What is coinsurance and copay?

Your 15-year-old daughter has been playing soccer since she could walk. At last weekend’s game, she collided with another player, injuring her knee. An x-ray, MRI and walking cast later, you both leave the emergency room exhausted. Weeks later, the statement for her visit arrives and you find yourself wondering, “What kind of policy do we have?”

If you want to know what to expect from your health insurance, knowing the key terms can make all the difference. Co-insurance and co-pay are particularly confusing, as they are often used synonymously but have very different meanings.

What is Coinsurance?

A health plan with a coinsurance payment rate means you split the cost of all health care services with your insurance company. This is typically a 70/30 split, where your insurance company is responsible for 70 percent while you are expected to cover the remaining 30 percent.

Additionally, many health insurance providers include a back-up plan for medical expenses which could prove to be a financial hardship on the individual. This is called a coinsurance maximum and limits your potential out-of-pocket expenses per year. For example, BCBSM’s health coverage for healthy individuals may have a coinsurance maximum of $3,500 for an individual person.

What is a Copay?

When an insurance policy requires a payment of a specific dollar amount for a service, such as a doctor visit or prescription drugs, this is called a copayment. Unlike coinsurance which is a percentage of the cost of the health services, copayment is a set amount, typically ranging $25-$50 for a scheduled doctor visit. Insurance plans establish this number upfront; a Health Plan Advisor will give you information on copays and different choices when discussing your plan with you.

Co-insurance and co-payments are meant to help split the cost of health care services with your insurance provider. This way you are not stuck with the entire bill, which can reach thousands of dollars.

Have other health care insurance questions? Ask a question, see answers and learn about health insurance on Health Insurance Central.

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