The health insurance industry is full of jargon. Terms like deductible, coinsurance, copay, allowable charge, and premium are common.
But two terms are easily confused. Coinsurance and copay both factor into what you’ll pay out of pocket for your healthcare, but understanding what these terms actually mean will help you to better understand your health insurance.
Free Life Insurance Comparison - Save up to 30%
No junk mail. No spam calls. Free quotes.
No Signup required
Coinsurance is the percentage of your healthcare costs that you’re responsible for paying after you meet your health insurance plan’s deductible. Your deductible is the amount that you will pay each year before your health insurance starts to pay for part or all of your covered healthcare services.
Let’s break this down a little. If your plan has a $2,000 deductible, you will need to pay $2,000 out of pocket before your insurance starts to pay for your healthcare expenses. But if you have a 25% coinsurance, you’ll be responsible for an additional 25% of your healthcare expenses.
Using those figures, let’s assume you need a surgery that costs $10,000. You will pay your $2,000 deductible, at which point your coinsurance goes into effect. You will need to pay your coinsurance, which is 25% of the remaining $8,000 balance, or $2,000. In total, you will pay $4,000 for this surgery bill.
Your copay is a fixed amount that you are responsible for paying for certain medical services and medications. Your policy might have a $30 copay when you visit a specialist, or a $100 copay for an emergency room visit.
Since copays are set amounts, you’ll know what you’ll need to pay before you receive the service. For example, if you have a $30 copay to see a specialist, and the entire cost of the visit is $200, you will pay your $30 copay and your insurance will pay the remaining $170.
Your copay can apply both before and after you reach your plan’s deductible.
Free Life Insurance Comparison - Save up to 30%
No junk mail. No spam calls. Free quotes.
No Signup required
No, your copay and coinsurance are different. While your copay is a set amount, your coinsurance is a percentage of the cost of your healthcare services, so your coinsurance can vary.
Additionally, you may be responsible for a copay before and after you reach your deductible. However, your coinsurance only goes into effect once you have reached your policy’s deductible.
Both your copays and your coinsurance can contribute to the out-of-pocket maximum, which is the maximum amount that you will be responsible for contributing to your healthcare expenses in a single year. Once you reach the maximum, your insurance policy will cover all of the remaining costs for covered services for the rest of the policy year.
As you shop for health insurance, it’s important to pay attention to not only your premium, but also to your copays, coinsurance, and out-of-pocket maximum. You can get a free health insurance quote today to start exploring plan options.
Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
