What is coinsurance?

Most Texas health insurance policies contain a reference to coinsurance. It is stated as a shared percentage such as 75/25, 80/20, or 85/15. The insurance company and you share the expense 75% (company) and 25% (you). A coinsurance maximum or out-of-pocket (OOP) is stated as a dollar amount like $3,000 out-of-pocket maximum.

Why is coinsurance important?

Coinsurance along with your annual deductible will determine how much you pay when you get that big hospital bill that makes the national debt look reasonable. After you have met your annual deductible, the insurance company and you begin paying coinsurance until you meet the OOP. After that, the company begins paying covered expenses at 100%.

Let's look at an example for a 40 year old couple with two children in Houston, Texas:

Hospital bill: $50,000

You have a choice of three insurance policies:

Here is how the hospital bill gets paid:

Better to owe hospital $4500 than $3000!

Looks like Policy B results in the lowest hospital bill. Is it the best plan to have? Let us consider some other factors. Statistics show that the average person goes to the hospital once every ten years. So let us consider a ten year period.

The difference in premium between Policy A and B is $88 per month or $1,056 per year. That is $12,672 over ten years. Plan B saves you $1,500 on the hospital bill once every ten years. Would you pay $12,672 to save $1,500? Most people would not!

Notice that Policy C has the highest premium, but does not save you any money on a $50,000 hospital bill.

Run a custom online quote to see the premiums for different Texas insurance policies for your family.