Copayment is a set amount people pay when they make a doctor’s visit or fill a prescription. Whereas, coinsurance is a percentage that people pay for medical costs after reaching their deductible.

Most insurance plans will include copayments and coinsurance.

Copayments are the payments people make at the time of a service, such as doctor’s visit.

Coinsurance is a percentage people pay to cover medical costs after they reach their deductible, and insurance covers the remaining percentage.

This article looks at the key points around copayments and coinsurance, as well as how they relate to deductibles and out-of-pocket expenses.

A person speaking with a pharmacist about copayment vs. coinsurance.Share on Pinterest
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The following provides definitions for some key terms and outlines the main points:

  • A copayment, or copay, is a set amount people pay for medical services and prescriptions.
  • Coinsurance is a percentage of medical costs that people pay after they meet their deductible, and the insurance pays the rest.
  • A deductible is an amount people pay themselves for medical costs before insurance starts paying a percentage of the costs.
  • Coinsurance comes into effect after people have reached their deductible.
  • Copayments may or may not contribute to the deductible, depending on which health plan people have.
  • Copayments, coinsurance, and deductibles all count toward the out-of-pocket maximum.

A copayment is a set amount in dollars that people pay for prescriptions and medical care they receive. The insurance pays the rest of the cost.

The copayment cost may be higher if people have not reached their deductible, and lower once they have met their deductible.

Copayment costs can vary depending on the type of service people receive, such as visits to specialists or lab tests.

In general, people paying lower premiums each month may have higher copayment costs and vice versa.

Copayments with in-network services count toward the out-of-pocket maximum. Once people have reached the out-of-pocket maximum, insurance will cover the rest of the costs of covered services.

Many insurance plans will cover the costs of preventive services, such as screenings and immunizations. This means people will not have to pay a copayment, even if they have not met their deductible.

Coinsurance is a percentage of medical costs that people pay after they have reached their deductible.

For example, once a person has reached their deductible, coinsurance will cover a percentage of the costs. Depending on the type of plan people have, an insurance provider may pay 80% of medical costs, and people pay the remaining 20%.

People pay coinsurance until they meet their out-of-pocket maximum. After that, insurance will cover the total cost of covered services for the remainder of the year.

Does a person want high or low coinsurance?

According to HealthCare.gov, people will typically pay more in coinsurance if they have lower monthly premiums. A plan with higher premiums may have lower coinsurance.

If people are less likely to require regular medical care and may only need it in an emergency, they may want to pay lower premiums with higher coinsurance.

If people are likely to face high medical costs, they may want to pay a higher monthly premium with lower coinsurance and other out-of-pocket expenses.

With some plans, such as an HMO plan, people may not have to pay any coinsurance. HMO plans require people to use providers within the plan’s network, otherwise, people will need to cover the costs themselves.

Risks of having high coinsurance percentage

The higher the percentage that people have to pay for coinsurance, the higher their costs will be.

A high coinsurance percentage may not be an issue if people do not meet their deductible, as they will only pay coinsurance after reaching their deductible.

If people meet their deductible and continue to need medical services, a high coinsurance percentage will mean they pay more than if they had a lower percentage coinsurance.

Once people reach their out-of-pocket maximum, people will no longer have to pay coinsurance for the rest of the year.

Coinsurance percentages may be different for in-network and out-of-network providers. Out-of-network providers are usually more expensive, so aiming to use in-network providers can keep coinsurance costs lower.

People may be able to estimate their coinsurance costs by working out how much medical care or treatment they are likely to need.

People can view plans through HealthCare.gov which will give people an estimate of their total costs, such as monthly premiums and out-of-pocket expenses.

Plans are split into bronze, silver, gold, or platinum, which indicates whether people will pay more in premiums or in out-of-pocket costs, such as coinsurance.

People will need to know their deductible, as people will not start paying coinsurance until they meet their deductible. People will not have to pay more than their out-of-pocket maximum limit.

A deductible is a set amount people pay for prescriptions and medical care across a year before coinsurance helps to cover costs. For example, if people have a deductible of $2,000, people will pay for medical care until they have paid $2,000 in costs.

Once people have reached their deductible, people will pay a certain amount in copayments and coinsurance, and the insurance provider will cover the rest.

A health plan may cover certain costs, such as routine check-ups before people have met their deductible.

Health plans with higher deductibles may have lower monthly premiums, and plans with lower deductibles may have higher monthly premiums.

The following table outlines the main differences between copayment and coinsurance:

CopaymentCoinsurance
What are they?This is a set amount in dollars that people pay for doctor’s visits or prescriptionsA percentage of the treatment cost, set by the insurance plan, that people pay for medical care and procedures, after they have met their deductible. Insurance pays the rest of the percentage.
CostsCopayment costs may vary depending on the type of medical visit or prescription.The percentage stays the same for all types of treatment.
When do they come into effect?People usually pay copayments before they reach their deductible.

Depending on the type of plan, copayments may or may not count toward the deductible.		Coinsurance begins once a person has met the deductible.
When will a person need to pay?People will pay the copay amount at the time of the service, or when they fill a prescription.The insurance provider will pay the bill, and then let people know the amount that they have to pay the insurance company.

Out-of-pocket costs are costs that the insurance does not cover, so people will have to cover these costs themselves.

Copayments and coinsurance for covered services both count as out-of-pocket costs, and count toward the out-of-pocket maximum.

An out-of-pocket maximum is the highest amount people will have to pay for medical services within their annual plan.

Deductibles, copayments, and coinsurance all count toward out-of-pocket maximums.

Premiums, and any costs on services that are not included in the plan, do not count toward out-of-pocket maximums.

Once people reach their out-of-pocket maximum, healthcare insurance will cover the remaining costs for services the plan covers, for the rest of the year.

Coinsurance does not count toward deductibles. Coinsurance comes into effect once people have met their deductible.

Once people have met their deductible, insurance will cover a percentage of medical costs. For example, if a health plan covers 80% of costs after a person has reached their deductible, people will need to pay the remaining 20% of medical costs.

People may pay copayments before and after they have met their deductible, but the costs may vary.

If the allowable cost, the maximum amount an insurance provider will pay for a covered service, is $100 for a doctor’s visit, people may pay $20 if they have reached their deductible.

If people have not reached their deductible, they may pay the full $100.

Copayments may or may not count toward a deductible, it depends on each individual health plan.

Copayments are a set amount of dollars people pay for medical services and prescriptions. Coinsurance is a percentage of medical costs that people pay after reaching their deductible.

People may want to choose a plan with higher premiums and lower coinsurance if they are likely to require frequent or high cost medical care.

If people are less likely to need medical care, they may opt for lower premiums and higher out-of-pocket expenses.