does 80% coinsurance mean? ›

One of the most common coinsurance breakdowns is the 80/20 split. Under the terms of an 80/20 coinsurance plan, the insured is billed for 20% of medical costs, while the insurer pays the remaining 80%. 2.

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