How to Calculate Coinsurance

Coinsurance is a term used in the insurance industry that describes the sharing of a cost between the insurance company and policy holder. Coinsurance is common in the health insurance industry but may appear in other insurance policies. Coinsurance is given in the form a certain percentage or ratio; for instance, 20 percent coinsurance on a certain type of loss or expense means that you would pay 20 percent of the cost toward the expense while the insurance company would cover 80 percent. Understanding and calculating coinsurance costs can help you plan on the cost of making insurance claims.

Instructions

• 1

  Read your insurance policy and note the deductible and coinsurance rate for a particular expense.

• 2

  Subtract the deductible amount from the cost of the expense covered by the plan.

• 3

  Multiply the result from step 2 by your coinsurance percentage. The result is the amount you will pay in coinsurance. For instance, if you get $5,000 worth of dental work done, you have a $1,000 deductible and your coinsurance rate is 10 percent, the amount you pay in coinsurance would be: (5000-1000)*(0.10) = $400.

• 4

  Add the result from step 3 to your deductible. This is the total amount of you will have to pay toward the expense. In the example from step 3, the total cost would be $1,400.