Coinsurance vs. Copays: What’s the Difference?
Key takeaways:
Coinsurance and copays, along with deductibles, are types of out-of-pocket expenses you pay as part of a health insurance plan. They are the primary way you share costs with your insurer for covered healthcare services.
Copays are fixed fees for specific healthcare services, such as doctor visits or prescription medications. Coinsurance is a percentage of the cost you'll pay for a service, which varies depending on the total cost of care.
Health plans with lower coinsurance and copays generally mean you'll pay higher monthly premiums. However, the insurance will start covering your bills sooner.
Table of contents
Copayments and coinsurance are similar but not quite the same. They are both out-of-pocket expenses you pay for healthcare services, but they work in different ways. These payments are typically necessary before your insurance covers any portion of your medical services. They act as a way to share expenses with your insurance provider.
Knowing what they are, when they apply, and how they can vary will help you estimate your future medical costs. That estimate can then guide your choices around health insurance for you and your family.
What is a copay?
A copay (short for “copayment”) is a flat fee you pay upfront for covered medical services, including doctor visits and prescription medications. Your health plan sets the specific copay amount for various types of covered services. Whether you’ll pay a copay or the full price for medical services often depends on if you've reached your deductible. Your deductible is the money you pay out of pocket for healthcare expenses before your insurance will cover any costs.
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For example, let’s say a visit to your primary care physician costs $100. You’ll have to pay the full amount for the visit if you haven’t met your insurance deductible. After you meet your deductible, you’ll only be responsible for paying your copay, which might be $20.
Copay amounts can vary by service and treatment. A 2023 survey reported an average of $26 for primary care visits and $44 for specialist visits, for example.
Under the Affordable Care Act (ACA), most health plans must waive copays for preventive care services, including screenings and vaccinations.
You may also need to use in-network healthcare professionals to keep your copays low. But regardless of your plan, copayments for brand-name medications are generally higher than generic alternatives.
If you are insured through Medicaid, check your plan details to see the current copay amounts, as the specifics vary by state.
Are there copays with Medicare?
Medicare is divided into four different parts that may issue copays for certain services, such as:
Medicare Part A (hospital insurance): You may be charged copays for services such as skilled nursing facility care and inpatient stays.
Medicare Part B (medical insurance): You may be responsible for copays if you receive care in an outpatient hospital setting.
Medicare Part C (Medicare Advantage): These plans, which are offered through Medicare-approved private insurers, have varying copays that are subject to change each year.
Medicare Part D (prescription medication coverage): Copays for prescription medications depend on your plan's structure, the medication tier, and the pharmacy.
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What is coinsurance?
Coinsurance is a percentage of medical costs that you are responsible for paying, also known as cost-sharing. You are typically responsible for paying coinsurance only after you’ve met your deductible and your insurance starts paying a percentage of costs.
For example, you might split your medical costs 80/20 with your insurer. That means, after you've paid your deductible, your insurance would be responsible for $8,000 of a $10,000 inpatient hospital stay. And you would be responsible for $2,000.
Generally, you'll continue to pay coinsurance for certain medical expenses until one of the following occurs:
It’s the end of your plan year.
You reach your out-of-pocket maximum.
If you reach your annual out-of-pocket maximum, your health plan pays 100% of your covered expenses for the rest of the year. At the end of your plan year, your deductible will reset, and you’ll need to meet it again before your insurance will share costs.
When plans have a low coinsurance amount, the insurer pays a greater portion of costs than the policyholder. But these plans often have higher premiums to even the score.
Be aware, your coinsurance percentage could be different with an out-of-network healthcare professional. Depending on your plan, you could end up paying 100% of the costs (or 100% coinsurance) by going out-of-network.
What is Medicare coinsurance?
If you have Medicare, your coinsurance amount depends on your plan. For Medicare Part A, you won’t pay any coinsurance until you’ve been hospitalized for more than 60 days in a single benefit period. Under Medicare Part B, after meeting your deductible, you’ll pay 20% of Medicare-approved costs.
Your prescription medication coverage and costs under Medicare Part D depend on your plan, income, and chosen pharmacy. In some states, Medicaid enrollees have to pay coinsurance, but the amounts are generally very low.
Coinsurance vs. copays: Differences between coinsurance and copays
Coinsurance and copays are both ways you share costs as part of your health insurance plan. Below is a comparison table that summarizes how coinsurance and copays work and their differences.
Category | Coinsurance | Copays |
How cost is determined | Varies depending on the cost of a service or procedure | Preset amount (flat fee) |
What you’ll pay | Expressed as a percentage of the cost (e.g., 20%) | Expressed as a dollar amount (e.g., $25) |
How much you’ll pay | Remains the same regardless of the service (e.g., 20% for office visit, labs, or scans) | May vary by procedure or service (e.g., $25 for a primary care visit, $44 for a specialist) |
When you’ll pay | Typically takes effect after deductible is met | May be charged before deductible is met |
Here’s what that means for your out-of-pocket costs:
If your copay to visit your primary care provider is $30, you can expect it to be $30 each time you go there. But you may have different copay amounts for different services, like a $20 copay for lab tests or $40 for physical therapy.
With coinsurance, the amount you’ll pay goes up as your medical fees increase. Therefore, if you undergo a $2,000 MRI and have 20% coinsurance, your insurer would pay $1,600, and you would pay $400. This arrangement ends, however, if you reach your out-of-pocket maximum.
What is a deductible?
A deductible is the initial, preset amount you must pay out-of-pocket for medical care before your insurance helps cover costs. This amount resets at the beginning of every new plan year. Health plans generally offer different deductible options, like $500, $1,000, or $2,000.
Not all healthcare services require you to meet your deductible before your insurance contributes to the costs. Under the ACA, most insurance plans must cover specific preventive services without any cost to you, even before you meet your deductible. These services include:
Annual checkups
Blood pressure screening
Depression screening
Type 2 diabetes screening for qualified adults between the ages of 40 to 70
Nutrition counseling for adults at higher risk for chronic conditions
Pap test for women 21-65 years old)
Screening for urinary incontinence in women
Once you've paid your deductible, you and your insurance will begin sharing the cost of your medical services that are not considered preventative.
Do copayments and coinsurance apply toward deductibles?
With most health insurance plans, copays do not apply toward the deductible. Since coinsurance does not take effect until after you’ve met your deductible, those payments also don’t apply.
It’s important to note that some insurance plans have a separate deductible for prescription medications. Medicare Part D plans have their own deductibles, which cannot exceed $545 in 2024.
What is an out-of-pocket maximum?
Your out-of-pocket maximum, or limit, is the highest dollar amount you'll pay for covered services and prescription medications within a policy year. Expenses that count toward your out-of-pocket maximum typically include the following:
Coinsurance
Copayments
Deductibles
Once you reach your annual out-of-pocket maximum, your health insurance pays 100% of your medical costs for covered benefits for the rest of the policy year. Out-of-pocket maximums can vary by plan.
Things that typically do not count toward your out-of-pocket maximum include:
Monthly premiums
Services not covered by your plan
Charges beyond the plan's contracted amount for a service
Every copay or coinsurance amount you pay helps you get closer to your out-of-pocket maximum. Some health plans have separate maximums for in-network and out-of-network care, with out-of-network maximums being higher. If your plan does not offer out-of-network benefits, you will pay 100% for those services.
Do copayments and coinsurance count toward out-of-pocket maximums?
As mentioned, copays and coinsurance do count toward your out-of-pocket maximum, as do other charges you’ve paid to meet your deductible. Your monthly premium payments do not count.
As of 2024, out-of-pocket maximums for ACA marketplace plans and most employer-sponsored plans can be no more than $9,450 for an individual and $18,900 for a family. Original Medicare plans do not have out-of-pocket maximums, but Medicare Advantage plans do. In 2024, out-of-pocket maximums for Medicare Advantage plans can be no more than $8,850 for in-network services and $13,300 for out-of-network services. Although, some insurers might set these caps lower, and the limits are subject to change every year.
Do all insurance plans have coinsurance and copays?
No, not every insurance plan comes with copays and coinsurance. These charges are typically a part of health, vision, and dental insurance, but not all plans are structured this way. Plans without copays and coinsurance often have higher monthly premiums. High-deductible plans may also offer lower copays and coinsurance amounts, or not require any.
Do you want a high or low coinsurance amount?
The lower your coinsurance percentage, the less you’ll pay out of pocket for services, as your plan will cover more of the costs. However, plans with a low coinsurance percentage often have higher premiums and/or higher deductibles. This means that you could pay more money month to month or have trouble meeting your deductible.
A 2020 study of employer health benefits in the U.S. found that the average coinsurance rates for people with employer-based plans were 18% for primary care services, 19% for specialty care services, and 20% for hospitalizations.
What are the risks in having a high coinsurance percentage?
A high coinsurance percentage means that you will spend more out of pocket, and your insurer will spend less. And, if you need frequent care, the costs could start to pile up.
For example, if you have a chronic health condition, you may need regular lab tests, specialist visits, medical equipment, and prescription medications.
How do I estimate my coinsurance cost?
Once you’ve met your deductible, your coinsurance cost for an office visit or procedure depends on these factors:
Is the healthcare professional in-network or out-of-network?
What is your plan’s coinsurance percentage for that category of healthcare professional?
How much is the service or procedure likely to cost overall?
What is your plan’s coinsurance percentage for that category of service?
As you answer those questions, you’ll be able to apply those percentages to the visit or procedure’s total cost and get a ballpark figure.
For ACA marketplace plans, the estimated average coinsurance split for in-network care is:
Bronze plans: 40% for policy holder, 60% for insurer
Silver plans: 30% for policy holder, 70% for insurer
Gold plans: 20% for policy holder, 80% for insurer
Platinum plans: 10% for policy holder, 90% for insurer
Again, bear in mind that for out-of-network healthcare services, your coinsurance amount could be higher. For more examples of how coinsurance rates can vary, check out various plans’ details at HealthCare.gov or the Medicare plan finder.
The bottom line
Coinsurance and copays both are cost-sharing measures imposed by your health insurance plan. Copays are flat-fee amounts you pay each time you use a service; coinsurance is the percentage of costs you split with your insurer after you’ve met your deductible. People who need more extensive care will likely benefit more from a plan with lower copays and a lower coinsurance amount, even if they pay a higher monthly premium.
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References
Coleman, K. A. (2023). Final contract year (CY) 2024 standards for Part C benefits, bid review, and evaluation. Centers for Medicare & Medicaid Services.
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