Coinsurance vs Copay: What You Need to Know

Written by Ally Streelman

NowRx Pharmacy

Coinsurance vs Copay

Coinsurance vs Copay

It is crucial to understand the difference between a coinsurance vs copay since it will influence the cost you pay for healthcare.

Your insurance plan outlines what your coinsurance and copay are. By looking at your plan, you can better understand exactly what you can expect to pay for medical services, such as prescriptions, doctor visits, and any other type of care you might receive.

However, we know insurance plans can be confusing so we’ll explain what coinsurance and copays are and the difference between them. When you have this knowledge, you can more easily choose the right health insurance for you and your family and more effectively budget for healthcare costs.

What is Coinsurance?

Coinsurance is the percentage of the cost of healthcare services (those your insurance plan covers) that you pay for after meeting your deductible. Your deductible is the amount of money you pay out-of-pocket for healthcare services before your insurance kicks in. 

In other words, coinsurance is your portion of the healthcare bill. But you only have to pay the portion up to your out-of-pocket maximum. Your out-of-pocket maximum is the limit on how much you have to pay for healthcare services in a given year. For 2022, the out-of-pocket limit maximum is $8700 for individuals and $17,400 for families.   

How does coinsurance work? 

To understand how coinsurance works, let’s take a look at an example. 

Say you have surgery and the hospital bill comes out to $10,000. If your deductible is $1000, and it wasn’t met prior to the surgery, and your coinsurance is 20%, you would owe your $1000 deductible and 20% of the remaining bill. 20% of $9000 is $1800. That is your coinsurance payment, and your insurance provider covers the rest.   

As you can see, the stipulations of your coinsurance directly affect how much you will pay for healthcare services. For this reason, it’s crucial to be aware of what your coinsurance is. 

What does 0 coinsurance mean?

Some healthcare plans come with 0 coinsurance. This means that you aren’t responsible for any portion of the bill after your deductible is paid. Albeit rare, there are plans that don’t have coinsurance.

What does 20 coinsurance mean?

Other healthcare plans have 20 coinsurance, sometimes referred to as an 80/20 plan. This means you are responsible for 20% of the bill after meeting your deductible and your insurance provider covers the other 80%. To understand how 20 coinsurance works, see the example above. 

After you meet your out-of-pocket maximum, your insurance should cover 100% of your medical expenses if you are using in-network providers. 

What is a Copay?

A copay is a small, set amount of money you pay for healthcare services at the doctor’s office or hospital, or pharmacy when picking up a prescription. You have probably dealt with a copay if you have ever picked up a prescription or gone to the doctor for a non-routine sick visit.

Copays, or copayments, can be as little as $10 but can be $20, $50, or another amount, depending on your plan. 

Additionally, plans usually have different copays for different services, i.e., $15 for prescriptions and $25 for specialist visits. However, not all services require copays, and some insurance plans don’t have copays at all.  

Typically, the higher the monthly premium for your healthcare plan, the lower the copay. Plans with high deductibles are typically the plans that don’t have copays. 

How do copays work?

Once again, let’s look at an example to learn how copays work.

Let’s say you visit your doctor to discuss potential causes of chronic headaches, and your copay for doctor visits is $40. You would pay the receptionist at your doctor’s office the $40 and your insurance would cover the rest. Say the doctor prescribes you medication. When you pick up your prescription from the pharmacy, you will pay your copay on prescriptions, which might be $20, and your insurance will cover the rest. If in a few months’ time, you have a follow-up appointment to see how the prescription is working, you will again pay the $40 copay at the doctor’s office.

Some preventative services are fully covered by insurance, meaning they require no copay. Some services may only require a copay, even if you haven’t met your deductible and others will require payment in full if you haven’t yet met your deductible.

Do copays count towards the deductible?

Most of the time, copays don’t count toward your deductible. Any other costs you encounter for medically necessary care will count toward your deductible, though. You will also continue to pay your copayment after you have reached your deductible until you reach your out-of-pocket maximum.  

Do you pay copay after out-of-pocket maximum is met?

No, you don’t pay your copay after you meet your out-of-pocket maximum. Since a copay would money paid “out of pocket”, once your out-of-pocket maximum has been met you will not need to pay a copay until the plan resets at the end of the year.

This is one reason why it is important to understand and track what the out-of-pocket maximum is for your specific plan throughout the year.

The difference between copay and coinsurance

Insurance can be complicated, but now that you know how your coinsurance vs copay works, it should hopefully be a bit simpler.

To summarize, the main difference between copay and coinsurance is that one is a set amount you pay at the doctor or pharmacy while the other is a percentage you pay for covered medical services. After you meet your out-of-pocket maximum, you aren’t responsible for copayments or coinsurance. 

To understand the unique details of your coinsurance and copay, review your benefits package or call your plan provider. And for more free tips, information, and resources, subscribe to our newsletter.

Disclaimer: This website does not provide medical advice and the information provided throughout the website, including but not limited to, text, graphics, images, and other material are for informational purposes only. It is not intended to be a substitute for professional medical advice, diagnosis, or treatment and you should always seek the advice of your physician or other qualified health care providers if you have questions regarding a medical condition or treatment or before starting or stopping any healthcare or health related regimen. Do not ever disregard or delay seeking medical advice from a qualified professional because of something you have read on