Welcome back to the HealthyMarks Education Series. What is a Co-Pay? What is a Co-Insurance? Which is better? You may be thinking “I have no idea what the difference is.” And that’s okay. Let’s take a few minutes to better understand our health insurance.
A Co-Pay is a dollar amount that you will pay for your medical services. A Co-Insurance is a percentage amount.
For example, I went to my primary care physician and had a Co-Pay of $50. I then took an x-ray and paid my Co-Insurance of 30%.
So which is better? A Co-Pay is always going to be better.
Reason One: Know you Cost
A Co-Pay is going to be a much simpler calculation to understand when looking at your plan details. When you see a “$” you know exactly how much you are paying out of your own pocket. A $50 Co-Pay is going to cost you $50. You can expect to pay that every time you see your primary care physician.
Is it better to have a $700 Co-Pay for your hospital visit or a 30% Co-Insurance? Again, the Co-Pay is going to be less expensive. Co-Pays are going to be a fixed dollar amount that is almost always less expensive than the percentage amount you would pay. A plan with Co-Pays is better than a plan with Co-Insurances.
Reason Two: Choose your best Doctors
I visited Dr. Albert to evaluate my knee surgery. Dr. Albert says it will cost $3,000. Dr. Baldwin says it will cost $4,000… but I liked Dr. Baldwin a lot more. My plan has a Co-Pay of $900. I know I’m going to pay $900 no matter which doctor I see.
However, let’s say I had a plan with a Co-Insurance of 30%. To have my surgery with Dr. Albert, I’d pay $900 (30% of $3,000). I would pay $1,200 to have my surgery with Dr. Baldwin (30% of $4,000). So a Co-Pay is better in this scenario allowing me to select the best doctor.
Co-Pays and Co-Insurances exist for Prescription Drug Costs
Even though we are now talking about costs for prescription drugs, the same rules still apply. Co-Pays and Co-Insurances are a common talking point for Medicare Part D Prescription drug plans. A Co-Pay is going to be the dollar amount you are responsible for when you pick up a prescription. For more expensive and non-generic drugs you may have a Co-Insurance. This will be the percentage amount you are responsible for.
For example, I went to pick up my generic prescription and I had a co-pay of $20.
I then picked up a specialty brand name drug and paid my co-insurance of 30%.
The total cost for my specialty brand drug was $100 so I paid $30 and my insurance paid $70.
Understanding your co-pays helps you evaluate insurance carriers and medical providers
Take a look at your own insurance plan and see which of your services are covered with a Co-Pay and which are not. You may be surprised to find that simple medical needs like Urgent Care or routine x-rays and lab work requires you to pay your deductible and more out of pocket costs. By better understanding your health insurance plan, you’ll be able to better select your medical providers and carriers that support your needs.
When I evaluate a medical plan, I look at these items to determine if it is a good health insurance policy.
- The monthly premium
- The network of doctors and hospitals
- The deductible and out of pocket maximum
- The Co-Pays and Co-Insurances
- The prescription drug coverages
If you’d like a professional team to help you make these decisions, HealthyMarks is just a phone call away.
Keaton Marks is the owner and CEO at HealthyMarks including the medicare team. Keaton was born and raised in Encinitas. He often rode his bike through town and to the local beaches like Moonlight. Keaton knows it is important to have a local resource, someone who understands the area, the hospitals and networks of doctors. Keaton is proud to be a local Medicare broker who is able to assist the people in his town when selecting medicare plans.
Keaton believes one thing above all else: “Medicare is confusing… but it doesn’t have to be! That is where HealthyMarks Medicare comes in” Please contact me with any questions.
Thanks for explaining the difference between co-pay and coinsurance. I was always confused about it. I don’t understand 0 deductible and out of pocket max. Can you explain?
Thank you so much for your comment. I’m glad you are learning from our videos. Here is a video outlining how deductibles work and how to use them to strategize: https://www.youtube.com/watch?v=4zgTdRdhnlA