What Is Coinsurance? –Forbes Advisor

What Is Coinsurance?

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Health insurance has multiple types of costs that affect how much you pay during the year. One type of cost is coinsurance, which dictates how much you pay for health services after you reach your health plan’s deductible.

How Does Coinsurance Work?

Coinsurance is the percentage of a health services bill that you pay after exceeding your deductible. A deductible is the amount you pay each year for eligible medical services and medications before your health plan starts to share your health treatment costs.

Once you reach your deductible, you split the costs with your health insurance company through coinsurance until you reach your out-of-pocket maximum.

Think of it as splitting the bill, but you usually pay much less than the health insurer. Your health plan’s coinsurance may be 20%. In that case, you pay that percentage of the bill once you reach your deductible and the health insurance company pays 80%.

Coinsurance is one way that you pay for health insurance. Other ways include the premium, copay and deductible. Health plans also typically have out-of-pocket maximums, which is the most you’ll pay out of pocket for health care services over a year. Once you reach your plan’s max, the health insurance company covers 100% of health service bills.

Premiums, out-of-network care and non-covered health care aren’t usually factored into your out-of-pocket maximum. The maximum out-of-pocket limit for Affordable Care Act marketplace plans is $8,700 for single coverage and $17,400 for a family.

How Do You Figure Out Coinsurance Costs?

The amount you pay for coinsurance depends on your health insurance plan. Health insurance companies share the financial obligations for your healthcare, depending on the plan and its payment structure.

For example, if you’re responsible for 20% of health service costs through coinsurance, you first pay your deductible, and then the remaining balance is split between you and your health plan based on the terms of your policy. In this case, you handle 20% of the costs and the health plan pays 80% of the bill.

Here are two examples.

20/80 coinsurance example

30/70 coinsurance example

How Much is Coinsurance After You Reach Your Deductible?

The amount of coinsurance depends on the health plan.

Say you have an in-network procedure coming up that will cost $25,000 and your health plan has the following structure:

Under these terms, you would have to handle the $5,000 deductible before the insurance company picks up its share of coinsurance. That means the balance on the bill would be $20,000 after you pay the deductible.

You then pay the 25% coinsurance of your policy, up to the plan’s $7,500 out-of-pocket maximum. In this case, you would pay another $5,000 because that’s 25% of $20,000. But once you reach that out-of-pocket max for the year, your health plan pays 100% for health care services.

Does Out-of-Network Care Have Coinsurance?

Out-of-network care works much differently than in-network care. If you opt to go to an out-of-network provider or facility, your health plan may not pick up any of the charges, depending on your type of health insurance.

A preferred provider organization (PPO) plan generally lets you get care out-of-network, but at a higher cost than if it was in-network care. A health maintenance organization (HMO) and exclusive provider organization (EPO) plan typically don’t pay for care outside of your provider network. In that case, you would have to pay for all of the out-of-network medical costs.


HMOs and EPOs are usually cheaper health insurance plans than a PPO, but lower premiums come with having to shoulder out-of-network costs without any help from the health insurance company. Be sure to take your time in reviewing your policy, so you fully understand the terms and conditions of your health care.

Here are a couple of points to keep in mind when thinking about out-of-network care:

  • Out-of-network care will likely cost more than in-network care and an insurance plan may not contribute anything.
  • Even if you’re in a PPO, your out-of-network coinsurance will likely be greater than your usual in-network coinsurance obligations.

All in all, coinsurance applies no matter what kind of insurance you have. The key is whether you’re paying in-network coinsurance or out-of-network coinsurance, since both entail different treatment and thus have different costs associated.

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Coinsurance Frequently Asked Questions

How is coinsurance different from a copay?

A copay is the charge you pay at the time of a visit, such as a primary care appointment or to see a specialist. The exact copay varies by health plan, but it could be $30 for a primary care visit and $60 to see a specialist.

Coinsurance is a percentage of costs you’re responsible for when you receive health care services. You pay coinsurance after you spend over your deductible with the health plan picking up the rest of the costs until you reach your out-of-pocket maximum.

How is coinsurance different from a deductible?

A deductible is what you pay for health care services over a year before the health plan kicks in money for your care.

This applies regardless of whether you are going for a simple doctor visit or headed into a more complex surgical procedure. For example, if your policy has a $2,500 deductible, you need to pay up to that amount before your insurance policy’s coverage kicks in to pay its share.

Once you reach the deductible, coinsurance kicks in and you pay a portion of costs.

Is a health plan’s deductible or coinsurance more important?

Both your health plan’s deductible and coinsurance are vital to your wallet, but many people may not reach their annual deductible so they don’t have to worry about coinsurance.

A deductible is the amount you must reach for health care costs before your health plan pays a percentage. Even though your insurance company splits this cost with you, coinsurance is still an additional payment you will need to make.

Pay close attention to your plan’s deductible because this dictates what you have to pay before your insurance coverage will kick in and help foot the bill. When you have a higher deductible, it typically means that you pay lower premiums. That may not be the best bet if you end up needing serious and expensive care, so be sure to weigh your deductible heavily when considering the best health insurance for you.

Make sure to check out your plan’s out of pocket maximum, too. That will tell you the most you may pay for in-network health care services over a year.


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