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The percentage of health care costs that you pay after you’ve met your deductible
Coinsurance is the percentage of your medical costs that you actually have to pay
It only applies after you hit your deductible
Your coinsurance depends on your health insurance plan and your insurer
Coinsurance is different from a copay, which is a flat fee you pay when you get different types of health care services
When you incur health care costs from a medical procedure, you have to pay out of pocket until you spend a certain amount. Once you hit that amount of spending, known as your deductible, your insurance company starts paying some of the costs of your care. However, they still don’t pay for all of it. You have to split the costs and pay a certain percentage of your bill. The percentage that you pay is your coinsurance.
How much you pay for coinsurance depends on your specific health insurance policy. You will usually see your coinsurance represented as a number, like 20%. This means that the amount you pay is 20% of the cost and your insurance will cover the other 80%. Some places also list this as 80/20, with the amount your insurer pays listed first.
As an example, let’s say you go to the doctor and it’s going to cost you $200 to have a minor surgery. You’ve already hit your deductible and your coinsurance is 40%. You will pay $80 and your insurance will pay the remaining $120.
In general, a plan with higher coinsurance usually has lower monthly premiums, and vice versa.
A copay is a set amount of money that you pay when you receive a specific health care service. Copayments vary based on the service you receive, but they are flat fees set by your insurance company in advance. A copay is independent of how much the doctor charges for an office visit.
For example, seeing your primary care physician for your annual checkup may have a $20 copay. You’ll pay just $20 whether your doctor charges $100 or $200 for a checkup. Then, if your doctor prescribes medicine, you may have to pay a copay for a prescription drug.
(The copay for prescription drugs is usually one price if you get a generic brand and a higher price if you get a name brand. Learn more about how pricing works for prescription drugs.)
Coinsurance is typically a percentage instead of a flat fee and it tells you how much of your final medical bill you actually have to pay. So if a medical procedure costs $100 and you have 30% coinsurance, you will pay $30 of that bill in addition to whatever your copay was.
Note that many insurance plans include free preventive care, such as your annual physical, so your insurer covers the full cost and coinsurance doesn’t apply.
However, coinsurance applies only after you hit your deductible. Your deductible is how much you need to spend before your insurance starts to cover any of your medical expenses. So if you receive a $1,000 bill and you haven’t hit your deductible yet, you will have to pay the full $1,000, no matter what your coinsurance is.
Below is a quick breakdown of things to remember when considering your coinsurance vs 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|
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With most health coverage, your copays and coinsurance 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 2019 is $7,900. 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.
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 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%. This 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 0% coinsurance, meaning you pay 0% of health care costs, or even 100% coinsurance, which means you have to pay 100% of the costs.
The following table lists the general cost-sharing percentages for each of the metal tiers. As you can see, the Bronze plan requires 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 (your monthly health insurance bill) and Platinum plans usually have the highest premiums.
|METAL TIER||CONSUMER PAYS||INSURER PAYS|
Outisde of this average cost sharing, note that your spending may rates may differ if you get care from an in-network provider instead of an out-of-network provider. For example, an HMO health insurance plan does not cover out-of-network care and so you will have to pay the ful price even if you've already hit your deductible.(Read more on how health plans cover out-of-network medical expenses.
Health insurance and life insurance work together to offer financial protection.
Health insurance can pay your medical expenses. Life insurance keeps your loved ones whole after you die.
About the author
Derek is a tax expert at Policygenius in New York City. He has written about multiple personal finance topics in the past, and his work has been covered by Yahoo Finance, MSN, Business Insider and CNBC.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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