Is coinsurance the same as copay?

If you’ve never had health insurance, you might not be familiar with the difference between a copayment and coinsurance. Understanding these two terms can help you better understand your out-of-pocket expenses for the health insurance plans you’re considering so you can choose a plan that is right for your needs.

Copayment and coinsurance are both forms of cost sharing. When you need services, you and your health insurance provider each pay for a part of the cost of your care. The difference between a copayment and coinsurance is how the costs are split up.

What Is a Copayment?

A copayment (or copay) is a fixed fee that you (the patient) are required to pay for specific medical services. You pay a copayment in addition to your monthly premium. Copays are predetermined and should be outlined in your health insurance plan. Fees vary depending on the service provided. For example, doctor visits, specialist visits, prescription drugs, and trips to the emergency room will probably each have their own copay fee.

Once you pay the copay for a qualified service, your health insurance provider is responsible for the remaining costs of that service. If you’re on a tight budget, or you simply want to make sure you have a good idea of what a service is going to cost beforehand, you will appreciate the predictability of a copay.

Copays typically do not count toward maximum out-of-pocket expenses, but you should always review a plan’s benefits summary for specifics.

What Is Coinsurance?

Coinsurance is another example of cost sharing, though in this case the fees are not fixed. After you have reached the deductible for your insurance plan, coinsurance is the percentage of the costs of your services that are split between you and your insurance provider, with each being responsible for a certain percentage of the total cost. In many cases, health insurance providers pay 70-90% of the costs, leaving you (the patient) with the remaining 10-30% of the bill.

While the percentage split is predetermined, the amount that you are responsible for is based on the total cost of service. This makes coinsurance less predictable than copayments, since you may not know how much a service will cost until you have seen a doctor or specialist.

One benefit of a coinsurance model is that many health insurance companies will count these fees as part of your maximum out-of-pocket expenses. Again, you should review a plan’s benefits summary to confirm whether or not coinsurance goes toward maximum out-of-pocket expenses before choosing the plan.

Evaluate the Difference Between Your Copayments and Coinsurance

Shopping for health insurance is more than just choosing the plan with the lowest monthly premiums. It’s important to weigh your out-of-pocket costs, too. HealthMarkets can help you compare your current plan’s copayments, coinsurance, and premiums, as well as help you determine that your plan is right for your needs and your budget.

A copay is a fixed cost ($40, for example) that an insurance policyholder pays for a specific service covered by insurance. Coinsurance, on the other hand, is paid as a percentage of the cost of a service. Copays and coinsurance apply in different situations, but both are expenses associated with your insurance plan.

Navigating the various out-of-pocket costs of insurance can seem daunting. Although the details vary depending on your provider and the plan you choose, there are some general terms that remain the same. Copays and coinsurance are two such terms, and they aren’t interchangeable.

So, what is the difference between a copay and coinsurance? Let’s break it down further.

Copay vs. coinsurance: understanding the differences

Copays and coinsurance apply to several forms of insurance, including health, vision, and dental. The easiest way to remember the difference between a copay and coinsurance is this:

• Copayments are fixed fees your provider charges for services.
• Coinsurance is a percentage of the cost you pay for services.

In other words, a copay that’s $20 will always be $20. But a 20% coinsurance fee will change depending on the cost of the service. The rates for each depend on the policy you’ve chosen. An insurance plan with higher premiums typically has lower copays and coinsurance fees.

It’s important to remember that there are different copays for different services. An emergency room copay isn’t the same as a general provider office exam copay. However, your coinsurance rate is always the same regardless of the service or procedure.

In a plan’s terms, you’ll sometimes see coinsurance represented as a ratio. An “80/20” health insurance plan means your insurance will cover 80% of the cost. You’re responsible for the remaining 20%.

Another key difference between the two out-of-pocket expenses is when you have to pay:

• Coinsurance applies only after you’ve met your deductible.
• Copayments often apply both before and after you’ve met your deductible.

Your deductible is the amount of money you have to pay out-of-pocket for covered services before your insurance starts to pay. Since coinsurance only applies after that, it doesn’t contribute to your deductible. Copays apply both before and after, but they usually don’t count toward your deductible, either.

Let’s review the key differences between copay and coinsurance:

Copay

Coinsurance

A fixed amount paid to your medical provider for services

A percentage of the total cost 

Can apply before and after you reach your deductible

Applies only after you reach your deductible

Copays, coinsurance, and out-of-pocket maximums

Copays and coinsurance are out-of-pocket costs. That means you, the policyholder, are responsible for paying them. But that also means they contribute to your out-of-pocket maximum — which is the most you’ll have to pay out-of-pocket each year.

Every time you make a copayment or foot the bill for coinsurance, it brings you closer to your out-of-pocket maximum. Once your out-of-pocket maximum is reached, your insurance is responsible for 100% of the cost of covered services for the remainder of the year.