What Coinsurance Is?
Coinsurance defined is a percentage of the bill, that you in or the insurance company is left with paying. It is not a dollar amount here's, what I mean by that, we're again
I'm gonna go back to Medicare Part B, as an example Medicare Part B for the most part is an 80/20 program and what that means is that? The government portion of Medicare , Medicare Part B is going to pay 80% of the bill that comes to them, to the doctor or hospital on your behalf. The other 20% is your coinsurance and what that means is the people paying eighty percent don't care who's going to pay the other 20% they just know that whatever that bill is they're going to leave you with that amount.
Now, why that's important and kind of the reason things like Medicare supplements exist is, because all they do is say 80/20. What is it 20% of now if all you do is go to a doctor, a couple of times a year 20% is nothing 20% maybe yeah, maybe not, maybe not even $20 the bill leftover.
Maybe about you know seven or eight dollars left over and if you have a Medicare supplement the supplement is typically going to pay that remaining 20% for you. Although if you don't have a supplement, you've got it. So you've got a seven dollar bill, even though you've been paying hundreds each year on your Medicare supplement but that 20% could also be 20% of $100,000.
So all of a sudden instead of you having a bill for seven dollars. You could have a bill for $20,000. That's what coinsurance is? It can be the littlest charge in the world, until such time, it is a retirement breaker. It can kill a retirement easily and it's set up that way. It's a form of cost-sharing it rather, because when a bill goes to an insurance company or in the case of Medicare bill goes to the government.
The engine, the government is not going to know overall what they're going to be able to calculate in their costs. So for example they know okay you're going to need a cat-scan, it's $5,000 and I don't know you see a doctor afterwards and office visits going to be $100. Well, they can easily predict or they can predict. Okay for $100 you'd have to pay maybe five dollars left over and for the but for you know. You know a twenty thousand dollar bill, you're gonna have to pay one thousand but they don't know if it's going to be twenty thousand.
Here with provider A that gives that cat scan or it's going to be twenty five thousand, here with provider B they don't know that, so rather than them just kind of settle it setting everything up to where there's kind of a flat amount. Because don't forget it's the people providing you medical services that could significantly be hurt by that, because if they have to cut down their costs.
Well, you know there there's doctor. The doctor needs to get paid. The doctor's office attendants need to get paid, the nurse needs to get paid, the people that are going to set you up and prep you need to get paid. There's a lot of human cost associated with medical care and the insurance companies and the government try to stay out of that.
To an extent, that they know they really don't want to kind of mess with people's income or they want to mess with people's income. As little as possible on that, so rather than kind of get everybody into a controlled cost, which may be fine for some but a significant reduction for others. They just say Okay we are going to say 20 percent left over, whatever 20 percent of the bill is you're gonna send that to somebody that's not us, we're gonna pay 80 percent it's gonna be a fluctuation.
We know we'll deal with that, but we're gonna be paying 80 percent of it. So that's what coinsurance is.