coinsurance and co-pay

If you’re just as confused about healthcare terms as we used to be, then we imagine you’ll be super confused by the very similar terms co-pay and coinsurance. They sound so much like the same thing, but they’re not at all. 


Simply put, a co-pay (short for co-payment) is a set price you pay for medical care and services; coinsurance is a percentage of costs you pay. Got it? Good! Just kidding. There’s a bit more to it than that, and we’re here to walk you through it all.


Before getting started, though, we’d suggest you familiarize yourself with our other healthcare blogs, particularly the ones on Co-pays vs. Deductibles and Deductibles vs. Out-of-Pocket Costs.


what is a co-pay?


Health insurance plans come with quite a few numbers and costs. The premium is the price you pay monthly for the plan, the deductible is the amount of money you have to pay before your health insurance begins covering costs for you, and the co-pay is a fee you’re charged each time you visit a provider


If you have insurance currently or have ever had health insurance, chances are that you had to pay some sort of a fee to visit a specialist or to pick up your prescriptions, right? That’s a co-pay. It’s a set fee for medical services that are reduced because you have insurance. 


Usually, each provider will have their own co-pay depending on the insurance plan you have. This means that you can expect to pay a different co-pay for visiting a general practitioner, a specialist, or an urgent care provider. You’ll also encounter co-pays when it comes to other services, such as paying for prescription drug costs, physical therapy, and certain lab tests.


do you always pay co-pays?


No, thankfully! Health insurance plans come with an out-of-pocket maximum limit. This means that if that limit is $2,000 per year, you’ll only ever be expected to pay a maximum of $2,000 for healthcare-related services out of your own pocket. So, if you happen to reach that maximum, you won’t have to continue paying co-pays for services, visits, or prescription drugs.


Don’t get this confused with your deductible, though. Unfortunately, co-pays don’t usually count towards meeting your deductible. So, let’s say that you meet your deductible of $2,000, what are you expected to pay? You’ll always have to pay your monthly premium (think of it like your Netflix subscription; it’s recurring) and, depending on your plan, co-pays for things like visits and prescriptions. That is, at least, until you meet the out-of-pocket maximum.


what is coinsurance?


So, we’ve mentioned meeting your deductible above. Let’s assume it’s $2,000 per year and that you’ve met it already. Now, you’ll begin paying coinsurance, which is a percentage of covered medical expenses you’re expected to pay for until you meet your out-of-pocket maximum. If you have a 70/30 plan, for example, you’ll pay for 30% of the cost, and your insurance provider will pay for 70% of the cost.


Here, it’s super important to understand that this only applies to covered services. If you go in to see a specialist or require a special surgery that’s not covered in your plan, you’ll have to pay for 100% of the cost.


This is why it’s important to really compare plans before choosing the right one for you. If you’re willing to pay a higher monthly premium, you’ll likely have a lower deductible and lower out-of-pocket maximum limit to reach. However, this really only makes sense if you’re sure you’ll use enough medical services to meet that deductible. Then, you’ll also want to look at the coinsurance details. If you’re not likely to meet the out-of-pocket maximum limit, but think you’ll meet the deductible, be sure to look for a plan with a better coinsurance ratio for you (one where your provider will cover a larger percentage of the costs).


faqs about co-pays vs. coinsurance


You’ve got questions about the costs of co-pays and coinsurance, and you’re not alone. Here are some of the most common questions about this aspect of health coverage.


Is my co-pay always the same? For each individual service, yes. If a doctor’s visit costs $35, then that fee will be the same every time you visit until you meet your out-of-pocket maximum.


Is it possible to have a $0 co-pay? Yes! It’s not that uncommon, actually. However, this usually only applies to things like primary care visits and generic prescriptions, not larger costs such as surgeries and lab tests.


What about coinsurance? Is it possible to have 100% coinsurance? Yep! It’s not uncommon, either. Quite a few of the most popular healthcare plans (think Anthem Blue Cross and Kaiser Permanente) offer 100% coinsurance for both in-network and out-of-network providers (this means they pay 100% of the costs after you meet your deductible).


How much do you pay after meeting your deductible? That depends on your coinsurance and your out-of-pocket maximum. Check out the definition of coinsurance here. Basically, once you reach your out-of-pocket maximum (not your deductible), you stop paying and your insurance provider covers the rest.


getting help with health insurance


Did we just throw a lot at you? Take some time to process it all, let it soak down into your brain, and then check out our course on health insurance. It’ll help you get the hang of all the confusing terms and numbers you see when applying for healthcare in the US.  

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