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The Main Difference Between Coinsurance and Copayments

No matter which kind of health insurance policy you have, it’s important to know the difference between a copay and coinsurance. These and other out-of-pocket expenses impact how much you’ll pay for the healthcare you and your family receive.

What Is a Deductible?

First, to understand the difference between coinsurance and copays, it helps in understanding about deductibles.

A deductible is the amount you pay every year for your healthcare before your plan starts to share the costs of the covered services. For instance, if you have a $3,000 deductible, you have to pay $3,000 before your insurance kicks in fully.

If you have any dependents on your plan, you will have an individual deductible and a different (higher) amount for the family.

What Are Copays?

Copays (or copayments) are set amounts you pay to your health provider when you receive services. Copays usually start at $10 and go up from there, depending on the kind of care you receive. Different copays typically apply to office visits, prescriptions, specialist visits, urgent care, and emergency room visits.

Your copay applies even if you have not met your deductible hitherto. For instance, if you have a $50 specialist copay, that’s what you’ll pay to see a professional—whether or not you have met your deductible.

Most plans cover preventive services at 100%, meaning you will not owe anything.

What Is Coinsurance?

Coinsurance means the percentage of covered medical costs you pay after you’ve met your deductible. Your health insurance program pays the rest. For instance, if you have an “80/20” plan, it means your policy covers 80%, and you pay 20%—up until you reach your maximum out-of-pocket limit.

Still, coinsurance only applies to covered services. If you have costs for services that the plan does not cover, you’ll be responsible for the bill. If you are not sure what your plan covers, review your benefits booklet, or call your plan provider.

What Are Out-of-Pocket Maximums?

After you reach your out-of-pocket maximum, your health insurance plan covers 100% of all covered services for the remaining part of the year. Any dollar you spend on deductibles, copays, and coinsurance counts toward your out-of-pocket maximum. Nevertheless, premiums do not count, and neither does anything you spend on services that your plan doesn’t cover.

Like deductibles, you might have two out-of-pocket limits—an individual one and a family one.

Conclusion

When you buy a health insurance plan, the plan descriptions always stipulate the premiums (the amount you pay each month to have the plan), deductibles, copays, coinsurance, and out-of-pocket limits. Generally, premiums are higher for plans that provide more favorable cost-sharing benefits.

If you’re generally a healthy and cautious person, a low-cost plan with higher limits may work. Though, if you expect to have significant healthcare expenses, it might be worth it to spend more on premiums every month to have a plan that will cover more of your costs.

Resources and References:

• How Copays Work
• Preventive Services
• Out-of-pocket Maximum