Regardless of the type of health insurance you have, it is very important that you know what is the difference between coinsurance and copay. These and other out-of-pocket expenses influence the total amount you will pay for the health care you and your family receive.
- A copay is a set fee you pay for prescriptions, doctor visits, and other types of care.
- Coinsurance is the percentage of costs you pay after you’ve met your deductible.
- A deductible is the set amount you pay for medical services and prescriptions before your coinsurance kicks in.
- 1 What is the difference between coinsurance and copay?
- 2 What is a deductible?
- 3 What are copays?
- 4 What is Coinsurance?
- 5 What are the out-of-pocket maximums?
- 6 Inside the network vs. Off the grid
- 7 What is the difference between coinsurance and copay (Example)
- 8 What is the difference between coinsurance and copay (cinclusion)
What is the difference between coinsurance and copay?
First, to fully understand the difference between coinsurance and copay, you want to know what deductibles are. We will explain it to you right away.
What is a deductible?
A deductible is a set amount you pay each year for your health care before your policy begins to pay for covered services. For example, if you have a $3,000 deductible, you have to pay $3,000 before your insurance fully kicks in.
If you have any dependents on your policy, you will have an individual deductible and a different (higher) amount for the family.
IMPORTANT: If you have a high-deductible health plan, you may be eligible to save money in a tax-advantaged Health Savings Account.
What are copays?
Copayments (or fees) are fixed amounts that you pay to your medical provider when you receive a service. Copays typically start at $10 and go up from there, depending on the type of care you receive. Different copays generally apply to office visits, specialist visits, urgent care, emergency room visits, and prescriptions.
Your copay applies even if you haven’t met your deductible yet. For example, if you have a $50 copay for a specialist, that’s what you’ll pay to see a specialist, whether or not you’ve met your deductible.
Most plans cover preventive services 100%, which means you pay nothing.
IMPORTANT: In general, copays don’t count toward your deductible, but they do count toward your yearly out-of-pocket maximum.
What is Coinsurance?
Coinsurance is the percentage of covered medical expenses that you pay after you have met your deductible. Your health insurance plan pays the rest. For example, if you have an “80/20” plan, that means your plan covers 80% and you pay 20% until you reach the maximum out-of-pocket limit.
Still, coinsurance only applies to covered services. If you have expenses for services that the plan does not cover, you will be responsible for the entire bill. If you’re not sure what your plan covers, check your benefit booklet or call your plan provider.
What are the out-of-pocket maximums?
Any money you spend on deductibles, copays, and coinsurance counts toward your out-of-pocket maximum.. Once you reach your out-of-pocket maximum, your health insurance plan covers 100% of all covered services for the rest of the year. However, premiums don’t count, and neither does anything you spend on services your plan doesn’t cover.
Like deductibles, you can have two out-of-pocket limits: an individual and a family.
Inside the network vs. Off the grid
Some plans have two sets of deductibles, copays, coinsurance, and out-of-pocket maximums: one for in-network providers and one for out-of-network providers.
In-network providers are doctors or medical centers with which your plan has negotiated special rates. Out-of-network providers are everything else, and they are usually much more expensive.
Please note that in-network does not necessarily mean near where you live. You could have a plan in North Carolina and see an in-network provider at the Cleveland Clinic in Ohio.
Whenever possible, be sure to use in-network providers for all of your health care needs. If you have certain doctors and facilities you’d like to use, make sure they’re in your plan’s network. If not, maybe it would suit you
change plans during the next open enrollment period.
What is the difference between coinsurance and copay (Example)
To help explain copays and coinsurance, we’ve provided a simplified example.
Let’s say you have an individual plan (no dependents) with a $3,000 deductible, $50 specialist copays, 80/20 coinsurance, and a $6,000 maximum out-of-pocket limit.
You go in for your annual checkup (free, since it’s a preventative service) and mention that your shoulder has been hurting. The doctor sends you to an orthopedic specialist ($50 copay) for a closer look.
That specialist recommends an MRI to find out what’s going on. The MRI costs $1,500. In this case, you will pay the full amount since you have not yet met your deductible.
Turns out you have a rotator cuff tear and you need surgery to fix it. The surgery costs $7,000. You’ve already paid $1,500 for the MRI, so you still need to pay $1,500 in surgery bills to meet your deductible and coinsurance to kick in. After that, your share is 20%, which in this example is $1,100. In total, your rotator cuff tear will cost you $4,100.
What is the difference between coinsurance and copay (cinclusion)
When you buy a health insurance plan, The policy always specifies premiums (the amount you pay each month to have the plan), deductibles, copays, coinsurance, and out-of-pocket limits. In general, premiums are higher for plans that offer more favorable cost-sharing benefits.
If you’re a healthy and careful person, a low-cost plan with higher limits may be your best option. However, if you expect to have significant health care expenses, it may be worth spending more on premiums each month to get a plan that covers more of your costs.