Copay vs Coinsurance: What's the Difference?

Both are ways you share the cost of care with your health plan. The difference is in how the amount is set. A copay is a fixed amount. Coinsurance is a percentage.

A copayment is a fixed amount you pay for a covered health care service. Coinsurance is the percentage of the cost of a covered health care service that you pay. Some plans use a copay for certain services, such as a doctor visit, and coinsurance for others, such as a hospital stay or a test.

The table below compares how they usually work. It describes process only. Your plan can set its own rules, so treat each row as a starting point.

A copay is a set amount for a specific covered service. Your plan may list a different copay for a primary care visit, a specialist visit, urgent care, and each tier of prescription drugs. The amount stays the same for that service, no matter how much the provider charged.

Whether the copay applies before or after your deductible depends on the plan. The sample Summary of Benefits and Coverage (SBC) published by the U.S. Department of Labor shows a plan that covers primary care and preventive services before the deductible is met. For some other services in that sample, a copay or coinsurance may apply once you are past the deductible.

Copays can also differ by network. That same sample lists one column for network providers and another for out-of-network providers, and labels the out-of-network column as the one where you pay the most.

Coinsurance is a percentage of the allowed amount, which is the maximum amount your plan will pay for a covered service. It is not a percentage of whatever the provider happens to charge. In most cases it applies after you have met your deductible.

Here is a hypothetical example. The numbers are made-up and round, only to show the math. They are not from any real plan. Imagine a covered service with a $1,000 allowed amount and 20% coinsurance, on a plan that does not cover this service before the deductible.

The deductible is what you pay for covered services before the plan begins to pay. The sample SBC explains it this way: generally, you pay all the costs from providers up to the deductible before the plan begins to pay.

The same sample adds that a plan can cover some items and services before you meet the deductible, though a copayment or coinsurance may still apply. That is why the SBC asks, "Are there services covered before you meet your deductible?" For preventive care, the sample says certain preventive services are covered without cost sharing, even before the deductible.

Some plans also have separate deductibles for specific services. The sample lists separate deductibles for prescription drugs and for occupational therapy. Our article on the deductible and the out-of-pocket maximum covers deductibles in full.

An out-of-pocket maximum, also called an out-of-pocket limit, is the most you have to pay for covered services in a plan year. According to the federal glossary, after you spend that amount on deductibles, copayments, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits.

So on most job-based and individual plans, the copays and coinsurance you pay for in-network care count. Plans can vary, though. The sample SBC lists copayments for certain services among the things that do not count toward the out-of-pocket limit, along with premiums, balance-billing charges, and health care the plan does not cover.

The sample also shows a separate out-of-pocket limit for out-of-network providers. If you see out-of-network providers, ask how your plan tracks that spending.

Start with your Summary of Benefits and Coverage. The Department of Labor describes the SBC as a uniform template that uses clear, plain language to summarize key features of the plan, such as covered benefits, cost-sharing provisions, and coverage limitations.

The Department of Labor says plans must give you the SBC at certain points, including with application materials, at renewal, at special enrollment, and on request. If you have not seen yours, you can ask your plan or, for job-based coverage, your employer's benefits contact.

In the sample, a chart lists common medical events and services, with what you pay at a network provider and at an out-of-network provider. A last column lists limitations, exceptions, and other important information, such as whether preauthorization (approval from the plan before you get the service) is required.

If you are comparing plans, a licensed Prime Health Consultants advisor can walk through the cost-sharing questions above with you, so you understand how copays, coinsurance, the deductible, and the out-of-pocket maximum would apply to the care you use. They explain things in English and Spanish.

If a bill does not match what you expected, an advisor can explain the claims and appeals process and guide you through it when necessary. That is guidance only, not representation. This article is general education, not legal advice.