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Hassle-Free Health Coverage: Co-Insurance Provisions

Once your deductible is satisfied, the major medical insurance company will then pay for covered medical expenses, on a co-insurance basis.

(As we've seen, co-insurance-sometimes called copayment-means that you and the insurance company split the cost of a claim. The company usually pays the larger part and you pay the smaller part.)

Co-insurance requirements are typically expressed as 80 percent to 20 percent, 70 percent to 30 percent, etc. If you have a plan with an 80 percent to 20 percent co-insurance requirement, the company will pay 80 percent of the covered expenses following the deductible and you are responsible for the additional 20 percent of the expenses.

Just as deductibles affect the cost of a plan, so too will co-insurance. An 80/20 percent co-insurance provision will carry a higher premium than a 70/ 30 percent co-insurance split. If you need to keep your premium low, one way to meet this goal is to have a high deductible and a low coinsurance provision-such as 60/40 percent.

This is another mechanism that insurance companies can use to limit the impact of insureds who have histories of health problems. If you've had heart bypass surgery and beaten a mild case of skin cancer, you may have to settle for a major medical policy includes a high deductible-say, $5,000- and a heavy co-insurance split-say, 60/40 percent.

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