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What is the difference between coinsurance and copayments?

by Lauren Mandel

When you shop for coverage this fall during Open Enrollment, will you know the difference between coinsurance and a copayment?

Both coinsurance and copayments help save health insurance companies money by making the consumer responsible for a portion of a medical bill, but the two health insurance terms have very different definitions.Health Care Reform Changes

A copayment is a specific amount you must pay for a covered health care service. For example, if you take a prescription drug, you may have a $15 copayment when you pick up your medication from the pharmacy. If the total cost of the drug is $75, your insurance company would pay the remaining $60 cost.

Alternatively, coinsurance is the portion of a bill you may be responsible for paying, calculated in a percentage format. For example, if you receive medical care that costs $200 and you’ve met your yearly deductible, your 10 percent coinsurance payment would come out to be $20.

Unlike a copayment (when you know the exact amount you have to pay for a service in advance), coinsurance can be more unpredictable. For example, if you receive an estimate of $2,000 for an upcoming surgery with 20 percent coinsurance, you would anticipate having to pay $400. However, if there are complications during surgery and the procedure ends up totaling $4,000, your expected costs would double.

In general, copayments tend to be a bit more affordable than coinsurance. With coinsurance, your percentage doesn’t go into effect until you’ve reached 100 percent of your deductible. Fixed copayment amounts go into effect immediately. Because of this, people with coinsurance usually end up paying more, especially in the beginning.

In both cases, once you pay your coinsurance or your copayment, your health insurance company is then responsible for paying the balance of your medical bills. It’s important to evaluate your copayment, coinsurance, and plan in general to ensure your coverage fits your needs. If you have questions about your coverage, call 888-322-7557 to speak with a licensed insurance agent.

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