How Does The Co-Insurance Clause In My Health Insurance Plan Work?

By Lisa Olsen Posted in Health Insurance News

Most health insurance policies in existence today have a co-insurance clause. This clause requires the patient to pay a certain amount of any medical bill after the deductible clause provisions have been met.

What Exactly Is A Health Insurance Co-insurance Clause

The Co-insurance clause stipulates that the patient will pay a certain portion of any medical bill out of their pocket. It is usually expressed as a percentage of the allowed amount of the bill. For example, the insured gets a physical exam at their primary care doctor’s office. The doctor bills $100.00 and submits it. The insurer allows 80.00 payment. The co-insurance is 20%. The patient pays 20% of $80.00 or $16.00. The insurer pays the remaining 80% at $64.00.

Why Do Health Insurance Policies Have A Co-insurance Clause

The Co-insurance payment involves the patient on a monetary basis in the treatment of their illnesses and injuries. If the insured knows a certain portion of the expenses will come out of his/her wallet, they are more motivated to seek out cost effective health care. It is not designed to discourage people from getting needed medical attention. Its goal is to keep the insured from seeking unnecessary care, such as an emergency room visit for conditions that do not threaten their lives, such as a sprained ankle or wrist. These can wait for an office visit to their doctor.

Another reason for the co-insurance clause is called moral hazard. A moral hazard is an event that protects someone from all of the risk associated with their actions. If patients had health insurance that covered all of their medical expenses the insured considers risks, such as skydiving, snowboarding or even smoking, less hazardous then they would with co-insurance.

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