Coinsurance

Percentage, not a flat fee

Coinsurance is cost sharing expressed as a percentage. A plan with 20% coinsurance means that after your deductible is met, you pay 20% of the allowed amount for a covered service and the plan pays 80%. That split continues until you reach your out-of-pocket maximum.

Because it is a percentage, coinsurance scales with the size of the bill. On a small lab test it barely registers. On a hospital stay it can add up to thousands of dollars, which is why the out-of-pocket maximum matters so much.

Example with real math

Derek is a contractor with a plan that has a $3,000 deductible, 30% coinsurance and an $8,000 out-of-pocket maximum. He needs an MRI and a follow-up outpatient procedure totaling $14,000 at the plan's negotiated rate.

1. He pays the first $3,000 toward the deductible.
2. On the remaining $11,000, he owes 30%, which is $3,300.
3. His total is $6,300, still under his $8,000 cap.

If he has another large claim later that year, he only pays 30% until he has spent $1,700 more. After that, covered in-network care costs him nothing for the rest of the year.

Coinsurance vs copay

A copay is a fixed dollar amount, like a set fee for a doctor visit. Coinsurance moves with the bill. Many plans use both: copays for routine services and coinsurance for hospital stays, surgery, imaging and specialty drugs. When you read a summary of benefits, check which services use which method.

Allowed amount matters

Coinsurance applies to the allowed amount, the rate your plan negotiated with the provider, not the provider's list price. That is a big reason to stay in network. Out of network, the allowed amount may be lower than what the provider bills, and you could owe the difference on top of your coinsurance.

Marketplace vs private plans

Marketplace plans commonly use coinsurance between 0% and 50%, with gold plans usually lower and bronze plans higher. Some private plans outside the Marketplace use a different structure, paying fixed dollar amounts per service or per day instead of a percentage. That can look simple, but if the fixed benefit is smaller than the bill, you pay the gap, and that gap may not count toward any cap. Ask how a plan handles a large hospital bill before you buy.

Tips for comparing

• Look at coinsurance alongside the deductible and out-of-pocket maximum, never alone.
• Check whether specialty drugs use coinsurance, since a high percentage on an expensive medication can drive your yearly costs.
• If you expect surgery, lower coinsurance usually saves money.

Our guide on how to read a health insurance quote breaks down these numbers. To compare plans with different coinsurance levels for your situation, get a quote here.