  We investigate an effective Hamiltonian for Na0.5CoO2 that includes the
electrostatic potential due to the ordered Na ions and strong electronic
correlations. This model displays a subtle interplay between metallic and
insulating phases and between charge and magnetic order. For realistic
parameters, the model predicts an insulating phase with similarities to a
covalent insulator. We show that this interpretation gives a consistent
explanation of experiments on Na0.5CoO2, including the small degree of charge
ordering, the small charge gap, the large moment, and the optical conductivity.
