How do copays, deductibles, and coinsurance work together?

Now that you know about copays, deductibles, and coinsurance, we can delve a little deeper into how they work together. Each time you see a healthcare provider, you will likely be required to pay a copay, the entire amount, or the coinsurance amount, depending on the type of health insurance plan you have. For example, when you go to the doctor, they may file a claim with your insurance company and charge you a copay that will be applied toward your deductible. This will continue until you reach your specified deductible amount. Once you’ve hit that amount, coinsurance comes into play. You’ve already met your out-of-pocket costs, so whatever your specified coinsurance ratio/percentage is, you will now be responsible for that amount of any insurance bills moving forward until you reach your out-of-pocket maximum, or your policy runs out or renews (typically at the end of the calendar year).

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What is Coinsurance?

2 min read Sep 26, 2022

What is Coinsurance?

Coinsurance refers to the portion of your insurance bill that you're responsible for paying after you've met your deductible. Typically, coinsurance operates on a fixed ratio, meaning you will always be charged the same percentage of the total bill each time.

How does coinsurance work?

When you file a health, dental, or vision insurance claim after you’ve reached your out-of-pocket annual deductible, you are responsible for a portion of the total bill. Most often, insurance companies operate on an 80/20 coinsurance plan.

Understanding coinsurance documentation

Coinsurance amounts are often represented by a ratio or percentage, outlined in your insurance policy documents. For example, in the typical ratio format of an 80/20 coinsurance plan, the first number in the ratio, 80, refers to the portion your insurance company will pay, and the second number, 20, represents the percentage of the cost you will be responsible for.

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. The most common percentages are:

20% coinsurance: you are responsible for 20% of the total bill
100% coinsurance: you are responsible for the entire bill
0% coinsurance: you aren’t responsible for any part of the bill — your insurance company will pay the entire claim

Coinsurance vs. Copay vs. Deductible

Outside of your premium payments, your biggest insurance-related expenses are coinsurance, copays, and deductibles. We’ve already covered what coinsurance is, but the other two are:

Copay: The flat out-of-pocket fee you pay for services
Deductible: The set amount you’re expected to pay for services before your insurance covers a larger portion of the costs.

Coinsurance—what’s the bottom line?

Coinsurance is a cost-sharing system insurance companies use in which you are responsible for a portion of your total bill, but only after your annual deductible is met. Knowing what coinsurance is and how it works can make a huge difference in understanding how your insurance policy is used and can help you better plan for the future of your health.

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This article is intended to provide general information about insurance. It does not describe any Metropolitan Life Insurance company product or feature.