What Is Coinsurance? Understand Your Health Insurance Costs

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Coinsurance is the portion of a medical bill you pay after meeting your deductible. It’s a cost-sharing arrangement between you and your insurance company — they cover a percentage of the expense and you pay the rest out of pocket.

While receiving a big bill from your health insurance provider can be frustrating, it’s all the more frustrating when it’s not clear why you owe what you owe. If you have a plan that includes coinsurance, you should understand how sharing costs with your insurer might affect what you ultimately owe.

What Is Coinsurance and How Does It Work?

A coinsurance plan means that your medical expenses and costs will be split between you and the insurance provider at a set percentage after a certain point. Here are key points to know:

• You’ll typically pay premiums each month.
• You’ll also pay for all costs up to your deductible amount.
• After you’ve reached your deductible, you will split any costs with the insurer at the rate you agreed upon when you signed on.

If your health insurance plan includes coinsurance — and most do — it’s important to understand the cost of each appointment or procedure. Why? Because the more expensive the care, the more you’ll pay out of pocket.

Coinsurance vs. Copay: What’s the Difference?

Many health plans include both copays and coinsurance — and they sometimes rely on one instead of the other.

Copays are fixed amounts you pay for each visit or service:

• For example: You might pay $55 for a regular checkup and $300 for an emergency room visit.
• These payments apply per visit, unless you’ve reached your out-of-pocket maximum, which limits what you’ll owe in total for the year.

Even after meeting your deductible, many plans still require copays. However, this can vary so check your plan details to know what applies to you.

In some cases, plans use only copays with no coinsurance after the deductible. That setup can lead to huge savings — especially if you end up needing high-cost care.

Coinsurance vs. Copay: Differences At a Glance

The table below breaks down the differences between coinsurance vs. copays:

Common Coinsurance Percentages

The coinsurance percentage you face varies based on your policy. Some common coinsurance percentages include 80/20, 70/30 and 90/10.

Example: Coinsurance Percentages

You might have a 70/30 coinsurance plan and have already hit your deductible for the year.

When you visit the doctor, you find out that you need an outpatient procedure that will cost $10,000.

Since you’ve hit your deductible, you’ll owe $3,000 for the procedure.

When Do You Start Paying Coinsurance?

Generally, you’ll start paying coinsurance after hitting your deductible for the year. But, it’s important to read the fine print of your particular health insurance policy to confirm all of the rules for your situation.

How Coinsurance Affects Your Out-of-Pocket Costs

If coinsurance applies to your plan, your out-of-pocket costs can vary depending on how much medical care you use throughout the year.

Your plan might have an “out-of-pocket maximum” that places a hard cap on what you’ll owe in a given year.

• For 2025, that cap is $9,200 for individuals and $18,400 for family plans through the health insurance marketplace.
• Once you hit that limit, your insurer covers 100% of covered expenses for the rest of the year.

So even if you have a plan with high coinsurance, your total yearly spending has a built-in limit.

Coinsurance Example

Imagine you have an 80/20 coinsurance plan and have already met your deductible. You find out that you need an outpatient procedure that will cost $10,000.

Here’s how the cost could break down depending on your year-to-date medical spending:

• If it’s the first medical expense of the year:
  • You’ll owe the full $5,000 deductible plus 20% of the remaining costs.
  • Total owed: $6,000
  • Insurer pays: $4,000
• If you’ve already paid out $2,500 for medical care this year:
  • Pay the remaining $2,500 of deductible and then 20% of the next $7,500.
  • Total owed: $4,000
  • Insurer pays: $6,000
• If you’ve already met your deductible:
  • You’ll pay 20% of the costs.
  • Total owed: $2,000
  • Insurer pays: $8,000
• If you have already hit your out-of-pocket max:
  • The procedure will be free for you.
  • Total owed: $0
  • Insurer pays: $10,000

Good To Know

If your health plan has a high out-of-pocket maximum, it’s smart to prepare for unexpected expenses. Consider building an emergency fund or contributing to a health savings account — a tax-advantaged way to set money aside for future medical bills.

While low deductibles and generous coinsurance may sound ideal, don’t forget about monthly premiums — the fixed amount you pay whether or not you visit a doctor.

Plans with lower out-of-pocket costs often come with much higher premiums, so weigh both sides when choosing a plan.

3 Tips for Choosing a Health Plan With Coinsurance

As you consider your health insurance plan options, keep the following tips in mind:

• Consider your health and budget:
  • If you have frequent medical needs, a plan with higher premiums but lower out-of-pocket costs could save you money in the long run.
  • If you rarely visit the doctor, a plan with lower premiums and higher out-of-pocket costs may be more affordable, especially if you don’t use much care.
• Evaluate the total costs:
  • Run the numbers to determine how much a health plan will cost for the entire year.
  • Make sure to include your planned visits and factor in unexpected medical costs.
  • Find a plan that fits into your budget.
• Shop around:
  • Different insurers offer different premiums. Comparing rates across multiple companies can help you find the most budget-friendly option for your situation.

Pros and Cons of Coinsurance

When considering a health insurance plan with coinsurance, it can help to consider the advantages and disadvantages.

Pros

• Can lower your monthly premiums.
• Insurer will cover some of your costs during a medical event.

Cons

• Costs can be unpredictable in a medical emergency.
• Higher financial risk if you need a major procedure.

Joel Anderson contributed to the reporting for this article.

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