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How coinsurance works
Coinsurance is your percentage share of the cost of a covered health care service. It is a cost you incur when you use care, not a recurring payment to keep your insurance active. The rate can differ by service or benefit, so a plan’s coinsurance percentage is not necessarily the same for every bill.
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- Check the deductible. You generally pay covered costs up to the applicable deductible before coinsurance begins. Some services are covered before the deductible, and some plans have separate deductibles for particular services or prescriptions.
- Find the applicable allowed amount. Coinsurance is calculated using the amount recognized under the plan’s terms—not automatically the provider’s full billed charge.
- Apply your percentage. If the deductible is met and your share is 20% of a $100 allowed amount, you owe $20 and the insurer’s share is $80.
- Track qualifying spending. Deductibles, copayments, and coinsurance for covered in-network care generally count toward the applicable out-of-pocket maximum. Once you reach it, the plan pays 100% of covered in-network benefits subject to that limit for the rest of the plan year.
HealthCare.gov defines the allowed amount as the maximum the plan will pay for a covered service. A provider may bill more than that amount, and the excess may not count toward your out-of-pocket maximum. Check your plan’s terms for how a particular service and provider are treated. HealthCare.gov: Coinsurance and HealthCare.gov: Allowed amount.
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Coinsurance examples
$100 allowed office visit
HealthCare.gov’s example uses a $100 allowed office-visit amount and 20% coinsurance. After the deductible is met, 20% of $100 is $20, so the member pays $20 and the insurer pays $80. Before the deductible is met, the member pays the full $100 allowed amount in this illustration. These figures explain the arithmetic; your plan may apply different rates or coverage rules. HealthCare.gov: Coinsurance.
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$12,000 in allowable costs
In another HealthCare.gov illustration, the plan has a $3,000 deductible, 20% coinsurance, and a $6,850 out-of-pocket maximum. The member first pays $3,000 toward the deductible. Of the remaining $9,000 in allowable costs, 20% is $1,800, making the member’s deductible-plus-coinsurance total $4,800 before considering other qualifying cost sharing. If qualifying spending reaches $6,850, the member pays no more for covered services subject to that limit for the rest of the plan year. These are example plan terms, not universal amounts. HealthCare.gov: Out-of-pocket maximum/limit.
One visit before and after the maximum
HealthCare.gov also illustrates a Marketplace plan with a $1,500 deductible, 20% coinsurance, and a $5,000 out-of-pocket maximum. In that example, a $125 office visit costs the member $125 before the deductible is met, $25 after it is met, and $0 after the member reaches the maximum, assuming the visit is covered and subject to that limit. Actual charges depend on the service and plan terms. HealthCare.gov: How to save on monthly premiums.
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Coinsurance, copays, deductibles, and premiums
| Term | What it means | How it relates to coinsurance |
|---|---|---|
| Coinsurance | A percentage of the applicable cost for covered care. | Your share is calculated as a percentage under the plan’s rules. |
| Copayment (copay) | A fixed dollar amount for a covered service. | A copay is not a percentage; plan rules may use copays for some services and coinsurance for others. HealthCare.gov: Copayment. |
| Deductible | An amount you generally pay for covered services before the plan begins sharing costs. | Coinsurance commonly applies after the applicable deductible, though some benefits are covered earlier or have separate deductibles. HealthCare.gov: Deductible. |
| Premium | The amount paid to maintain insurance coverage. | It is separate from cost sharing when you receive care and generally does not count toward the out-of-pocket maximum. HealthCare.gov: Premium. |
What counts toward the out-of-pocket maximum?
The out-of-pocket maximum limits qualifying cost sharing under the plan for covered care. Deductibles, copayments, and coinsurance for covered in-network services generally count toward the applicable limit. After you reach it, the plan pays 100% of covered in-network benefits subject to that limit for the remainder of the plan year.
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How to compare coinsurance when choosing a plan
A lower coinsurance percentage does not by itself mean a plan will cost less over the year. Compare the premium and likely care costs together, including the deductible, copays, service-specific coinsurance, network, and out-of-pocket maximum. HealthCare.gov’s plan example notes that estimated costs depend on the care used. HealthCare.gov: How to save on monthly premiums.
- Monthly and annual premiums.
- Individual and family deductibles, including separate medical or prescription deductibles.
- Coinsurance rates by service, and whether they apply before or after a deductible.
- Copays and services covered before the deductible.
- In-network and out-of-network rules for the providers and facilities you may use.
- Individual and family out-of-pocket maximums, and which costs count toward them.
- Your expected services and prescriptions, rather than one coinsurance percentage in isolation.
Review the plan’s Summary of Benefits and Coverage or ask the insurer what allowed amount, network rules, and cost-sharing terms apply to a service you expect to need.
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What to check on a bill
If your share seems different from a simple percentage calculation, check the explanation of benefits and plan documents for the deductible status, the allowed amount, the coinsurance rate for that service, and the provider’s network status. Also check whether the service was covered and whether another deductible or benefit rule applies. The provider’s billed charge alone may not be the amount to which your coinsurance applies.
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