Coinsurance Limit

Updated: 09 June 2023

What Does Coinsurance Limit Mean?

A coinsurance limit refers to the maximum amount the insured is required to pay out of pocket for covered medical expenses before the insurance company starts covering the full amount for the rest of the policy year. As coinsurance refers to cost sharing, the insured would pay whatever agreed upon percentage, such as 20%, of medical expenses until they have paid up to the limit, after which the insurer would assume 100% of the expenses.

A coinsurance limit is similar to an out-of-pocket limit or maximum, but it is important to refer to the specific insurer’s definition of each before assuming they are the same.

Insuranceopedia Explains Coinsurance Limit

A coinsurance limit only counts coinsurance expenses toward the limit. Therefore, the deductible would not be factored in. For example, consider a health insurance plan with a $2,000 deductible, 80/20 coinsurance, and a $3,000 coinsurance limit, and the insured receives a $25,000 medical bill. In this case, because the 20 percent coinsurance, or $5,000, exceeds the limit, the insured would only pay $3,000 in coinsurance as well as $2,000 as a deductible, with the insurer covering the remaining $20,000. For future expenses in the policy year, because the insured has already reached their coinsurance limit and paid their deductible, the insurer would cover 100%.

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