Coinsurance is the percentage of your medical costs that you actually have to pay after reaching your deductible. When you incur health care costs from a medical procedure, you have to pay out of pocket until you spend a certain amount, known as your deductible. Once you hit your deductible, your insurance company starts splitting the cost of future care, based on a set percentage of the costs. The percentage that you pay is your coinsurance.
How much you pay for coinsurance depends on your health insurance policy. You will usually see your coinsurance represented as a number, like 20%. If you have 20% coinsurance, you have to pay 20% of the cost of medical care and your insurance will cover the other 80%. Some places also list this as 80/20, with the amount your insurer pays listed first. The higher your coinsurance, the more you have to pay out of pocket but a plan with higher coinsurance usually has lower monthly premiums, and vice versa.
As an example, let’s say you go to the hospital and get a bill of $400 to have a minor surgery. If you’ve already hit your deductible and your coinsurance is 40%, you will pay $160 and your insurance will pay the remaining $240.
Learn more about out-of-pocket medical costs.
Coinsurance vs copay
A copay is a set amount of money that you pay any time you receive a specific health care service or prescription. Coinsurance is the percentage of an overall medical bill that your insurance company expects you to pay. Copayments vary based on the service or prescription you receive, but they’re always flat fees set by your insurance company in advance. A copay is also independent of how much a doctor charges. Your coinsurance rate is generally the same regardless of what medical expenses you incur.
For example, let’s say that a visit to your primary care physician for anything other than your annual checkup has a $20 copay. You owe the $20 copay no matter how much your doctor charges for an office visit. If your doctor then prescribes medicine, you will likely owe a copay when you pick up your prescription. (Learn more about how prescription drugs are priced.) Now, if your office visit costs $200 and you have 30% coinsurance, you will pay $60 of the bill in addition to your copay. However, coinsurance only applies after you spend enough to reach your deductible. Before reaching your deductible, you have to pay all of your medical costs. Copays often apply regardless of whether you've reached your deductible.
Below is a quick breakdown of things to remember when considering your coinsurance vs copay.
Coinsurance | Copay | |
|---|---|---|
How it's charged | Percentage of costs | Flat fee per service |
Does it vary based on what service you get? | No, the percentage is always the same | Yes |
Do you pay it before or after reaching your deductible? | Only after | Before and after |
Does it count toward your out-of-pocket maximum? | Yes | Yes, in most plans |
Coinsurance and your out-of-pocket maximum
With most health coverage, your coinsurance and copays both count toward your out-of-pocket maximum. Once you spend enough overall to hit the out-of-pocket limit, your insurance will step in to cover 100% of your medical costs for the remainder of the calendar year.
Out-of-pocket maximums vary by plan, but the highest legal maximum that an insurer can set in 2021 is $8,550 for an individual and $17,100 for a family. [1] It’s important to know that not all out-of-pocket expenses count toward the limit. Read more on what counts toward the out-of-pocket maximum.
Coinsurance and the metal tiers
Your coinsurance percentage depends on the details of your individual insurance policy. If you got a plan through the marketplace, then your plan falls into one of four tiers — Bronze, Silver, Gold, Platinum. These are called the metal tiers. The tier a plan falls into depends on how the insurer will split all costs with you, which isn’t the same as your coinsurance split.
With a Bronze plan, for example, insurers cover an average of 60% of your medical costs, leaving you to pay 40%. The 60/40 cost sharing factors in copays, coinsurance, and the costs you will pay before and after hitting your deductible. So the average cost-sharing value for the tier of your insurance plan may not be the same as your coinsurance percentage. In fact, it’s possible to have a plan with 0% coinsurance, meaning you pay 0% of health care costs, or even 100% coinsurance, which means you have to pay 100% of the costs.
Further reading: How metal tiers work
The following table lists the general cost-sharing percentages for each of the metal tiers. Bronze plans require you to pay the most while the Platinum plans require you to pay the least. At the same time, Bronze plans usually have the lowest monthly premiums and Platinum plans usually have the highest premiums.
METAL TIER | CONSUMER PAYS | INSURER PAYS |
|---|---|---|
Bronze | 40% | 60% |
Silver | 30% | 70% |
Gold | 20% | 80% |
Platinum | 10% | 90% |
Outside of this average cost sharing, your spending rates may differ if you get care from an in-network provider or out-of-network provider. For example, an HMO health insurance plan does not cover out-of-network care and you will have to pay the full price even if you've already hit your annual deductible. Read more on how health plans cover out-of-network medical expenses.
