Coinsurance – What it is and How it Works

Health insurance has various types of costs that affect the amount you pay in a year. And one of these types of costs is coinsurance. Coinsurance is the amount you pay for health services when you get to your health plan deductible.

Coinsurance - What it is and How it Works

Typically, it operates on a fixed ratio. This means you will be charged the same percentage of the total bill every time. In this blog post, we will explore what co-insurance is all about and how it works.

How Does It Work?

Coinsurance is what you pay after you’ve used up your deductible on medical stuff, once you have hit your deductible, you split the costs with your insurer through coinsurance until you hit your out-of-pocket limit.

You usually pay a smaller part of the bill compared to your insurer. For instance, if your coinsurance is 20%, you pay that once you reach your deductible, and your insurer will pay the 80%. Coinsurance is just one part of how you pay for health insurance. There’s also the premium, copay, and deductible. And every one of the plans has a maximum amount you’ll pay out of pocket in a year. Once you have reached the limit, your insurance company covers everything.

But keep in mind that things like premiums, out-of-network care, and stuff your plan doesn’t cover don’t count toward your out-of-pocket max. For Affordable Care Act plans, the limit is $8,700 for singles and $17,400 for families. Understanding how this cost works is an important step when you want to choose the best health insurance policy for you and your budget.

How do I figure out Coinsurance Costs?

Your health insurance plan will determine the amount you pay for coinsurance. Health insurers share the financial obligation of your healthcare, depending on its payment structure and the plan. Just like I have mentioned above, if you are responsible for 20% of the cost of health services through coinsurance, first you pay your deductible. Then the remaining balance will be split between you and your health plan based on the policy terms. In this event, you will be responsible for 20% of the costs, and the health plan will be responsible for 80% of the bill.

After I reach my deductible, how much is Coinsurance?

This depends on your health plan. If you have an in-network procedure coming up, that will cost $25,00, and the health plan has a $5,000 deductible, 25% coinsurance, and a $7,5000 out-of-pocket maximum. For these terms, you will have to handle the $5,000 deductible before the insurer picks up its coinsurance share. This means, after you pay your deductible, the balance on the bill will be $20,000.

You then pay your policy’s 25% coinsurance up to the $7.5000 out-of-pocket maximum. In this event, you will have to pay an extra $5,000 because that’s 25 percent of $20,000. However, once you reach the out-of-pocket limit of the year, your insurer will pay 100% for your healthcare services.

Does Out of Network have Coinsurance?

Just so you know, out-of-network care works in a different way than in-network care. If you go to a doctor or hospital that’s not in your insurance network, it can cost you more. Depending on your plan, your insurance might not contribute to any of the bills.

With a PPO (Preferred Provider Organization) plan, you can go out of network, but it’ll cost you more than staying in-network. However, HMOs (health maintenance organizations) and EPOs (exclusive provider organizations) usually don’t cover out-of-network care at all.

HMOs and EPOs might be cheaper, but you’re on your own for out-of-network costs. Make sure you check your policy so you can understand the full terms and conditions of your health care.


  • Out-of-network care is pricier, and your insurance might not help in contributing anything.
  • Even with a PPO, your out-of-network care coinsurance will be more than the normal network coinsurance obligation.

Keep in mind that coinsurance applies no matter what type of insurance you go for. The key is whether you are paying out-of-network or in-network coinsurance. Since they both have different treatments and thus have individual costs associated with them.

What is the Difference between Copay and Coinsurance?

Copays and coinsurance are similar cost-sharing features that health insurers make use of to spread risk among policyholders. Although they are often mistaken for one another, they have their differences.

Just like I have mentioned above, coinsurance is the percentage cost that you will have to handle when you receive health care services. You pay this cost after you have spent over your deductible. And the health plan picks up the rest of the cost until you get to your out-of-pocket maximum.

A copay is the amount you pay at the time of a visit, such as a specialist or primary health care appointment. The exact cost depends on the health plan. However, it may be $60 to see a specialist and $30 for a primary health care visit.

Which is more important? Coinsurance or the health plan’s deductible

Both of them are very important to your wallet. However, most people may not reach their deductible, so they don’t have to think about coinsurance. A deductible is the amount you must get for your health care costs before your health plan insurer pays a percentage. Although your insurer splits this cost with you, coinsurance is an additional payment you will have to make.

Ensure that you pay attention to your plan’s deductible because this tells you what you have to pay for before your coverage comes in and you pay the bills. If you have a higher deductible, it means you will pay lower premiums. That may not be the best option if you later need expensive and serious care. So, ensure that you weigh your deductible when considering the best health insurance plan for yourself.