What is co-insurance and what effect does it have on my health insurance?

Co-insurance in the health insurance context is a little different from, say, your regular commercial property insurance.

The co-insurance requirement for commercial property insurance is a requirement to insure a large enough portion of the value of the property. For example, if your property is worth $1,000,000 and you have an 80% co-insurance requirement, then you are required to pick a limit of insurance of at least $800,000. If you don't and a loss occurs, you would be penalized for not meeting the co-insurance requirement.

With health insurance, the definition of co-insurance is a bit more literal. It just means the percentage of covered healthcare services you are required to pay out of pocket on top of the deductible you already pay. For example, let's say you have a claim valued at $11,000 with a $1,000 deductible and a 30% co-insurance clause. In this case, you would pay out of pocket the $1,000 deductible plus 30% of the remaining $10,000, equaling $4,000 in total (learn more in All the Ways You Pay: Premiums, Deductibles, Co-pays, and Coinsurance).

Of course, this is subject to your out of pocket maximum. If the amount calculated above is greater than your out of pocket maximum, you would only be required to pay the maximum.

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About the Author: Jacques Wong (Director of Education at PNC Learning)

Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.

In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.

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