Coinsurance vs. copay: Differences and how each works

What’s the difference between a copay and coinsurance?

Copays and coinsurance are out-of-pocket costs you are responsible for before your insurance company pays the rest of the bill. There are differences in how coinsurance and copays work and relate to your deductible and out-of-pocket maximum.

Let’s break down how copays and coinsurance work and how they differ.

What does a copay mean in health insurance?

A copay is a flat-rate amount you pay when visiting a doctor’s office, urgent care, or emergency room. The copay for in-network primary care physician visits is usually lower than for specialists or out-of-network care. You may also have a copay for prescription drugs.

Both copays for primary care and specialists usually cost well under $100, although copays vary. Some plans will offer a zero-copay option for office visits.

You normally won’t pay a copay for annual wellness visits. However, if your doctor performs a service or requests a test not part of a standard wellness visit, you may be responsible for some of that bill.

Your plan may waive the ER copay if you’re admitted.

What is a copay in health insurance?

Coinsurance is the percentage you and the plan pay for the covered medical expenses after the deductible is met and until you reach your out-of-pocket limit. You can think of it as cost-sharing between you and the health insurance company.

Here's an example:

• Let’s say your health plan has 20% coinsurance. That portion of the bill is your responsibility.
• The insurer pays the other 80%.
• If you’re hospitalized, and the bill is $10,000, the health plan would pick up $8,000, and you’ll owe $2,000.

You’ll continue to pay that percentage after your deductible is met until you reach your limit for out-of-pocket expenses. After that, the plan covers 100% of the costs.

What’s the average coinsurance percentage?

Coinsurance amounts differ depending on the type of plan you have. Let’s take a look at how it applies to ACA plans.

Affordable Care Act (ACA) plans are divided into tiers with varying costs, including coinsurance.

Here are the coinsurance costs for each metal tier:

In addition to the coverage levels, you must decide the type of plan you want. There are differences between HMO, PPO, and POS plans and other options to consider.

What does coinsurance after deductible mean?

Coinsurance after deductible means that your coinsurance amount will apply once you have met the deductible.

So what does 40% coinsurance mean, for example?

• If you have 40% coinsurance after the deductible, you will pay the deductible first and then 40% of the costs.
• If you have a $1,000 deductible and a 40% coinsurance amount and you have a medical bill for $3,500.
• First, you pay the deductible, which is $1,000. Remaining balance: $2,500
• After the deductible, you pay 20% of your costs. 40% of $2,500 is $1,000.
• The remaining 60%, or $1,500 is charged to your insurance company.

You see the doctor again, incurring a $5,000 bill:

• You have met the deductible so coinsurance applies.
• Your out-of-pocket this time is $2,000
• The insurance company pays $3,000

Copay vs. coinsurance vs. deductible: What’s the difference?

The deductible is the amount that you must pay in full before most of your benefits kick in. Copays are the main exception to that, and coinsurance kicks in after the deductible is met.

Copays and deductibles: Copays generally do not count towards your deductible, and you will continue to pay them even after it is met.

Coinsurance and deductibles: Coinsurance kicks in after the deductible is met. While paying your deductible, you pay 100% of the costs. After that, you’ll pay the percentage of costs set out by your plan until you hit the out-of-pocket max.

How to calculate coinsurance after deductible

Let’s consider a coinsurance and deductible example. If you have a $500 individual deductible and a 20% coinsurance amount, and you have a $3,000 bill for treatment at your doctor’s office, you’ll pay:

• The first $500 of the bill
• 20% of the remaining bill

Your out-of-pocket cost would be $500 + $500 (20% off the remaining $2,500) for a total of $1,000. Your plan pays $2,000.

What’s the average annual deductible?

According to the Kaiser Family Foundation’s annual report, the average employer-sponsored health insurance deductible for an individual was $1,784 in 2024.

With ACA plans, and sometimes with employer-sponsored plans as well, you may have a selection of plans with different deductibles.

How do you decide which deductible to choose? A Bronze or Silver plan with higher out-of-pocket costs and lower premiums might be a wise choice if you’re young, healthy, and don’t expect to need many health care services over the next year. On the other hand, if you use many healthcare services and don’t mind paying higher premiums with the understanding that you’ll pay less for services, a Gold or Platinum plan may be a better choice.

What is an out-of-pocket maximum?

Every plan has a maximum amount for out-of-pocket costs, after which the plan pays in full. If your plan covers out-of-network care, you will have a different in-network maximum from the out-of-network maximum (the latter is higher).

What are in-network and out-of-network providers?

Healthcare providers that are part of your health plan's network must meet certain requirements and should agree to accept a discounted rate for covered services under the policy to become "in-network."

If a doctor or facility has no contract with your health insurance, they may be considered out-of-network and can charge you the full price. This usually means that the rates will be considerably higher than what's discounted for in-network patients.

The annual out-of-pocket amount includes the amount you pay for deductibles, copays, and coinsurance. These things don’t count towards the maximum:

• Premiums
• Anything that is not a covered service
• Out-of-network care and services
• Any amount that is above the provider’s allowed amount for that service

Out-of-pocket maxes vary by plan, and there are limits. Here are examples:

• A high-deductible plan can’t exceed $7,050 for an individual and $14,100 for a family.
• Affordable Care Act plans can’t exceed $8,700 for an individual plan and $17,400 for a family plan.
• A Medicare Advantage plan can’t exceed $7,550 in out-of-pocket expenses.
• Original Medicare doesn’t have a limit for out-of-pocket expenses. An optional Medigap plan covers out-of-pocket expenses.

How copays, deductibles, coinsurance and out-of-pocket maximums interact

Let’s look at an example of how deductibles, copays, and coinsurance work together.

You go to the doctor for back pain. Your primary care copay is $30, so you pay that before seeing the doctor.

Your doctor decides you need an MRI. You schedule an MRI, which costs $2,000.

Your deductible is $1,000, and your coinsurance is 20%. In that case, you’d pay the $1,000 for the deductible portion and 20% of the remaining cost, with the health plan picking up the other 80%.

In this case, you’d pay $1,200 for the MRI on top of the $30 copay.

Your back continues to give you problems, and you have multiple doctor visits and tests that rack up costs. You reach your plan’s $3,000 out-of-pocket max. At that point, your health insurance company will pick up all costs for the rest of the year, except for copays for doctor visits.

Sources:

• KFF : Average annual deductible per enrolled employee in employer-based coverage." Accessed October 2025