Coinsurance is the percentage of the allowed cost of a covered health care service that you pay after meeting any applicable deductible. If your plan uses 20% coinsurance and a covered in-network service has a $1,000 allowed amount, you would generally pay $200 and the insurer would pay $800 after the deductible has been satisfied. Coinsurance can continue until you reach the plan’s applicable out-of-pocket maximum, and exact rules vary by plan and service.
Key Takeaways
- Coinsurance is percentage-based cost-sharing rather than a fixed dollar charge.
- Coinsurance commonly applies after you satisfy an applicable deductible, although plan designs vary.
- Your percentage is generally applied to the insurer’s allowed amount for covered services, not automatically to a provider’s full billed charge.
- Copays, deductibles, premiums, and coinsurance are different health insurance costs.
- Qualifying coinsurance payments generally count toward an applicable out-of-pocket maximum, which limits covered in-network cost-sharing during the plan year.
What Is Coinsurance?
Coinsurance is a form of health insurance cost-sharing in which you pay a percentage of the cost of a covered service and your health plan pays the remaining applicable percentage.
A common example is 20% coinsurance.
Under a simplified 20% coinsurance arrangement:
- You pay 20% of the applicable allowed amount.
- The insurance company pays 80%, subject to the policy’s benefit rules.
This is sometimes informally described as an 80/20 plan, although the same plan can use different cost-sharing percentages for different services.
For example, hospital care might use one coinsurance percentage while prescription drugs, imaging, or out-of-network services use another.
How Does Coinsurance Work?
Coinsurance usually becomes relevant after an applicable deductible has been satisfied.
Suppose your plan has:
- A $2,000 deductible.
- 20% coinsurance after the deductible.
- An applicable annual out-of-pocket maximum.
Once you have satisfied the $2,000 deductible for services subject to it, you receive an additional covered in-network service with a $1,500 allowed amount.
Your 20% coinsurance:
$1,500 × 20% = $300
Insurer’s simplified share:
$1,500 × 80% = $1,200
In this simplified example, you would owe $300 in coinsurance and the insurer would pay $1,200.
The actual amount can differ if separate copays, exclusions, benefit limits, network rules, or other policy provisions apply.
What Does 20% Coinsurance Mean?
If your plan says you pay 20% coinsurance, that generally means you are responsible for 20% of the applicable allowed amount for that covered service after satisfying any required deductible.
It does not necessarily mean you pay 20% of whatever amount appears on the provider’s original bill.
This distinction matters because health insurers typically negotiate rates with in-network doctors, hospitals, laboratories, and other providers.
What Is the Allowed Amount?
The allowed amount is generally the amount your health plan recognizes for a covered service under its provider arrangement and plan rules.
Consider this simplified example:
| Amount | Example |
|---|---|
| Provider’s billed charge | $2,000 |
| Plan’s allowed amount | $1,200 |
| Your coinsurance | 20% |
| Simplified patient coinsurance | $240 |
$1,200 allowed amount × 20% = $240 coinsurance
For an in-network covered service, the provider generally cannot simply charge you the difference between its full billed amount and the negotiated allowed amount when network rules prohibit doing so.
Out-of-network billing can work differently and may create additional costs.
Coinsurance vs. Deductible
A deductible and coinsurance are both forms of cost-sharing, but they apply differently.
| Feature | Deductible | Coinsurance |
|---|---|---|
| How it is expressed | Dollar amount. | Percentage. |
| Example | $2,000 annual deductible. | 20% coinsurance. |
| When it generally applies | Before applicable post-deductible cost-sharing begins. | Often after the deductible is met. |
Meeting the deductible usually does not eliminate your medical expenses. Instead, it often moves you into the coinsurance phase of the plan.
Coinsurance vs. Copay
A copay is usually a fixed dollar amount, while coinsurance is a percentage.
| Cost-Sharing Type | How You Pay | Example |
|---|---|---|
| Copay | Fixed amount. | $40 specialist copay. |
| Coinsurance | Percentage of applicable allowed cost. | 20% of an allowed imaging charge. |
If a specialist visit uses a $40 copay, you generally know that portion of your cost before the appointment.
If the same visit instead requires 20% coinsurance, the dollar amount depends on the allowed cost of the service.
This makes coinsurance less predictable than a fixed copay.
Coinsurance vs. Premium
Your health insurance premium is the recurring amount charged to maintain coverage.
Coinsurance is what you pay when you actually use certain covered health care services.
For example, suppose your monthly premium is $450.
$450 × 12 months = $5,400 annual premium
Paying $5,400 in premiums during the year does not satisfy a deductible or eliminate applicable coinsurance.
Premiums and medical cost-sharing are separate expenses.
Deductible, Copay, Coinsurance, and Premium Compared
| Term | Simple Meaning |
|---|---|
| Premium | Recurring amount charged to keep your insurance active. |
| Deductible | Amount you generally pay toward certain covered services before applicable plan cost-sharing begins. |
| Copay | Fixed dollar amount for a particular covered service. |
| Coinsurance | Percentage of an applicable covered cost that you pay. |
A Full Deductible and Coinsurance Example
Suppose your hypothetical health plan includes:
- A $2,000 deductible.
- 20% coinsurance after the deductible.
- A covered in-network hospital service with a $7,000 allowed amount.
- You have not paid anything toward the deductible yet.
A simplified calculation would work like this:
Step 1: Pay the deductible
$2,000
Step 2: Determine the remaining allowed amount
$7,000 − $2,000 = $5,000
Step 3: Apply 20% coinsurance
$5,000 × 20% = $1,000
Simplified patient responsibility = $2,000 + $1,000 = $3,000
In this simplified example, the insurer would pay $4,000 of the remaining $5,000 after the deductible.
Real claims can involve several providers, separate copays, multiple benefit categories, or services with different cost-sharing rules.
What Is the Out-of-Pocket Maximum?
The out-of-pocket maximum is another important part of understanding coinsurance.
For applicable health plans, it limits how much you must pay during the plan year for qualifying covered in-network cost-sharing.
Amounts that commonly count toward an applicable out-of-pocket maximum can include qualifying:
- Deductible payments.
- Copays.
- Coinsurance.
Premiums generally do not count toward the out-of-pocket maximum.
Some spending for non-covered or out-of-network services also may not count.
What Happens After You Reach the Out-of-Pocket Maximum?
Once you reach the applicable out-of-pocket maximum, the health plan generally pays 100% of covered in-network benefits for the rest of the plan year under applicable plan rules.
That means qualifying additional coinsurance generally stops for those benefits.
However, you can still be responsible for expenses such as:
- Monthly premiums.
- Services the plan does not cover.
- Certain out-of-network expenses.
- Other charges that do not count toward the plan’s out-of-pocket limit.
Does Coinsurance Count Toward the Out-of-Pocket Maximum?
Qualifying coinsurance for covered in-network services generally counts toward the applicable out-of-pocket maximum.
Suppose you have already paid $5,000 toward your applicable out-of-pocket limit and then owe $600 of qualifying coinsurance.
Your accumulated amount could increase to:
$5,000 + $600 = $5,600 accumulated qualifying out-of-pocket spending
Check your Explanation of Benefits and member portal to see how claims are being credited toward your plan’s limits.
Can Coinsurance Apply Before the Deductible?
Plan designs vary, so there is no universal rule that every service follows the same sequence.
A plan might:
- Require the deductible before coinsurance applies.
- Use copays for some services before the deductible.
- Cover certain preventive care without ordinary cost-sharing when applicable requirements are met.
- Use a separate deductible or cost-sharing system for prescriptions.
The Summary of Benefits and Coverage can help show whether a particular service is subject to the deductible, a copay, coinsurance, or a combination.
Does Every Medical Service Have the Same Coinsurance?
No.
One health plan can use different coinsurance amounts for different categories of care.
For example, a hypothetical plan might use:
| Service | Hypothetical Cost-Sharing |
|---|---|
| Primary care visit | $30 copay. |
| Specialist visit | $60 copay. |
| Diagnostic imaging | 20% coinsurance after deductible. |
| Hospital care | 30% coinsurance after deductible. |
| Certain prescriptions | Separate copay or coinsurance structure. |
These figures are examples only. Actual cost-sharing is determined by your plan.
How Prescription Drug Coinsurance Works
Some health plans charge coinsurance for certain prescription medications instead of a fixed copay.
This can be particularly important for higher-cost drugs.
Suppose a covered medication has an applicable negotiated cost of $2,500 and your plan requires 25% coinsurance.
$2,500 × 25% = $625 hypothetical coinsurance
Your actual cost can depend on:
- The drug’s formulary tier.
- Whether a prescription deductible applies.
- Whether the pharmacy is in network.
- Prior authorization or other coverage requirements.
- The plan’s applicable out-of-pocket limits.
In-Network vs. Out-of-Network Coinsurance
Network status can dramatically affect coinsurance.
A plan may charge lower coinsurance when you use an in-network provider and higher coinsurance for covered out-of-network care.
| Feature | In Network | Out of Network |
|---|---|---|
| Negotiated rate | Generally established through the insurer’s network contract. | Different allowed-amount methodology can apply. |
| Coinsurance | Often lower. | Can be higher where out-of-network benefits exist. |
| Balance billing risk | Generally restricted by network agreements. | Can be a concern where legally permitted and not otherwise protected. |
Some health plans do not provide ordinary out-of-network benefits at all except in specific situations.
Always verify provider network status before scheduled care when possible.
Why Out-of-Network Coinsurance Can Cost More Than It Appears
A higher percentage is not the only reason out-of-network care can cost more.
You can also face:
- A separate out-of-network deductible.
- A higher coinsurance percentage.
- A lower insurer-recognized allowed amount.
- Potential charges above the plan’s allowed amount where permitted.
- Different out-of-pocket accumulation rules.
For this reason, “40% out-of-network coinsurance” does not necessarily mean your maximum responsibility is simply 40% of the provider’s full bill.
How Family Coinsurance Works
Family coverage can include individual and family deductibles or out-of-pocket limits that determine when coinsurance applies and when cost-sharing stops.
For example, one family member may satisfy an applicable individual deductible before the entire family deductible is reached under certain plan designs.
Once the appropriate threshold is satisfied, that person’s services may move into the applicable coinsurance stage.
The exact interaction depends on the plan’s deductible and out-of-pocket structure.
Is Lower Coinsurance Always Better?
Lower coinsurance reduces your percentage of applicable medical bills, but it does not automatically make a plan cheaper overall.
A plan with 10% coinsurance may have:
- Higher monthly premiums.
- A different deductible.
- A different provider network.
- A different prescription formulary.
- A different out-of-pocket maximum.
A plan with 30% coinsurance may have a substantially lower premium.
The better option depends on how much medical care you expect to use and how much financial risk you can comfortably absorb.
A Low-Coinsurance vs. High-Coinsurance Example
Suppose two hypothetical plans cover the same $10,000 allowed hospital bill after each applicable deductible has already been satisfied.
| Plan | Coinsurance | Simplified Patient Share |
|---|---|---|
| Plan A | 10% | $1,000 |
| Plan B | 30% | $3,000 |
Plan A saves $2,000 on this particular hospital bill.
However, if Plan A costs several thousand dollars more per year in premiums, the total annual comparison may be very different.
How Coinsurance Affects People Who Use a Lot of Health Care
Coinsurance can have a major effect on people who expect significant medical services during the year.
This can include someone anticipating:
- Surgery.
- Hospitalization.
- Pregnancy and childbirth.
- Frequent imaging or testing.
- Ongoing specialist treatment.
- Therapy.
- High-cost prescription medications.
Because coinsurance increases as covered costs increase, a seemingly small difference between 10%, 20%, and 30% can become meaningful during an expensive medical year.
How Coinsurance Affects People Who Rarely Need Medical Care
If you use very little medical care, you may never reach the stage where significant coinsurance applies.
For example, if most of your annual care consists of covered preventive services and a small number of visits using fixed copays, a lower coinsurance percentage may provide little financial benefit during that year.
However, insurance is designed partly for unexpected events.
A major injury, hospitalization, or diagnosis can quickly make the coinsurance provisions important even for someone who is usually healthy.
How to Estimate Your Coinsurance Before Care
You may be able to estimate your potential cost using the following process:
- Confirm the provider is in network. Network status can change the cost significantly.
- Check your deductible progress. Determine how much remains before coinsurance applies.
- Find the coinsurance percentage. Review the benefit category for the specific service.
- Request an estimated allowed cost. Your insurer’s cost-estimator tools or provider may offer information.
- Apply your percentage. Multiply the applicable amount by your coinsurance rate.
- Check your out-of-pocket progress. If you are close to the maximum, your final responsibility may be lower than a basic percentage calculation suggests.
How to Compare Coinsurance When Choosing a Health Plan
Do not compare health plans using coinsurance alone.
Review the entire cost structure:
- Monthly premium.
- Annual deductible.
- Coinsurance percentages.
- Copays.
- Out-of-pocket maximum.
- Provider network.
- Prescription formulary.
- Drug deductible and cost-sharing.
- Out-of-network benefits.
- Expected medical use.
A plan with a higher premium and lower coinsurance may be attractive for someone expecting expensive care.
A lower-premium plan with higher cost-sharing may work better for someone expecting little care who also has enough savings to absorb an unexpected bill.
Where to Find Your Coinsurance Percentage
Your cost-sharing details should appear in your health plan documents and member resources.
Check:
- Your Summary of Benefits and Coverage.
- Your insurer’s member portal.
- Your plan’s detailed benefit document.
- Your Explanation of Benefits after receiving care.
- Your insurer’s customer service department.
Look at the specific service category because one plan can contain several different coinsurance percentages.
Common Coinsurance Mistakes
- Thinking coinsurance is a copay: A copay is generally fixed, while coinsurance changes with the applicable cost.
- Applying the percentage to the full billed charge: In-network coinsurance is generally based on the applicable allowed amount.
- Assuming the deductible and coinsurance are the same thing: The deductible often comes first, followed by coinsurance.
- Assuming all services use the same percentage: Hospital, specialist, drug, imaging, and out-of-network benefits can differ.
- Ignoring the out-of-pocket maximum: It is critical when estimating risk during a high-cost medical year.
- Ignoring provider networks: Out-of-network care can involve much higher costs than the stated coinsurance percentage suggests.
- Choosing a plan based only on low coinsurance: Premiums, deductibles, copays, networks, and prescription coverage also determine total cost.
Frequently Asked Questions
The Bottom Line
Coinsurance is the percentage of an applicable covered health care cost that you pay, often after satisfying your deductible. If your coinsurance is 20%, you generally pay 20% of the relevant allowed amount while the insurer pays the remaining applicable share.
Your actual costs depend on more than the percentage. Deductibles, provider networks, negotiated rates, copays, prescription benefits, and the out-of-pocket maximum can all affect what you ultimately pay.
When comparing health plans, look at coinsurance as part of the entire annual cost picture rather than in isolation. A lower coinsurance percentage can reduce your share of expensive medical bills, but higher premiums or other plan differences may offset that advantage. Understanding both the percentage and the plan’s allowed-cost rules makes medical expenses much easier to estimate.
Sources
- HealthCare.gov, Coinsurance — Glossary.
- HealthCare.gov, Deductible and Out-of-Pocket Costs consumer guidance.
- HealthCare.gov, Summary of Benefits and Coverage guidance.
- Centers for Medicare & Medicaid Services, health insurance cost-sharing and consumer insurance terminology resources.