Coinsurance vs Copay: Difference and Comparison

People get confused between certain terms when it comes to experiencing the benefits of health insurance.

Especially when the terms Coinsurance and Copay are placed in front of them, they get flustered very fast when they don’t know the difference between them.

Knowing these words is pretty important for better understanding your healthcare costs.

Key Takeaways

  1. Coinsurance requires patients to pay a percentage of healthcare costs, whereas copay involves a fixed amount.
  2. Coinsurance costs vary depending on the medical bill, while copay amounts remain consistent.
  3. Patients encounter copayments for routine visits, whereas coinsurance applies to specialized treatments or procedures.

Coinsurance vs Copay

Coinsurance is a term that refers to the percentage of the amount that a person has to pay for health insurance after paying deductibles. Copay refers to the fixed amount that is needed to pay for a doctor’s appointment, medicines, prescriptions, and other medical facilities or services. 

Coinsurance vs Copay

Coinsurance is the percentage of the amount you pay for health care after your deductibles have been satisfied.

For example, let’s assume that your medical insurance plan’s allowed amount for the doctor’s appointment is $100. and your coinsurance is 20%.

If you have already paid your deductibles beforehand, then you have to pay 20% of $100, and the insurance company pays the rest.

A copay is a fixed amount paid by the insured for specific services not covered by the insurance policy. Numerous health insurance plans consider copay as their standard point.

Many times, copays are being charged by the insurance providers for certain services like doctor’s appointments or prescribing medicines, etc.

Comparison Table

Parameters of ComparisonCoinsuranceCopay
DefinitionIt is the percentage of cost that has to be paid by the insured.Copay is a fixed payment done by the patients for their medical services.
Process of paymentIt is paid after the insured pays the deductible amount.The insured needs to pay a certain portion of payment every time they visit the doctor.
AdvantageWhen the out-of-pocket maximum is achieved, the company bears all the costs for the rest of the year’s plan.Co-pays reduce the periodic expenses by lowering the payment of premium.
Risk factorCoinsurance is risky as the percentage of cost is determined and not the actual cost.Copay is risky as people end up spending more money on treatments than is required.
PurposeIt lets the insured share the medical expenses with their insurance providers.It is a common form of sharing cost under various health insurance policies.

What is Coinsurance?

Coinsurance is the fixed percentage of the expense an insured has to pay against their medical claim after; they’ve paid their deductibles.

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Under the 80/20 slit of the Coinsurance plan, 20% of the medical expenses are meant to be paid by the insured, whereas the insurer pays the remaining 80% of the cost.

The term coinsurance is only applied when the insured has paid the out-of-pocket deductible amount.

Oftentimes’ many health insurance policies and plans have an out-of-pocket maximum that restricts the total cost that has to be paid by the insured for the given period of care.

For example, let’s assume that you need a lot of serious treatments, and your allowable costs are $20000 with a deductible amount of $5000, an out-of-pocket maximum of $10000, and coinsurance is 20%.

First, You must pay your deductible amount, i.e., $5000.

After the deductible is being paid, you will need to pay 20% of the remaining cost, i.e., 20% of $15000, that is $3000 (your Coinsurance), and the rest will be taken care of by the insurer.

So the total of your out-of-pocket cost will be deductible$5000 plus Coinsurance $3000 will be $8000.

If the final expense of your out-of-pocket is more or equal to your out-of-pocket maximum, your insurance company will be responsible for paying for all the services that are covered for the rest of your year’s plan.

What is Copay?

A Copay is referred to the fixed amount of out-of-pocket cost that is paid by an insured for the services that are covered.

Many times, for services like doctor’s consultations, appointments, or prescriptions of medicines, insurance companies charge co-pays.

Unlike coinsurance, Copay is the stated amount that is paid at the service time. Some specific medical services ask for a Copay, and not all.

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For example, an insurance company would not ask for a Copay for annual physical check-ups. The fees of Copay are not fixed and differ among the insurers but are $25 or less than that.

For example, let’s assume an insurance plan that has co-pays will need the insured paying $25 per doctor visit or $15 per prescription of drugs.

The insured may need to review the terms of their insurance plan to determine their copayment options.

If the copay option is available, it will have various payments for visits of physicians, ER visits, medical specialist visits, and other medical facility services.

For out-of-network providers, insurance companies charge a high amount of Copay, so it is important to know the co-pay charges that out-of-network providers charge, especially when you are visiting frequently.

The copay amount is not fixed and changes annually, so it is recommended to check with your insurance providers to know about the cost and expense at the beginning of the new year.

Main Differences Between Coinsurance and Copay

  1. Coinsurance is the percentage of the amount paid, whereas a copay is a fixed amount of fees paid by the insured.
  2. Coinsurance secures the insured against a large sum of claims, whereas copayments help people in major cities where the treatment cost is very high.
  3. The coinsurance percentage of the amount remains unchanged, whereas the co-pays vary from person to person.
  4. Under coinsurance, the policyholders are needed to satisfy their deductibles before the coinsurance plan is put forward, whereas, in the copay clause, the policyholders must pay a fixed fee.
  5. The coinsurance plan is divided into an 80/20 split of cost, whereas the co-pays cost $25 or less.
Difference Between Coinsurance and Copay
References
  1. https://www.jmcp.org/doi/abs/10.18553/jmcp.2007.13.9.765
  2. https://www.pkdhc.com/wp-content/uploads/2016/05/PKDHC-New-Patient-Packet-.pdf

Last Updated : 13 July, 2023

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3 thoughts on “Coinsurance vs Copay: Difference and Comparison”

  1. Great article! I wish I could’ve learned about these differences earlier, this is important knowledge for everyone to understand.

    Reply
    • I disagree, the article feels like it’s aimed at a younger, insurance-beginner audience. It’s difficult for more experienced readers to enjoy an article with such simple concepts.

      Reply

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