Co-insurance

Co-insurance is a shared payment for medical expenses between a patient and an insurance company. Co-insurance is a percentage of total cost. The co-insurance amount is represented as a split percentage, such as 80/20 or 70/30. Insurance pays a portion, and the insured pays a portion.

Deductible Comes First

Health insurance plans typically have a deductible, until that deductible amount is reached the insured pays the full cost of medical bills. Once the deductible amount is reached, the insurance policy begins to pay a portion of the expenses: the co-insurance.

Susan’s Plan

Consider the example of Susan, who works in human resources. Susan just got a new health plan and then in February suffered a broken arm. Her relevant plan details and costs are shown below.

Susan’s Health Insurance Policy

$ 1,000 deductible
80/20 co-insurance 

Susan has MEDICAL CLAIMS of $ 1,500 due to broken arm. 

Susan pays the first $ 1,000 to meet her plan DEDUCTIBLE.

  1500 (medical expense)
- 1000 (Susan's deductible)
----------------------------
   500 (remaining)

The remaining amount is split 80/20 between Susan and her insurance company.

20% of $ 500 = $ 100 (Susan pays)
80% of $ 500 = $ 400 (insurance pays)

In the above example Susan has paid $ 1,100 toward her broken arm. That total amount is her deductible ($1,000) plus her share of the co-insurance (20% or $100).