Employee Benefits
Coinsurance is the percentage of covered health costs you're responsible for paying after you've met your deductible. Typically, coinsurance operates on a fixed ratio, meaning you’ll always be charged the same percentage of the total bill each time. Let’s explore how coinsurance works and how it compares to other out-of-pocket expenses.
When you file a health, dental, or vision insurance claim after you’ve reached your out-of-pocket annual deductible, you may be responsible for a portion of the total bill in the form of coinsurance. Many insurance companies operate on an 80/20 coinsurance plan.
Simply put, 80/20 coinsurance means your insurance company pays 80% of the total bill, and you pay the other 20%. Remember, this applies after you've paid your deductible.
Insurance companies list percentages in coinsurance plan descriptions (e.g., 20% coinsurance, 0% coinsurance, etc.) to refer to the part of the bill that you, the insured party, will be responsible for. Some of the most common percentages are:
To get a better understanding of how to calculate coinsurance costs, check out this breakdown:
Let’s say Gloria has an 80/20 payment structure and needs to see her doctor for a non-preventive service. If the cost of her visit is $250, and she’s already met her deductible, this is how Gloria would calculate her responsibility.
Cost of doctor visit |
Gloria’s responsibility (20% of the total cost of the visit) |
Insurer's responsibility (80% of the total cost of the visit) |
$250 |
$50 |
$200 |
Deductibles are the initial amount you’re required to pay before coinsurance kicks in. For example, if you have a $2,000 deductible, you’re responsible for paying the full $2,000 for the year before your insurance will help cover a portion of the costs. After meeting your deductible, you may be responsible for paying coinsurance.
Keep in mind that certain preventive services may not be subject to a deductible, such as routine check-ups, vaccines, and screenings.
Copayments (or copays) are fixed amounts you pay for specific services. These services may also be subject to coinsurance, but unlike coinsurance, copay amounts are predetermined and don’t vary based on the cost of the service.
For example, you might have a $20 copay for a non-preventative doctor visit, meaning you pay $20 regardless if the total cost for the visit is $100 or $300. However, a 20% coinsurance fee would vary depending on the cost of the service.
Another key difference between coinsurance and copays is that coinsurance applies only after you've met your deductible, while a copay can apply both before and after you've met your deductible.
Coinsurance payments contribute to your out-of-pocket maximum. That means you’ll pay your coinsurance percentage until you reach your out-of-pocket maximum. Once you reach the maximum limit, you stop paying coinsurance, and your insurance company covers 100% of the remaining costs for covered services.
When it comes to out-of-network care, the coinsurance rate may be higher than what you’d pay for in-network care. And in some cases, your insurance provider won’t foot any of the costs for out-of-network providers, meaning you’ll be responsible for the entire bill.
Review your insurance policy to understand the specific coinsurance rates for in-network and out-of-network care.
Knowing what coinsurance is and how it works can make a huge difference in understanding how your insurance policy is used and help you better plan for the future of your health. Before enrolling in a plan, be sure to carefully review its coinsurance rates and policies so you won’t be surprised when your billing statement arrives.
