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Health Plans With High Coinsurance Double Dipping With Big Out-of-Pocket Costs

Higher coinsurance rates correspond to higher annual limits on medical out-of-pocket costs

Consumers could still fare better now than under some Affordable Care Act plans

SUNNYVALE, Calif., March 25, 2013 /PRNewswire-USNewswire/ -- A new analysis of coinsurance rates from HealthPocket, Inc., shows that the average coinsurance rate nationally for individual and family health plans is 20 percent, meaning that people with coinsurance are paying one-fifth of the costs on average for certain more expensive services such as hospitalization, child birth, emergency care, and others.

The analysis also shows that the plans with the highest average coinsurance rate (above 40 percent) also had the highest average annual limit on out-of-pocket expenses for their enrollees. The coinsurance rate did not, however, track predictably with the average deductibles that consumers pay.

"Coinsurance" is a common term in the individual and family market as a method of cost-sharing for more expensive services, including hospitalization, surgery, child birth, and emergency care. Out of the 9,711 plans examined, a quarter of plans with coinsurance rates were higher than the national average. The lowest range of up to a 10 percent coinsurance rate corresponded to an average out-of-pocket limit of $4,286 while the highest range of above 40 percent corresponded to an average limit of $8,825.

The Affordable Care Act (ACA) will prevent companies from offering plans with some of the current outer limits of these costs, but in some instances, consumers may face even higher deductibles and out-of-pocket costs than the current average plan.

"This is definitely a situation of buyer beware, particularly if people assume that a plan with a low premium but high coinsurance translates into less money out of their pockets in a given year. A serious medical episode could completely change the financial impact of the health plan," said Kev Coleman, head of Research & Data at HealthPocket and the lead author of the analysis. "Starting in 2014, cost transparency will be even more critical given that health plans will be designed around what percentage of medical costs the consumer is expected to pay. Consumers will need not only to understand how much of their costs are covered by their health plan but what their healthcare providers charge for the services they use."

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