Copays vs. Coinsurance

health insurance medical claim form, with medical bills
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