Coinsurance vs. copay: What's the difference and how do they work?

What’s the difference between a copay and coinsurance?

Copays and coinsurance are out-of-pocket costs you are responsible for before your insurance company pays the rest of the bill. The main difference is how you calculate your share of the cost. A copay is a set dollar amount, while coinsurance is a percentage of the allowed cost of a covered service. 

Let’s break down how copays and coinsurance work and how they differ.

What is a copay for health insurance?

A copay is a fixed dollar amount you pay for a covered health care service. Your plan might charge one copay for a primary care visit and a higher amount for a specialist, urgent care or emergency room visit.

• The copay for in-network primary care physician visits is usually lower than for specialists or out-of-network care. You may also have a copay for prescription drugs.
• Both copays for primary care and specialists usually cost well under $100, although copays vary. Some plans will offer a zero-copay option for office visits.
• You normally won’t pay a copay for annual wellness visits. However, if your doctor performs a service or requests a test not part of a standard wellness visit, you may be responsible for some of that bill.
• Your plan may waive the ER copay if you’re admitted.
• Copays don't apply to the deductible, but do apply to the out-of-pocket max.

What is coinsurance for health insurance?

Coinsurance is the percentage you and the plan pay for the covered medical expenses after the deductible is met and until you reach your out-of-pocket limit. You can think of it as cost-sharing between you and the health insurance company.

Here's an example:

• Let’s say your health plan has 20% coinsurance. That portion of the bill is your responsibility.
• The insurer pays the other 80%.
• If you’re hospitalized, and the bill is $10,000, the health plan would pick up $8,000, and you’ll owe $2,000.

You’ll continue to pay that percentage after your deductible is met until you reach your limit for out-of-pocket expenses. After that, the plan covers 100% of the costs.

What’s the average coinsurance percentage?

Coinsurance amounts differ depending on the type of plan you have. ACA Marketplace plans use four metal tiers, with Bronze plans having the highest coinsurance and Platinum plans the lowest. The tier reflects how plan costs are divided between you and the insurer.

Here are the coinsurance costs for each metal tier:

In addition to the coverage levels, you must decide the type of plan you want. There are differences between HMO, PPO, and POS plans and other options to consider.

What does coinsurance after deductible mean?

Coinsurance after deductible means that your coinsurance amount will apply once you have met the deductible.

So what does 40% coinsurance mean, for example?

• If you have 40% coinsurance after the deductible, you will pay the deductible first and then 40% of the costs.
• If you have a $1,000 deductible and 40% coinsurance, and you have a medical bill for $3,500.
• First, you pay the deductible, which is $1,000. Remaining balance: $2,500
• After the deductible, you pay 40% of your costs. 40% of $2,500 is $1,000.
• The remaining 60%, or $1,500, is charged to your insurance company.

You see the doctor again, incurring a $5,000 bill:

• You have met the deductible, so coinsurance applies.
• Your out-of-pocket this time is $2,000.
• The insurance company pays $3,000.

Copay vs. coinsurance vs. deductible: What’s the difference?

A deductible is the amount you pay for covered care before your health plan starts paying its share of costs. A copay is a fixed amount for a covered service, while coinsurance is a percentage of the cost. Your plan determines when each applies and how much you pay.

Copays and deductibles: Copays generally do not count towards your deductible, and you will continue to pay them even after it is met.

Coinsurance and deductibles: Coinsurance kicks in after the deductible is met. While paying your deductible, you pay 100% of the costs. After that, you’ll pay the percentage of costs set out by your plan until you hit the out-of-pocket max.

How to calculate coinsurance after deductible

To calculate coinsurance after meeting your deductible, subtract the deductible from the covered medical bill, then apply your coinsurance percentage to the remaining amount.

Let’s consider a coinsurance and deductible example. If you have a $500 individual deductible and a 20% coinsurance amount, and you have a $3,000 bill for treatment at your doctor’s office, you’ll pay:

• The first $500 of the bill
• 20% of the remaining bill

Your out-of-pocket cost would be $500 + $500 (20% of the remaining $2,500) for a total of $1,000. Your plan pays $2,000.

What’s the average annual deductible?

According to the Kaiser Family Foundation’s annual report, the average employer-sponsored health insurance deductible for an individual was $1,866 in 2025.

With ACA plans, and sometimes with employer-sponsored plans as well, you may have a selection of plans with different deductibles.

How do you decide which deductible to choose? A Bronze or Silver plan with higher out-of-pocket costs and lower premiums might be a wise choice if you’re young, healthy, and don’t expect to need many health care services over the next year. On the other hand, if you use many healthcare services and don’t mind paying higher premiums in exchange for lower out-of-pocket costs, a Gold or Platinum plan may be a better choice.

What is an out-of-pocket maximum?

An out-of-pocket maximum is the most you pay during a plan year for covered services that count toward the limit. Once you reach the maximum, your plan pays 100% of covered costs for the rest of the plan year. If your plan covers out-of-network care, it may have a separate, higher out-of-network maximum.

What are in-network and out-of-network providers?

In-network providers have a contract with your health plan and agree to negotiated rates for covered services. Out-of-network providers don't have a contract with the plan, so you pay more for their services. Some plans don't cover out-of-network care at all, leaving you responsible for the full cost. 

In-network providers

In-network providers include doctors, hospitals, specialists, laboratories, and other healthcare professionals who have contracts with your health plan. These agreements set negotiated rates for covered services, lowering your healthcare costs.

When you visit an in-network provider, you pay the applicable copay or coinsurance. Coinsurance amounts will go towards your deductible (copays do not apply to the deductible but do count toward your out-of-pocket maximum), and your insurer pays its share of covered services after the deductible is met.

Out-of-network providers

Out-of-network providers don't have contracts with your health plan, so they don't offer the same negotiated rates. As a result, you often pay more for their services. Your coverage depends on your health plan, but if out-of-network care is covered, it’s usually at a higher out-of-pocket cost to you.

What are in- and out-of-network copays and coinsurance?

An in-network copay or coinsurance amount is what you pay when you see a provider in your insurance plan's network, while out-of-network copays and coinsurance apply when you see a provider outside the network.

• In-network copays and coinsurance amounts are usually lower because the plan has made an agreement with the provider
• Out-of-network costs are higher to encourage people to see in-network providers whenever possible
• Not all health plans offer out-of-network coverage, so you'll have to pay the full bill if you see one
• Out-of-network deductibles and out-of-pocket maximums are also usually higher

How copays, deductibles, coinsurance, and out-of-pocket maximums interact

Copays, deductibles and coinsurance determine your share of medical costs, while the out-of-pocket maximum limits what you pay for covered care during the plan year.

Let’s look at an example of how deductibles, copays, and coinsurance work together.

You go to the doctor for back pain. Your primary care copay is $30, so you pay that before seeing the doctor.

Your doctor decides you need an MRI. You schedule an MRI, which costs $2,000.

Your deductible is $1,000, and your coinsurance is 20%. In that case, you’d pay the $1,000 for the deductible portion and 20% of the remaining cost, with the health plan picking up the other 80%.

In this case, you’d pay $1,200 for the MRI on top of the $30 copay.

Your back continues to give you problems, and you have multiple doctor visits and tests that rack up costs. You reach your plan’s $3,000 out-of-pocket max. At that point, your health insurance company will pick up all costs for the rest of the year, except for copays for doctor visits.