Coinsurance vs Copay

Health insurance seldom covers 100% of your healthcare costs. The costs that are not covered are called out-of-pocket expenses for the patient. These are of three types:

  1. Deductible: the amount of money that the patient must spend on her own before insurance benefits start to kick in.
  2. Copay: the amount of money that the patient pays directly to the healthcare provider (doctor, hospital etc.) at every visit.
  3. Coinsurance: The copay is usually too small to cover all of the provider's fees. The insurance company covers a large percentage (usually 60-90%, depending upon the plan) of the remaining fee and the patient is responsible for the balance. This balance is called coinsurance.

Comparison chart

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Coinsurance

Copay

What is it? A percentage of covered benefits that the patient is responsible for paying. A flat amount that the patient pays a healthcare provider (or pharmacy) at every visit.
Typical amounts 10-40% of the provider's bill $15 - $50

edit Video explaining the difference

This video explains deductibles and coinsurance and also talks about copay.

edit Copay, Coinsurance and Deductible Example

Assume that a plan has a deductible of $1,000, $30 copay and 20% coinsurance. The patient makes her first visit to a doctor in that year. Like every visit, she pays a copay of $30 at the time of the visit. Suppose the total bill for that visit is $750. The doctor's office bills the insurance company the balance $720. In this case, the insurance company will not pay any benefits and the entire balance ($720) will have to be paid by the patient because the deductible of $1,000 has not been met.

An illustration of copay, coinsurance and deductibles. Click the picture to expand.
An illustration of copay, coinsurance and deductibles. Click the picture to expand.

Now let's say the patient makes another visit to the doc and the total fee for the second visit is $900. She pays $30 copay again so the doctor bills $870 to the insurance company. By now the patient has already paid $780 out of her own pocket ($750 for the first visit and $30 copay for the second visit). She needs to pay another $220 to meet her $1,000 deductible. So when the insurer receives the $870 bill from the doctor for the second visit, it will ask the patient to pay the first $220 in full to cover her deductible. That leaves a balance of $650 that is eligible for insurance benefits. Because the plan has 20% coinsurance, the insurance company pays 80% of the $650 in benefits, which is $520. So for the second visit, the total out-of-pocket expenses for the patient are $380 ($30 copay + $220 to meet her deductible + $130 coinsurance).

Finally, suppose the patient makes a third visit to the doctor and this time the fee is $1,030. As usual, the patient pays a $30 copay and the doctor sends a bill to the insurer for the remaining $1,000. With 20% coinsurance, the patient is liable for $200 and the insurance company pays the doctor $800.

edit Other considerations

Navigating the health insurance maze can be challenging because there are other variables involved. For example,

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