Some of the details of your insurance programs can be confusing unless you’re in the know. With most insurance plans, there is a portion that you pay and a portion that the insurance company pays. This is called cost sharing. Deductibles, coinsurance and copays are different ways you share costs.
A deductible is the amount you pay for health care services before your health insurance begins to pay.
Suppose your plan’s deductible is $1,000. That means for most services you’ll pay 100% of your medical and pharmacy bills until you’ve met the $1,000 threshold. After that, you share the cost with your plan. This is where the difference between coinsurance and copays matters.
Coinsurance is your percentage share of the cost of a health care service after you’ve paid your plan’s deductible.
For example, Melina has just paid her $1,000 deductible. On her next doctor visit, her plan will cover 70% of the cost. Melina pays the other 30%; that’s her coinsurance.
A copay is a fixed amount you pay for a health care service, usually upon receipt of service. It is not uncommon to also have a copay when you get a prescription filled.
When Daniel visits the doctor’s office, he has a copay of $30 after he meets his $1,500 deductible.
Different Plans, Different Ways of Sharing
Whether you have a copay or coinsurance will depend on the kind of insurance plan you have. Different plans have different deductibles, copays, and coinsurance rates. There is no one way that is better; the way you typically consume health care services will determine what combination works best for you.
Source: Consumer Reports