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What Does Hospitalization Coinsurance Mean?

When you have a health insurance plan, it is designed to pay for the major costs you incur for medical expenses. While the plan pays for the majority of large expenses, you have to pay some money out of pocket to cover your deductible and coinsurance. If you have to go into the hospital, your policy may be subject to a hospitalization coinsurance clause.

  1. What is Coinsurance?

    • Some health insurance plans include a coinsurance percentage. This means you have to pay a certain amount of money out of pocket when large medical bills are incurred. After you pay your deductible, you may have to pay 20 percent of all covered medical expenses. Depending on the bill, this could be a sizable expense. With most health insurance plans, the insurance company pays 70, 80 or 90 percent of the bill, according to the Insurelane website.

    Hospitalization Coinsurance

    • Some health insurance plans also have a separate clause for hospitalization coinsurance. With this clause, you have to pay a certain amount of money out of pocket if you are admitted to the hospital. The hospital bills you incur are separate from any other medical bills paid by the insurance company. The hospitalization coinsurance percentage can vary, but it typically is similar to the plan's other coinsurance rates.

    Coinsurance Maximum

    • When paying a coinsurance percentage, you have to pay a certain amount of money out of pocket, but your payment will not be unlimited. With coinsurance percentages, you typically have a maximum out of pocket amount of money that you will have to pay. For example, if you have a sizable medical bill that must be paid, you could have to pay 20 percent up to a maximum of $10,000. The coinsurance maximum varies from one policy to the next.

    Purpose

    • The purpose of the coinsurance percentage is to share the cost between the insurance company and the insured. With this provision, the insured knows he will have to pay a certain amount of money out of his own pocket if he goes into the hospital. While the insurance company may not want to discourage an insured from getting medical care when it is necessary, it forces the insured to evaluate the severity of the condition before going to the hospital.

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