If you’ve ever been enrolled in a health insurance plan, chances are you’ve seen the terms “copay” and “coinsurance.” Both refer to the out-of-pocket costs you’re expected to pay for health care services. However, the way they function is very different. It’s important to know how each works so you can get the most out of your plan – and properly set your health care budget for the year.
Learn what makes copays and coinsurance similar, the ways they’re different and how they play into your overall health care costs.
What copays mean for your health insurance
Your copay, also known as a copayment, is a set cost that you pay out of pocket for covered health care services. For instance, the copay for a primary care doctor visit may be set at $20 or a specialist visit at $50. These amounts are defined by your health insurance plan. Typically, they’re paid at the doctor’s office after you’ve received care or at the pharmacy when you pick up your medicine.
After you pay your copayment, your plan will cover the remainder of your health service cost. Copay amounts vary depending on the plan and the type of service you receive, like office visits, specialty services, emergency care and prescriptions.
If you’re already enrolled in a health insurance plan and you want to double check your copayment amounts, you can look at your benefits summary. You can also call your health insurance provider directly or (if your provider offers this) sign into your members account online to review your plan.
Why copays exist
Copays are somewhat of a middle ground between a policy holder and their insurance company. This way, both parties contribute to the costs of services. With a set amount, you know how to budget when it’s time to go to the doctor. However, not all health plans use a copay structure. If that’s something you’re interested in, make sure a copay is one of the features a plan offers when you’re shopping for coverage.
What coinsurance means for your health insurance
Coinsurance is like a copay, except instead of a specific amount that you pay for care, you pay a fixed percentage. If you pay 20% of the cost for a doctor’s office visit, your insurance will pick up the remaining 80%. The higher that percentage is for you, the more you’ll be paying out of pocket. Many plans offer coverage through a series of fixed copays and coinsurance rates.
The differences between copays and coinsurance
Differentiating between copays and coinsurance can be a little tough. Both are ways to total your out-of-pocket costs for services, but there are also finer details to consider. Here’s what you need to know at a glance.
| Copays | Coinsurance | |
|---|---|---|
| What will you pay for services? | A preset dollar amount
(Ex. $30 for a primary care doctor visit) |
A fixed percentage
(Ex. 20% of the cost of a primary care doctor visit) |
| How are these amounts determined? | Set by your plan for specific services | Depends on the cost of a service |
| How much will you pay for services? | Your provider determines a specific copay amount per service
(Ex. $25 for a doctor visit or $50 for seeing a specialist) |
The percentage you pay stays the same no matter what procedure or service
(Ex. 30% for a primary care doctor visit) |
| When will you pay these amounts? | Can either be charged before or after a deductible is met depending on plan | |
| Do these contribute to my out-of-pocket maximum | Yes, in most cases, both amounts will go toward an out-of-pocket maximum | |
How copays and coinsurance relate to deductibles (or don’t)
Often, copays, coinsurance and deductibles are mentioned together even though they’re different. But each is an important cost outlined by your plan.
Your deductible is the specific amount you’re expected to pay out of pocket for covered services during the calendar year. You must pay your deductible before your provider begins contributing to care costs. For example, if you have a $2,000 deductible, you’ll have to pay that amount out of pocket before your plan starts contributing.
Copays and coinsurance typically don't apply to your overall deductible – however, they do contribute toward your out-of-pocket maximum. Some plans don’t charge a copay until after your deductible is met, while others will allow you to start paying your copays and coinsurance amounts right away. It really depends on your plan type and the limitations and guidelines outlined by your insurance provider.
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