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What Is Coinsurance?

Are you confused about coinsurance and how it differs from your copay or deductible? It can be hard to understand all of the different terminology that comes along with health insurance plans. In fact, according to Forbes, over three-quarters of Americans who have health insurance don’t know what the term coinsurance means.

Here, we’re breaking down the definition of coinsurance and how this concept compares to other words or phrases commonly heard with health insurance.

What is coinsurance?

Coinsurance is the percentage of a medical bill that you’ll pay after you exceed your deductible for the year. Your coinsurance applies to any services that are covered by your health insurance plan (if you incur medical expenses that fall outside your coverage, you’ll have to pay the entire bill).

One good example of how coinsurance works is the 80/20 split, which is common among health insurance plans. In this case, after you meet your deductible for the year, any additional medical expenses would be split 80/20: Your health insurance company would pay 80% of the cost, and you’d be responsible for the additional 20%.

If you reach your out-of-pocket maximum for the year, you will no longer owe coinsurance on covered medical services. An out-of-pocket maximum is the largest amount you have to pay for covered healthcare services in a calendar year. Once you’ve reached your deductible, you can reach your out-of-pocket max through copays and coinsurance, and then your insurance plan will pay 100% of your covered medical costs for the remainder of the year. The out-of-pocket limit for a Marketplace individual plan is $9,100 or less in 2023.

Coinsurance vs. deductible

Your deductible is the amount you will pay for healthcare services before your health insurance plan starts to pay. It resets at the beginning of each calendar year. Each insurance plan has a different deductible. In 2021, the average deductible for an individual plan was $2,285. Whatever the number, your coinsurance will not kick in until you’ve paid this amount for medical services.

Both your deductible and coinsurance are important numbers to understand — but since many people don’t have enough medical payments to reach their annual deductible, coinsurance doesn’t even come into the picture.

Coinsurance vs. copay

Your copay is a set dollar amount that you have to pay at the time of service — for example, a $30 cost when you visit your doctor or a specialist for a check-up. You will owe a copay regardless of whether you’ve met your deductible or not. Sometimes, you might owe a copay and coinsurance on the same procedure or service.

Your coinsurance, on the other hand, is the amount you’ll pay for a medical bill after surpassing your deductible. Coinsurance doesn’t come into play until after you’ve met your deductible for the year by paying a certain amount of out-of-pocket costs.

While your copay amount can vary depending on the doctor you’re seeing or the procedure you’re having, your coinsurance is a set percentage that applies to everything. Sometimes your coinsurance is the same across the board. In other cases, it might change based on the service you’re receiving, like 10% for medication or 20% for a doctor’s appointment.

What else to know

Before purchasing a health insurance plan, you’ll know the amount of the deductible, copays, coinsurance, and out-of-pocket max. Generally, plans with lower monthly premiums have a higher coinsurance amount, while plans with high monthly premiums have lower coinsurance. Low coinsurance is often a better choice for people who need ongoing medical care — for example, for a chronic illness.

Finally, if your healthcare costs (such as copays, coinsurance, and premiums) surpass 7.5% of your adjusted gross income, the amount over 7.5% can be deducted from your taxes.


  • Deductible: A certain dollar amount that you must reach each year before your health insurance will kick in to provide coverage.
  • Copay: A set dollar amount that you owe at the time of a visit or service.
  • Coinsurance: Once you’ve reached your yearly deductible, the percentage of a medical bill that you’ll pay (split with your health insurance plan).
  • Out-of-pocket max: The most you have to pay for covered health services in a year. After reaching this, your insurance plan pays 100% of covered medical services.