Coinsurance is a percentage of the cost of a covered healthcare service that you pay after you have met your insurance plan’s deductible. It represents the share of the medical expenses you are responsible for, while your insurance company pays the remaining percentage. For example, in a common 80/20 coinsurance plan, the insurer pays 80% of the covered costs, and you pay 20% after the deductible is met
. Coinsurance differs from a copay, which is a fixed dollar amount you pay at the time of service regardless of whether your deductible has been met. Coinsurance only applies after the deductible is satisfied and is calculated as a percentage of the allowed amount for the service
. Here is how coinsurance works in practice:
- You pay 100% of costs until your deductible is met.
- After meeting the deductible, you pay a fixed percentage (coinsurance) of covered services.
- Your insurance pays the remaining percentage.
- This cost-sharing continues until you reach your out-of-pocket maximum, after which the insurer typically pays 100% of covered costs
For example, if your plan has 20% coinsurance and you receive a medical bill of $1,000 after your deductible, you would pay $200, and your insurance would pay $800
. In summary, coinsurance is a cost-sharing mechanism in health insurance where you pay a percentage of covered medical expenses after meeting your deductible, differing from copays which are fixed fees paid at the time of service
