What Is Coinsurance?

What is coinsurance?

Coinsurance is a form of cost sharing between you and your health insurance plan.

Unlike a copayment, which is a fixed dollar amount, coinsurance is calculated as a percentage of the allowed cost of a covered healthcare service.

For example, if your health plan requires 20% coinsurance, your insurance company pays the remaining 80% of the covered cost after your deductible has been met.

The percentage you pay depends on the health insurance plan you've selected.

How does coinsurance work?

Coinsurance typically begins after you meet your annual deductible.

For example:

• Your health plan has a $2,000 deductible.
• You have already met that deductible for the year.
• You receive a covered outpatient procedure with an allowed cost of $1,000.
• Your plan requires 20% coinsurance.

In this example:

• You pay $200 (20%).
• Your insurance pays $800 (80%).

Your actual cost depends on your plan's negotiated rates, network status, and covered benefits.

When do you pay coinsurance?

Coinsurance commonly applies to services such as:

• Hospital care
• Outpatient surgery
• Emergency room treatment
• Diagnostic imaging
• Laboratory services
• Specialist care
• Durable medical equipment
• Certain prescription medications

Some healthcare services instead require only a copayment, while others may be covered in full.

Every health plan is different, so it's important to review your Summary of Benefits and Coverage (SBC).

Coinsurance vs. copayment

Although both are forms of cost sharing, they work differently.

Coinsurance

• Percentage of the covered cost.
• Amount varies depending on the total cost of the service.
• Most commonly applies after you've met your deductible.

Copayment

• Fixed dollar amount.
• Usually known before receiving care.
• Often applies to office visits, urgent care, or prescription medications.

Many health insurance plans use both copayments and coinsurance.

Coinsurance vs. deductible

These terms are closely related but serve different purposes.

Deductible

The amount you generally pay for covered healthcare services before your insurance begins sharing many medical costs.

Coinsurance

The percentage of covered healthcare costs you pay after your deductible has been met.

Many people think their healthcare becomes "free" after meeting the deductible. In reality, coinsurance often continues until the annual out-of-pocket maximum is reached.

Does coinsurance count toward your out-of-pocket maximum?

Generally, yes.

For most health insurance plans, eligible coinsurance payments for covered in-network services count toward your annual out-of-pocket maximum.

Once you reach that limit, your health plan generally pays 100% of covered in-network healthcare costs for the remainder of the plan year.

Monthly premiums typically do not count toward the out-of-pocket maximum.

In-network vs. out-of-network coinsurance

Many health insurance plans have different coinsurance rates depending on whether you receive care from providers in your plan's network.

For example:

• 20% coinsurance for in-network providers.
• 40% coinsurance for out-of-network providers.

Some plans also have separate deductibles and out-of-pocket maximums for out-of-network care.

Using in-network providers generally reduces your healthcare costs.

Why this matters

Coinsurance can significantly affect the total cost of medical care, especially for expensive procedures or hospital stays. Understanding how coinsurance works—and how it interacts with deductibles and out-of-pocket maximums—can help you estimate healthcare expenses and compare insurance plans more effectively.