Table of ContentsView AllTable of ContentsWhat Is Coinsurance?How Much You’ll PayCalculating CoinsuranceMedicare ExceptionsA Word From Verywell

Table of ContentsView All

View All

Table of Contents

What Is Coinsurance?

How Much You’ll Pay

Calculating Coinsurance

Medicare Exceptions

A Word From Verywell

Coinsurance is a type ofcost-sharingto pay for health care. With coinsurance, both you and your insurance provider pay part of a medical bill.

This article will explain what coinsurance is, how it works, and how to figure out how much you will have to pay.

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Understanding Your Health Insurance Network

With mosthealth insuranceplans, patients pay a set amount for certain medical services they get throughout the year. This is called anannual deductible.

Under most health plans, patients still have to pay some of the cost of their care, even after they meet their deductible. However, their insurance plan will pay some, too. This arrangement is called coinsurance.

Once the patient has met their deductible and coinsurance starts to apply, the patient pays a percentage of the cost of additional medical services they receive (note that coinsurance amounts are based on thehealth plan’s network-negotiated rate, rather than the amount that the medical provider bills).

The patient’s percentage of the cost typically ranges from 10% to 40%, depending on the health plan. The health plan will pay the other 60% to 90%.

In most cases, coinsurance applies to the same services that would have counted toward the deductible if the deductible had not yet been met. In other words, the patient pays 100% of the plan-approved amount for those services until the deductible is met, and then switches to paying the coinsurance percentage instead.

But some services, such as prescription drugs, can be covered with coinsurance even before the deductible is met, depending on the plan specifics.

Coinsurance does not apply to services that are covered in full without a deductible, like somepreventive careservices. It also does not apply to services that arecovered with a copayinstead of coinsurance, like seeing your primary care provider (if that’s how your health plan is structured).

Copay vs. CoinsuranceCopaysare aset amountthat you pay on the day you get a health care service. For example, you might have to pay a $30 copay when you visit your provider’s office or when you fill a prescription at the pharmacy.Coinsuranceis afixed percentagethat you will pay toward the total cost of a medical bill once you have paid up to your deductible for the year. Your health insurance also pays a percentage, usually more than what you pay. You don’t have to pay the full coinsurance amount at the time you receive care, as it gets calculated after the health plan reduces the overall price according to their negotiated contract with the medical provider.

Copay vs. Coinsurance

Copaysare aset amountthat you pay on the day you get a health care service. For example, you might have to pay a $30 copay when you visit your provider’s office or when you fill a prescription at the pharmacy.Coinsuranceis afixed percentagethat you will pay toward the total cost of a medical bill once you have paid up to your deductible for the year. Your health insurance also pays a percentage, usually more than what you pay. You don’t have to pay the full coinsurance amount at the time you receive care, as it gets calculated after the health plan reduces the overall price according to their negotiated contract with the medical provider.

Copaysare aset amountthat you pay on the day you get a health care service. For example, you might have to pay a $30 copay when you visit your provider’s office or when you fill a prescription at the pharmacy.

Coinsuranceis afixed percentagethat you will pay toward the total cost of a medical bill once you have paid up to your deductible for the year. Your health insurance also pays a percentage, usually more than what you pay. You don’t have to pay the full coinsurance amount at the time you receive care, as it gets calculated after the health plan reduces the overall price according to their negotiated contract with the medical provider.

Deductible vs. Copayment: What’s the Difference?

Out-of-Pocket Maximum

Coinsurance is part of the total amount the health insurance company can require patients to pay in cost-sharing during the year. This is called theout-of-pocket maximum. Deductibles, copays, and coinsurance are included in the amount.

Once the amounts paid in deductibles,copayments, and coinsurance add up to a patient’s out-of-pocket maximum, their health plan will start to pick up the full cost of covered in-network care for the rest of the plan year (assuming the patient follows all of the plan’s rules for things likeprior authorization, primary care physicianreferralsto see a specialist, step therapy, etc.).

That means the patient’s coinsurance percentage will be 0% for the rest of the plan year.

How to Talk About Health Insurance

Limits

The limit applies to in-network treatment foressential health benefits. However, plans often set out-of-pocket maximums that are lower than the federal cap. For 2023 health plans, the cap is $9,100 for an individual and $18,200 for a family.

How to Calculate Coinsurance

Calculating a health insurance coinsurance amount is harder because coinsurance is a percentage of the total cost of service rather than a set amount. That means the amount of coinsurance can be different for each service you get.

If a service does not cost that much, then the coinsurance amount will be small. However, if the healthcare service was expensive, the coinsurance will be higher, too.

What’s key to remember is the out-of-pocket maximum on your plan. If your policy includes 20% coinsurance, that does not mean you pay 20% of all your health care costs during the year.

Once your spending hits your out-of-pocket maximum for the year, you’re done paying as long as the care you get is in-network and you follow the other rules your insurance provider has, likepreauthorization requirements.

(As discussed in more detail below,Original Medicaredoes not have a cap on out-of-pocket costs. So underMedicare Part B— which covers outpatient care and has a 20% coinsurance—there is no limit to how high a person’s coinsurance charges can be. This is why most Medicare beneficiaries either have supplemental coverage—fromMedigap, an employer/retiree plan, or Medicaid—or Medicare Advantage coverage, which does have a cap on out-of-pocket costs.)

Real-World Example

Let’s say that you havea health insurance planwith these features:

In February, you cut your finger andneed stitches. The approved amount for the care based on your policy’snetwork negotiated ratesis $2,400.

You have to pay the first $1,500 because that’s your deductible. That leaves a $900 bill. You’ll have to pay 20% of that amount in coinsurance, which is $180.

That means you’ll pay a total of $1,680 for the stitches, and yourinsurance policywill pay $720.

Why Surgery Costs So Much

In July, you have surgery toremove your gallbladder. The procedure will cost $16,000, after your health plan’s network negotiated discount. You have already met your deductible for the year, so you will only have to pay coinsurance (20% of the cost).

You might think your coinsurance responsibility would be $3,200 because that’s 20% of $16,000.

However, you will not have to pay the full $3,200 because your plan has a maximum out-of-pocket of $3,000 for the whole year.

You already paid $1,680 when you had stitches. When you subtract that amount from your out-of-pocket maximum ($3,000) you’ll get $1,320. That’s how much you will have to pay for your surgery.

Your insurance will pay the rest ($14,680) and will now cover 100% of your approved claims for the rest of the year.

How to Save Money If You Reach Your Out-Of-Pocket Maximum

What About Medicare?

The ACA put rules in place that limited maximum out-of-pocket costs on all non-grandfathered health plans. Rules that came later also allowed grandmothered plans to stay in use and not be subject to limits on out-of-pocket maximums.

The exception is Medicare, which is not subject to the ACA’s rules for out-of-pocket limits.

Medicareon its own—without a Medigap plan, a supplementalemployer-sponsored plan, or additional coverage fromMedicaid—does not have a cap on out-of-pocket costs.

Medicare Part Bcovers outpatient care, which can include ongoing, high-cost health care services such as dialysis. The plan has a small deductible that must be met ($226 as of 2023). After that, a patient pays 20% coinsurance and there is no limit on how high the bill can get.

Without supplemental coverage, coinsurance can add up to high out-of-pocket costs.That’s why most Medicare beneficiaries have supplemental coverage or Medicare Advantage, which has a cap on out-of-pocket costs.

Medicare Part Ahas a per-benefit-perioddeductible that will cover 60 days in the hospital. After that time is up, a patient has to start paying part of the bill—and there’s no cap on how high the patient’s out-of-pocket costs can get.But supplemental coverage will pick up some or all of these costs as well.

Summary

Coinsurance is a type of cost-sharing where you and your health insurance provider both pay a percentage of a medical bill.

You will have to pay costs for health care services you receive until you meet your deductible. Then, your insurance plan will start covering their percentage in coinsurance and you will pay yours.

Once you pay the amount of your out-of-pocket maximum—which includes deductibles, copays, and coinsurance—your insurance plan will pay all the costs for covered in-network services until the end of the plan year.

People who have Original (Traditional) Medicare have different rules around coinsurance and out-of-pocket costs. If they don’t have supplemental coverage, their costs for care can be very high, as Original Medicare does not have a cap on out-of-pocket costs.

Although your health plan likely has a coinsurance of 10% to 40%, you almost certainly also have a cap on how high your total out-of-pocket costs (including coinsurance) can be. Knowing exactly how much you’ll owe in coinsurance for a specific medical procedure can be difficult, since it depends on the rate that your health plan has negotiated with the doctor or hospital for that service.

How to Calculate Your Coinsurance Payment

6 SourcesVerywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Centers for Medicare and Medicaid Services.Your total costs for health care: premium, deductible & out-of-pocket costs.Centers for Medicare and Medicaid Services.Out-of-pocket maximum/limit.Whitmore H, Gabel JR, Satorius JL, Green M.Grandfathered, grandmothered, and ACA-compliant health plans have equivalent premiums.Health Aff (Millwood). 2017;36(2):306-310. doi:10.1377/hlthaff.2016.0895Centers for Medicare and Medicaid Services.Medicare costs at a glance.Centers for Medicare and Medicaid Services.Understanding Medicare Advantage plans.Centers for Medicare and Medicaid Services.Costs.

6 Sources

Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Centers for Medicare and Medicaid Services.Your total costs for health care: premium, deductible & out-of-pocket costs.Centers for Medicare and Medicaid Services.Out-of-pocket maximum/limit.Whitmore H, Gabel JR, Satorius JL, Green M.Grandfathered, grandmothered, and ACA-compliant health plans have equivalent premiums.Health Aff (Millwood). 2017;36(2):306-310. doi:10.1377/hlthaff.2016.0895Centers for Medicare and Medicaid Services.Medicare costs at a glance.Centers for Medicare and Medicaid Services.Understanding Medicare Advantage plans.Centers for Medicare and Medicaid Services.Costs.

Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

Centers for Medicare and Medicaid Services.Your total costs for health care: premium, deductible & out-of-pocket costs.Centers for Medicare and Medicaid Services.Out-of-pocket maximum/limit.Whitmore H, Gabel JR, Satorius JL, Green M.Grandfathered, grandmothered, and ACA-compliant health plans have equivalent premiums.Health Aff (Millwood). 2017;36(2):306-310. doi:10.1377/hlthaff.2016.0895Centers for Medicare and Medicaid Services.Medicare costs at a glance.Centers for Medicare and Medicaid Services.Understanding Medicare Advantage plans.Centers for Medicare and Medicaid Services.Costs.

Centers for Medicare and Medicaid Services.Your total costs for health care: premium, deductible & out-of-pocket costs.

Centers for Medicare and Medicaid Services.Out-of-pocket maximum/limit.

Whitmore H, Gabel JR, Satorius JL, Green M.Grandfathered, grandmothered, and ACA-compliant health plans have equivalent premiums.Health Aff (Millwood). 2017;36(2):306-310. doi:10.1377/hlthaff.2016.0895

Centers for Medicare and Medicaid Services.Medicare costs at a glance.

Centers for Medicare and Medicaid Services.Understanding Medicare Advantage plans.

Centers for Medicare and Medicaid Services.Costs.

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