Understanding Copays vs. Coinsurance

Many people have heard the terms copay and coinsurance, but understanding the difference between the two can help make healthcare costs more predictable and easier to understand.

A copay is usually a fixed dollar amount paid for a specific service, such as a primary care visit, specialist appointment, or prescription. For example, you may pay a $30 copay for an office visit regardless of the total cost of the appointment.

Coinsurance works differently. Instead of paying a fixed amount, coinsurance is a percentage of the cost of a service that you are responsible for paying after meeting your deductible. For example, if your plan has a 20 percent coinsurance, you may pay 20 percent of the allowed cost for a covered service while your health plan pays the remaining amount. Out-of-network care may also result in higher out-of-pocket costs, as coinsurance percentages and allowed amounts can differ from those for in-network services.

Many Health Savings Account (HSA)-compatible health plans work differently from traditional copay-based PPO plans. In many cases, individuals enrolled in HSA-compatible plans may pay the full contracted cost of services until the deductible is met, after which coinsurance may apply.

Knowing whether a service is subject to a copay or coinsurance can help you better estimate your out-of-pocket costs before receiving care. Understanding how your specific plan is structured, including which services apply to copays versus coinsurance, can help you make more informed healthcare decisions throughout the year.

If you’re ever unsure whether a service is subject to a copay or coinsurance, reviewing your Summary of Benefits or contacting your health plan before receiving care can help you better understand your potential out-of-pocket costs.

Health plan benefits, cost-sharing requirements, and coverage vary by carrier and plan. Members should review their plan documents or contact their health plan for information about their specific coverage.