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Coinsurance and copay: The words sound the same, but their meaning is different. Understanding the difference between those words and knowing other phrases like deductible and out-of-pocket costs are key to choosing a health insurance plan that’s right for you. 

Read on to learn more about what these terms mean — and how they can impact your bottom line.

What is coinsurance?

Coinsurance is the percentage of health care expenses you pay once you have paid the deductible. The health insurance plan picks up the rest. In that way, it’s a cost-sharing plan with your health insurance.

Coinsurance is expressed as the percentage of costs you pay out of pocket for a covered health care service. For example, if your coinsurance is 20%, you owe that percentage of the health care costs for services after you reach your deductible. 

As a general rule, plans with lower monthly premiums have higher coinsurance amounts, and vice-versa.

How does coinsurance work?

Coinsurance kicks in after you pay your deductible. It’s based on your insurer’s allowed amount for a service. 

For example, if the allowed amount for an office visit is $100 and your coinsurance is 20%, your coinsurance after deductible amount would be $20. Your health insurer picks up the rest of the tab.

It’s important to note that before reaching the deductible, you’re on the hook for all of the health care services costs. 

Key Takeaways

  • Coinsurance and copays are two ways that you pay when you get health care services.
  • Deductibles and out-of-pocket maximums are also vital parts of health insurance costs.
  • Coinsurance is the percentage of costs for health care that you pay after meeting your deductible, while copay is what you pay at the time of service.
  • When choosing a health insurance plan, make sure to review the different out-of-pocket expenses costs, and premiums, and pick a plan that works best for your situation.

Let’s take a look at six examples. 

What does 0% coinsurance mean?

If you have 0% coinsurance, that means you pay nothing after you reach your plan’s deductible. 

What does 20% coinsurance mean?

If you have 20% coinsurance, you pay 20% of the health care costs after you reach your deductible. So, if you get $200 worth of health care services, you would pay $40 and the health plan would pay the rest. 

What does 30% coinsurance mean?

If you have 30% coinsurance, you pay 30% of the health care costs after you reach the deductible. If you receive $100 in health care services, you would pay $30 and the health plan would pay $70. 

What does 40% coinsurance mean?

If you have 40% coinsurance, you pay 40% of the health care services and the health plan picks up the rest. So, if the health care costs are $100, you’d pay $40 and the insurance would handle the remaining $60.

What does 50% coinsurance mean?

If you have 50% coinsurance, you pay for half of the health care costs after reaching your deductible. So, if the costs are $400, you would pay $200 and the health plan would take on the other half. 

What does 100% coinsurance mean?

Having 100% coinsurance means you pay for all of the costs — even after reaching any plan deductible. You would have to pick up all of the medical costs until you reach your plan’s annual out-of-pocket maximum. 

What is a copay?

A copay is the amount of money you owe for a covered health service, such as for a doctor’s visit. Unlike coinsurance, it’s a fixed, flat fee and isn’t based on a percentage of the insurer’s allowed amount for a service.

Do copays count toward a deductible? Generally, the answer is no.

How does a copay work?

A copay is a fixed amount you pay for a service. Many health care providers require you to pay this amount at the time of your visit.

Plans with lower monthly premiums typically have higher copayments and vice-versa.

Copay amounts may vary depending on the nature of the service you receive. For example, there may be one copay for lab testing and another for seeing a specialist. Or, you may pay one copay to see a doctor and a higher copay to go to the emergency room.

Here is an example of a potential copay structure:

  • Primary care visit — $20
  • Specialist — $50
  • Prescription drug — $10
  • Emergency room visit — $100

Kelly Fristoe, president-elect of the National Association of Health Underwriters, says certain copays — such as those for emergency room visits — tend to be higher than copays for standard office visits to your primary physician. Health insurance companies charge  higher copay to discourage people from using emergency rooms when cheaper care, such as at an urgent care center or a primary physician’s clinic, would suffice. Those plans often waive the emergency room visit copay if you wind up getting admitted to the hospital. 

“The most expensive place that you could ever go to receive health care is going to be the emergency room,” Fristoe says. He says insurers “want to discourage people from looking at that emergency room as being a place to go for things that maybe aren’t an emergency.”

For that reason, a copay for a regular doctor’s office visit will be lower.

“A copay for a doctor’s visit will be much more appetizing to a consumer,” Fristoe says.

Which health insurance plans have copays?

Many health insurance plans have copayments. There’s a good chance that your plan is among them.

Copayments most often pop up in managed care plans, such as HMOs. Insurers that offer these plans negotiate fixed fees for essential health care services with health care providers. Because these fees are fixed, it’s easier for the insurer to forecast actual costs and to zero in on a copay that works.

Other types of plans — such as PPO plans — also may have copays.

Fristoe says many people have gotten used to paying a copay. But choosing a health insurance plan based solely on copays isn’t always in the consumer’s best interest. This is especially true for people who rarely use health care services.

“It doesn’t make sense to pay an extra $50 a month in premiums so you can have a $20 copay when you go to the doctor’s office,” Fristoe says.

Some people who don’t need many health care services may benefit from a plan with higher deductibles and lower premiums. 

“There are certain things that aren’t appropriate to try to transfer to a health insurance contract, and that may include two or three simple office visits per year,” Fristoe says. “Buy insurance for the reason it was meant to be purchased, and that’s for the catastrophic health care event that is going to be multiples of thousands of dollars.”

Coinsurance vs. copay

Let’s take a look at the differences between coinsurance and copays. 

Coinsurance is the amount you pay for health care services after you meet your deductible. It’s expressed as the percentage of costs of a covered health care service you must pay.

By contrast, a copay is a fixed amount that you owe for a covered health service — regardless of deductible. For example, you may owe a $20 copay every time you see your primary health care provider.

A copay you pay at the time of the health care service; coinsurance is paid after the provider files the claim with the health insurer. 

What is a deductible?

A deductible is the out of pocket costs for health care you pay before your insurance kicks in and starts to cover your costs. You may pay copays toward your deductible depending on the plan.

As a general rule, the higher your annual deductible, the lower the insured person’s premium, and vice-versa.

Paying a higher deductible often makes sense for healthy people who typically don’t need many health care covered services in a given year, Fristoe says.

Fristoe says that at one time, most consumers looked at the deductible as the most important feature of their health insurance plan. But that changed after passage of the Affordable Care Act, which put strict limits on out-of-pocket maximums.

“The most important feature now in a health plan is the out-of-pocket maximum,” Fristoe says.

When do deductibles apply?

Many health insurance plans have a deductible. This may be waived in some instances — such as for routine checkups or for some preventative benefits as defined by the Affordable Care Act — but in most other cases, your deductible will apply.

If you have a deductible, you’re responsible for paying up to the deductible limit for in-network care before your health insurer begins paying your bills. For example, if your deductible is $3,500, you will be responsible for paying for your care out of pocket up to that amount before the insurance policy pays.

It’s also possible to have a separate deductible for things like prescription drugs. And family coverage may come with a deductible for each individual family member, and a separate deductible that applies to the entire family.

What’s the out-of-pocket maximum in health care?

Once you have met your deductible, you typically only will owe copayment or coinsurance costs up to your annual out-of-pocket maximum. The amount you owe in coinsurance can be limited by your out-of-pocket maximum.

If your annual out-of-pocket maximum is $7,000, for example, that’s the most you could owe over the rest of the year, regardless of your actual coinsurance responsibility.

In fact, when thinking about how to choose health insurance, knowing your out-of-pocket maximum can be the single most important thing to keep in mind, says Fristoe. Deductibles, copayments, and coinsurance all count toward your out-of-pocket maximum.

“We ask people, ‘What level of financial risk are you willing to expose yourself to in the cost of your health care this year?'” Fristoe says. “The answer to that really is going to be the out-of-pocket max. That’s the ultimate exposure in the cost of their health care.”

Frequently Asked Questions

Can you both have copays and coinsurance?

Yes, it’s likely for health plans to have both a copay and coinsurance. For example, you might pay a copay to a doctor for an office visit and then pay coinsurance for the services rendered during the visit. 

What does coinsurance mean in health insurance?

Coinsurance is the percentage of medical expenses that you owe after you have paid your deductible. For example, if your coinsurance is 20%, you would owe that percentage of your plan’s allowed amount for a specific medical service after your deductible is paid.

If you receive $100 worth of services during a visit and you have 20% coinsurance, you would owe $20. Health insurance picks up the rest. 

The amount you owe in coinsurance can’t exceed your plan’s out-of-pocket maximum in a given year.

What does it mean when you have a $1,000 deductible?

If you have a $1,000 deductible, you must pay that amount of your health care bill before your health insurer begins to pick up part of the costs.

It’s important to note that some preventative health care services are at no cost to you. In those cases, you won’t be billed even if you haven’t met your deductible.

Once you meet your deductible, you may still owe copay and coinsurance fees. However, once you reach your plan’s out-of-pocket maximum, you no longer will be charged for health services for the remainder of that year.

What is a deductible in simple terms?

Your deductible is the amount that you must pay out of pocket before your insurance kicks in and starts to cover your costs.

There will be no charge after a deductible and your out-of-pocket maximum have been reached. The health insurance company will cover the rest of your care for the year once you have hit those limits.

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Chris Kissell
Contributing Researcher


Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.