You may be looking at words like copayment and coinsurance when trying to deal with healthcare expenses. These two terminologies are used to set your price for medical services. Knowing their distinction will help you control your expenses for health care better.

What is a payment?

A copayment, or copay, is what you are expected to pay for a certain service or prescription. For instance, each time you visit your doctor or need a prescription, you are required to pay ₹500. The amount is fixed by your insurance policy.

Fixed Cost: You will always pay the exact amount.
Easy to budget: You know exactly how much you need to pay each time.

What is co-insurance?

Coinsurance means that you pay a certain percentage of the cost of services. Unlike copayments, the amount you pay with coinsurance will vary depending on your total medical bill.

Percentage-Based: You are required to pay part of the bill, say 20%.
Variable Costs: You will pay an amount that varies based upon the cost of that service.

How Copayments and Coinsurance Work

Here’s how they work in practice:

Copayment Example: Your doctor visit copay is ₹500, so at every visit, you pay ₹500. If the total visit cost amounts to ₹3,000, the remaining amount is paid by your insurance.
Coinsurance Example: You have 20% coinsurance. Your visit to a doctor costs ₹3,000. You pay ₹600, which is 20% of ₹3,000. Your insurance pays ₹2,400.

Why both types of costs?

Both copayments and coinsurance are combined in health insurance plans to control the cost of health care. This is why:

Payments: They provide a predictable cost for everyday services. This makes it easier to budget and removes some of the surprise of high medical bills. Coinsurance: This controls higher-priced services’ costs. Since you are paying a percentage, most high-cost care is covered by the insurance company. When to Expect Copayments You typically pay copayments for such routine services as: Doctor Visits A fixed amount each time that you visit your doctor. Prescriptions: a set amount for your medications.
Preventive Care: Some services, like vaccinations, may be covered with flat copays.

When Coinsurance Kicks In

Coinsurance usually applies to:

Hospital stays: the cost of a hospital stay.
Specialist Services: More intense medical treatments and procedures.
Surgery: costs relating to surgeries or other high-intensity procedures.
How It Affects Your Wallet
These costs will help you better plan your care and your budget for healthcare:
Predictable Copays: It is easier to plan and budget for routine care.
Variable Coinsurance: Will either increase or decrease the expenses.

Tips to Control Costs

Following are a few useful tips to cope with these costs:

Know your plan: Check your insurance plan so that you know what is covered and how much copayments and coinsurance cost.
Plan for Big Expenses: In case you know you’re going to require any expensive treatments later, estimate the coinsurance in advance.
Keep track of your payments to ensure that you are not charged for something you have already paid for.

Conclusion
Copays and coinsurance are both a share of the costs that you pay for your health care. Copays are a fixed cost that goes toward the more predictable costs. Coinsurance is a percentage and is different depending on what a service costs. Now that you know these terms, you can better plan your health care budget and avoid any surprises.