Copay vs. Coinsurance

Understanding the difference between health insurance copays and coinsurance helps you estimate costs and maximize your benefits. Copays provide predictable fees, while coinsurance means you pay a percentage of charges. Learning how each works makes it easier to budget for medical expenses.

What is a Copay?

A copayment, or copay, is a fixed dollar amount you pay when receiving a covered healthcare service after meeting your health plan’s annual deductible.

Common examples include:

  • $20 copay for an in-network primary care doctor visit
  • $60 copay for an urgent care facility visit
  • $15 copay for a generic prescription

Copays are paid at the time of medical service directly to the provider. These predetermined fee amounts make it easy to know your exact out-of-pocket responsibility for certain services.

Plans typically have higher copays for specialists, brand name drugs, and emergency room visits. Having set copay dollar amounts gives you cost predictability.

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How Coinsurance Works

Unlike copays, coinsurance represents the percentage of costs you share with the insurance company for covered healthcare expenses after meeting your deductible.

For example, if your plan has:

  • 30% coinsurance for hospital stays after the deductible
  • 20% coinsurance for durable medical equipment after the deductible

This means you pay 30% of the total bill for any hospital admissions and 20% of the cost for any eligible medical equipment. The insurer pays the remaining percentage.

The benefit of coinsurance is that your part of the cost is proportional based on the total charges rather than a fixed amount. The downside is the dollar amount due from you is variable instead of predictable.

Copay vs. Coinsurance Key Differences

The main differences between copays and coinsurance boil down to:


  • Set dollar amounts ($20, $50)
  • Establish cost predictability
  • Don’t depend on total charges


  • Percentages (20%, 30%)
  • Leads to variable out-of-pocket costs
  • You pay based on a proportion of total allowed charges

Both copays and coinsurance apply after meeting your deductible each year. They determine what you owe for covered care beyond the deductible, up to your out-of-pocket maximum.

How Copays and Coinsurance Work Together

Many health insurance plans incorporate both copays and coinsurance as forms of cost sharing once you meet your deductible for the year.

For example, a plan may have:

  • $50 copay for specialist office visits
  • 10% coinsurance for diagnostic imaging

So you would pay $50 directly to the doctor for a specialist visit. But for a $1,000 MRI, your 10% coinsurance share would be $100. Insurance covers the rest.

Understanding which services have defined copays and which follow coinsurance percentages helps set healthcare cost expectations.

Comparing Copay vs. Coinsurance Amounts

To illustrate the difference in cost exposure, let’s compare potential copay vs. coinsurance amounts for:

Specialist visit:

  • $50 copay
  • 20% coinsurance on a $200 allowed charge = $40 coinsurance

Hospital stay:

  • $250 per day copay
  • 30% coinsurance on a $5,000 total bill = $1,500 coinsurance


  • $20 copay
  • 25% coinsurance on a $100 prescription = $25 coinsurance

In these examples, the copay gives cost predictability while coinsurance results in variable out-of-pocket costs depending on total charges.

How Copays and Deductibles Work

Copays apply to services after you first meet your annual deductible under most plans. But some policies exempt certain services from needing to meet the deductible and just charge a copay instead.

For example:

  • A plan with a $2,000 deductible may charge a $25 copay for primary doctor visits instead of needing to pay the full visit charges until meeting the deductible.
  • A prescription drug plan may exempt Tier 1 generics from the deductible and charge just a $10 copay.

Review your health plan details to understand which specific services are subject to the deductible versus those with defined copay amounts that bypass the deductible.

Do All Plans Have Copays?

Not necessarily. Some health plans rely entirely on deductibles and coinsurance. But copays have become very common for their cost predictability benefits.

Plans more likely to have copays:

  • Employer group health plans
  • HMO plans
  • More traditional PPO designs

Plans less likely to have copays:

  • High deductible health plans eligible for HSAs
  • Short term limited duration insurance
  • Catastrophic plans

Again, check your specific benefits to understand when copays, coinsurance or deductible-only cost sharing applies. The mix of copays vs. coinsurance vs. deductible services can vary greatly by health plan.

How are Copay Amounts Determined?

Insurers consider several factors when setting copay dollar amounts:

  • Provider contracts – Negotiated rates with doctors, hospitals and facilities factor into copay calculations.
  • Utilization – Higher copays on services prone to overuse help steer patients to more cost effective care settings.
  • Market benchmarking – Comparing copay amounts to competitors ensures they stay aligned with norms.
  • Member cost sharing – Copays coordinate with total out-of-pocket maximums to strike an optimal balance.
  • Benefit design – Plans emphasize different areas like urgent care access or generic drug use through tailored copays amounts.
  • Regulations – State or federal rules sometimes dictate maximum copay fees for certain benefits or services.

The goal is to arrive at strategic copays that accomplish plan utilization and cost sharing goals while remaining competitive and affordable for members.

Pros and Cons of Copays

Advantages of copays:

  • Predictable costs – You know exactly what you’ll pay for services like doctor visits or prescriptions at the time of care.
  • Lower risk of surprise bills – Copays avoid variable charges based on allowed amounts. The copay is the copay.
  • Encourage preventive care – A low copay incentivizes members to get annual physicals and other wellness visits.
  • Telehealth flexibility – Copays allow virtual visits to be cost-equivalent to an in-office appointment.

Potential disadvantages of copays:

  • Inflexible cost sharing – Copays don’t reflect overall severity or complexity of a case.
  • Discourage needed care – High copays can dissuade members from seeking beneficial services due to cost.
  • Weak connection to value – Services with high and low value may have an equivalent copay amount.
  • Administration challenges – Providers must collect different copay amounts at point of service for each patient.

Overall, copays provide a predictable cost sharing structure that is easy to understand for health plan members even if less adaptable.

Pros and Cons of Coinsurance

Advantages of coinsurance:

  • Cost sharing aligns to total charges – The health plan member responsibility adjusts based on the total cost of care received.
  • Accounts for complex conditions – More extensive healthcare services result in higher coinsurance amounts.
  • Discourages overutilization – Paying a percentage of costs deters potential overuse of marginal services.
  • Adaptable model – Coinsurance rates can differ by service type, facility setting, medical necessity, and other factors.

Potential disadvantages of coinsurance

  • Unpredictable costs – It’s impossible to know exactly what your responsibility will be until after the care is received.
  • Risk of surprise gaps – If your provider balance bills, you must pay the difference between the insurer’s allowed amount and the provider’s charges.
  • Confusing calculations – Coinsured amounts involve estimating percentages and allowed charges instead of simple dollar copays.
  • Delays reimbursements – Providers often must wait to bill patients their portion of coinsurance costs.

While more complex, coinsurance aligns your cost sharing with overall utilization and service intensity. This comes with trade-offs in terms of cost predictability.

Sample Copay and Coinsurance Scenarios

Here are a few examples illustrating copay vs. coinsurance cost sharing:

Doctor visit

Copay model: $25 PCP visit copay

Coinsurance model: 20% coinsurance, $200 visit allowed amount, you owe $40


Copay model: $15 generic Rx copay

Coinsurance model: 20% on $100 prescription, you owe $20


Copay model: $150 copay per day in hospital

Coinsurance model: 30% of $20,000 bill, you owe $6,000


Copay model: $40 copay per visit

Coinsurance model: 30% of $100 allowed amount per visit, you owe $30

Copays create cost certainty, while coinsurance means you pay based on the total charges for care.

Health Plan Cost Sharing Examples

Typical health plan designs often use copays, coinsurance and deductibles together:

HMO Cost Sharing

  • $30 PCP visit copay
  • $50 specialist visit copay
  • $500 ER visit copay
  • 20% coinsurance on other services after $1,000 deductible

PPO Cost Sharing

  • Deductible applies to all services
  • $25 PCP visit copay after deductible
  • $50 urgent care visit copay after deductible
  • 30% coinsurance on other services after $2,000 deductible

HDHP Cost Sharing

  • Deductible applies to all services
  • 20% coinsurance on all services after $5,000 deductible

These examples illustrate how copays, coinsurance and deductibles work together under different types of health insurance plans.

Other Key Health Insurance Terms

  • Deductible: The amount you pay out-of-pocket before insurance coverage kicks in.
  • Out-of-pocket maximum: Total amount you’ll pay annually for covered care including deductible, copays and coinsurance.
  • Allowed amounts: Maximum charge for a service your insurer deems eligible for coverage.
  • Balance billing: When out-of-network providers bill you for the difference between their charges and what your insurance allowed.
  • In-network: Doctors, hospitals and providers contracted with your health plan to provide care at set rates.

Frequently Asked Questions about Copays and Coinsurance

Do copays count toward my deductible?

Typically no. Copays usually apply after meeting the deductible. But some plans exempt certain copay services from needing to meet the deductible first before copays are charged.

Is coinsurance cheaper than copays?

Not necessarily. Because coinsurance is a percentage, the dollar amounts you owe can sometimes exceed what the copay would have been depending on the total charges. It varies case by case.

Do I have to pay coinsurance and a copay?

You may for certain services, if your plan incorporates both copays and coinsurance cost sharing models. For example, you might pay both a copay and coinsurance for an ER visit.

Can I get an estimate of my coinsurance responsibility?

You can request an estimate from the provider of your coinsurance amount due based on the expected treatment charges. Just know the final amount can vary once actual services get billed.

Do all health plans use copays and coinsurance?

No. Some plans may rely entirely on deductibles and coinsurance. And high deductible health plans with HSA-compatibility often forgo copays altogether in favor of just subjecting services to the deductible and coinsurance.

Knowing how copays and coinsurance work as forms of cost sharing helps you anticipate and budget for medical expenses.

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