Coinsurance (Health Insurance)
Coinsurance is a cost-sharing arrangement where the insured pays a percentage of covered medical expenses after the deductible is met, typically 20% with insurance paying 80%.
Exam Tip
80/20 = insurance pays 80%, you pay 20%. Applies AFTER deductible is met.
What is Coinsurance?
Coinsurance is the percentage of costs you pay for covered healthcare services after you've met your deductible. It's a cost-sharing arrangement between you and your insurance company.
How Coinsurance Works
Example: 80/20 Coinsurance
- You've met your $1,000 deductible
- You have a $5,000 medical bill
- Insurance pays: 80% = $4,000
- You pay: 20% = $1,000
Coinsurance vs. Copay
| Feature | Coinsurance | Copay |
|---|---|---|
| Type | Percentage | Fixed amount |
| Example | 20% of bill | $25 per visit |
| When Applied | After deductible | Usually from first dollar |
| Predictability | Varies with cost | Fixed and known |
Common Coinsurance Splits
| Plan Type | You Pay | Insurance Pays |
|---|---|---|
| 80/20 | 20% | 80% |
| 70/30 | 30% | 70% |
| 60/40 | 40% | 60% |
Out-of-Pocket Maximum
Your coinsurance payments count toward your out-of-pocket maximum. Once you reach this limit, insurance pays 100% of covered services for the rest of the year.
In-Network vs. Out-of-Network
Coinsurance often differs:
- In-network: 20% coinsurance
- Out-of-network: 40% coinsurance (or not covered)
Coinsurance in Property Insurance
In property insurance, coinsurance requires you to insure your property to a certain percentage (usually 80%) of its value, or face a penalty at claim time.
Study This Term In
Related Terms
Deductible (Health Insurance)
InsuranceA deductible is the amount a policyholder must pay out-of-pocket before the insurance company begins to pay for covered expenses.
Copay (Copayment)
InsuranceA copay is a fixed dollar amount that an insured person pays for a covered healthcare service, typically due at the time of service, regardless of the total cost.
Out-of-Pocket Maximum
InsuranceThe out-of-pocket maximum is the most you have to pay for covered healthcare services in a plan year, after which your insurance pays 100% of covered costs.