Tiers of Coinsurance

The CloudAdvisors Benchmarking Reports can list multiple tiers of coinsurance. Coinsurance is the percentage of a claim reimbursed to the plan member. 100% coinsurance means the whole claim is paid (less any deductible and subject to maximums and definitions) whereas 90% coinsurance means 10% of the claim is paid by the plan member. This is a form of cost sharing.

Many Extended Health and Dental plans have a single coinsurance typically between 50% and 100%.  There is also an option in some plans for multiple tiers of coinsurance, here are a few examples:

Example 1 - Threshold Tier- ex. 80% of the first $1000 and 100% thereafter

Claimants would be paying a portion of the claim up to a threshold and then receive higher or complete coverage.  This strategy provides an advantage to high claimants who may not be able to afford the cost sharing burden.

Example 2 - Definition Tier - 80% Mandatory Generic and 100% Provincial Formulary.

The plan is offering a higher reimbursement based on the definition of coverage, for example drug coverage.  This would encourage plan members to choose alternatives that are 100% covered versus 80% covered if they were interchangeable.  The advantage may be to the future risk of the benefits plan.

Example 3 - Preferred Tier - 80% Retail Pharmacy and 100% Preferred Pharmacy

The plan is offering an incentive to use a different provider.  There may be other advantages to both the plan member and plan sponsor to use that provider, such as a digital / mail direct pharmacy with lower mark-ups etc. that the supports more claims going to the Preferred Provider.