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What Is Coinsurance?

Key Takeaways

  • CoinsuranceCoinsurance is the percentage of your medical costs that you pay after you meet your deductible. Your insurance company pays the remaining amount. For example: If you have a $1,000 medical bill and your coinsurance is 20%, you’ll pay $200. Your insurance company will cover the final $800. is a percentage of the cost for a covered medical service that you pay.
  • The coinsurance rate depends on your health plan. Typically, your coinsurance can be lower if you pay a higher monthly premiumA premium is a fee you pay to your insurance company for health plan coverage. This is usually a monthly cost. .

 

What Is Coinsurance?

Coinsurance is a cost-share between you and your health insurance company. The rate is a percentage of a total medical bill split between you and your insurer. For example, your insurance plan may cover 80% of the cost, while you’re responsible for the remaining 20%. 

You are usually required to pay coinsurance costs after you’ve met your deductible and before you’ve reached your out-of-pocket maximum. Coinsurance generally applies if you select doctors and hospitals within your health plan’s network. Costs could be higher if you use out-of-network healthcare providers.

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How Does It Work?

Here’s an example of when coinsurance rates may apply:

  • Deductible: $1,000
  • Coinsurance: Insurance pays 80%, while you pay 20%
  • Out-of-pocket annual maximum: $3,000

Let’s say you were sick with the flu at the beginning of the year, and admitted to the hospital. Your stay cost $1,000. You’ll pay the full $1,000 to reach your deductible. 

In the same year, you broke your leg. This time, your bill is for $2,500. Because you met your deductible earlier in the year, you’re only responsible for 20% of the bill until you reach your out-of-pocket maximum.

Here’s the cost breakdown:

  • Total medical bill: $2,500
  • Your health insurer pays 80%: $2,000
  • You then owe 20% of coinsurance: $500

After two hospital visits, you’ve paid $1,500 of your out-of-pocket costs for the year. Your coinsurance costs (20% for you and 80% from your insurance plan) will continue until you’ve reached your out-of-pocket limit of $3,000. 

What’s the Difference Between Coinsurance and Copays?

Coinsurance and copays are two different ways insurance companies pass on service costs to you. Generally speaking, a copay is a flat rate you pay at the time of service for care, and it applies immediately.

For example, while a primary care visit may cost $180, you’re only responsible for your copay amount. If your copay for a primary care visit is $20, you pay $20 instead of the $180.

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FAQs

There’s not a right or wrong answer to determining whether coinsurance or copays are better. Everyone has different healthcare and financial needs. However, there are some pros and cons to each type of payment. 

In general, plans with lower monthly premiums tend to have higher coinsurance rates and vice versa. More cost-sharing benefits can make premiums higher. If you visit the doctor often or need prescription drugs regularly, consider higher premiums to cover more of your care.

It’s also important to consider all of your costs when deciding on your health plan. Copays usually don’t count toward health insurance deductibles or out-of-pocket maximums. However, you can get a better estimate of how much care will cost with copays as there’s usually a set price for doctor visits. You may not know your coinsurance cost until after receiving care.

You can find plans with coinsurance in the Health Insurance Marketplace. If you’re on Medicare, connect with a GoHealth licensed insurance agent to find a Medicare Advantage plan that fits your needs and financial situation.

The insurance company will determine coinsurance based on your level of coverage. Your Marketplace policy is categorized by category (gold, silver, bronze), also called metal tiers. The tiers represent coverage, and not the quality of care.

Platinum

  • You pay: 10%
  • Insurer pays: 90%

Gold

  • You pay: 20%
  • Insurer pays: 80%

Silver

  • You pay: 30%
  • Insurer pays: 70%

Bronze

  • You pay: 40%
  • Insurer pays: 60%

Please note: Your costs may vary. The percentages are based on averages.

Sources

This website is operated by GoHealth, LLC., a licensed health insurance company. The website and its contents are for informational and educational purposes; helping people understand Medicare in a simple way. The purpose of this website is the solicitation of insurance. Contact will be made by a licensed insurance agent/producer or insurance company. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. Our mission is to help every American get better health insurance and save money.

Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.