Copay Vs. Coinsurance

Understanding your healthcare coverage can feel daunting, frustrating, and even rage-inducing. Trust us; we get it. Even after you’ve filled out every form, sifted through all the required reading, and followed every rabbit hole to try and find an answer, it can still feel like you’re at square one.

According to a recent study done by Bankrate, 1 in 4 Americans are avoiding medical care because they are afraid of the cost. This study includes insured people who simply aren’t sure what their policies will cover, so they choose to forgo treatment instead of getting surprised with a huge bill. In an attempt to avoid a financial blow, they are putting their lives at risk. 

1 in 4 Americans are avoiding medical care because they are afraid of the cost.

We’ve written several blogs on understanding the ins and outs of insurance coverage, and we’re not done yet. Today we’re diving into one of the most confusing things about insurance: Copay Vs. Coinsurance. We’ll discuss how they are different from each other, and more importantly, how they affect you and your family’s coverage. 

Start With The Basics

Before we can get into these two concepts, we have to understand what they each mean. Let’s take a look at the definitions. 

Copay- A fixed amount you pay for a covered health care service at the time of care.

  • COPAY: For example, if your listed copay for a standard office visit is $20, then you would be responsible for $20 at the time you see your doctor.

Coinsurance- This is the percentage of costs of a covered health care service that you pay after you’ve met your deductible. (A deductible is how much you pay for covered health care services before your insurance plan kicks in. With a $1,600 deductible, you pay the first $1,600 of covered services yourself.)

  • COINSURANCE: For example, say you find yourself in need of medical treatment for a serious medical condition costing $12,000, and the following amounts apply to your plan:
    • Deductible: $3,000
    • Coinsurance: 20%
    • Out-of-pocket maximum: $6,850

When the first $3,000 (the deductible) has been paid, you are then only responsible for 20% of the remaining $9,000 in cost while your insurance provider is responsible for the remaining 80%. This means that, in addition to the $3,000 deductible, you would be responsible for $1,800 for a total of $4,800. Your insurance would pay the remainder. If you have already met your deductible within the same policy year, then you would only be required to pay 20% of the entire cost; in this case, that would be $2,400. 


Copay and coinsurance are what we in the healthcare industry call cost-sharing options. Both are tools aimed at relieving the burden of medical cost to the insured. If you’re looking at the two definitions above and still aren’t clear on what each one means, don’t be disheartened, you aren’t alone. See the chart below to get a better idea of how each one works. 

Fixed dollar amount. This does not change.Percentage. Actual amount paid varies depending on cost of service.
Paid at time of service.Billed to you by your healthcare provider.
Paid each time you visit the doctor or fill a prescription.Paid after deductible is met. 

In general, health insurance plans tend to have a variety of cost-sharing options. Some will have high premiums/monthly rates and lower deductibles/out-of-pocket costs, and others will be just the opposite. In general, it’s supposed to work like this:

There’s a monthly premium that must be paid to have health insurance. When you go to the hospital or see your doctor at their office, you’ll either pay the full cost of the visit/services or the copay, depending on your specific policy. Once the services you’ve paid for, generally not including copays, add up to your deductible for the year, your insurance provider starts to pay the majority of your medical costs, usually around 60% to 90%. The remainder that you pay is coinsurance. 

You’ll pay both copay and coinsurance until you meet the out-of-pocket maximum for your chosen policy. Once this happens, your insurer pays 100% of your medical costs until the policy year ends, or you switch insurance plans, whichever comes first. 


In short, the answer to this is no. Some insurance plans will rely solely on the deductible/coinsurance to share in the covered cost expenses. Some plans will use both copays and deductibles/coinsurance to share the coverage. Some will require no out-of-pocket expense on certain services. Things like annual check-ups and other preventive care screenings are often covered by insurance at no cost to you. 

In and out of network.

In and Out of Network.

As stated, most health plans have some form of cost-sharing options to help take the burden off you and your family, but which cost-sharing option is available to you, depends on where you go for medical care. The scenario described above is how things will work if you choose the clinics, hospitals, and doctors that fall within your chosen health insurance plan’s network. This is referred to as ‘in-network.’ There is the same cost-sharing structure with out-of-network, it will just be more expensive than your in-network structure.

Our previous article, Insurance: What’s the Difference Between ‘Accepted’ and ‘In-Network’ Insurance?goes into more detail about what precisely in-network means and how it applies to you. 


We know that insurance can be a headache, and what you really care about is making the best choice for your family. In addition to explaining the ins and outs of policies and insurance terms, Neighbors aims to make the overall experience easier. We are now in-network with BlueCross BlueShield, Cigna, and Aetna at all six of our locations. We also accept Medicare and Traditional Medicaid at all our locations.

If you want more information about what insurance your nearest Neighbors’ location accepts, you can click on the insurance button on our individual locations pages; or visit our insurance page. 

Knowledge is power. Having a firm understanding of your insurance plan can arm you with all the tools necessary to calculate your medical cost and understand your bill when it comes. When you understand something fully, it’s less intimidating. At Neighbors, we aim to be a resource for you. It’s our goal to make healthcare easier from the moment you step through our doors. From the exam room to the discharge packet and beyond, we’re here to be your Best Neighbors Ever.