Coinsurance Limit
What Does Coinsurance Limit Mean?
A coinsurance limit refers to the maximum amount the insured must pay out of pocket for covered medical expenses before the insurance company begins covering 100% of the costs for the remainder of the policy year. Under coinsurance, the insured pays a designated percentage (e.g., 20%) of medical expenses until they reach the coinsurance limit, at which point the insurer takes over the full cost of additional covered expenses.
While the coinsurance limit is similar to an out-of-pocket limit or maximum, it is important to consult the specific insurer’s definitions, as these terms may not always be interchangeable.
Insuranceopedia Explains Coinsurance Limit
A coinsurance limit only accounts for coinsurance expenses and does not include the deductible. For instance, in a health insurance plan with a $2,000 deductible, 80/20 coinsurance, and a $3,000 coinsurance limit, if the insured receives a $25,000 medical bill, here’s how it works:
- First, the insured pays the $2,000 deductible.
- After that, the insured is responsible for 20% of the remaining $23,000, which amounts to $4,600.
- However, since the coinsurance limit is $3,000, the insured only has to pay that amount, instead of the full $4,600.
- The total out-of-pocket cost for the insured is $2,000 (deductible) + $3,000 (coinsurance), totaling $5,000.
The insurer covers the remaining $20,000, and for any future expenses during the policy year, the insurer will cover 100%, as the insured has already reached their coinsurance limit and paid the deductible.
