Copay vs Coinsurance

When you’re choosing or using a health insurance plan, you’ll probably run into terms like copay and coinsurance. These may seem like jargon at first, but they directly impact how much you’ll pay for healthcare—and when.

Knowing the difference between these two cost-sharing features can help you make smarter choices, avoid surprises at the doctor’s office, and pick a plan that matches your needs and budget.

What Is a Copay?

A copay, or copayment, is a fixed dollar amount you pay out-of-pocket for certain healthcare services. This fee is typically paid at the time of service, such as when you visit a doctor, pick up a prescription, or go to urgent care.

Common Copay Examples:

• $25 for a primary care visit
• $50 for a specialist
• $10 for generic prescription drugs
• $250 for an emergency room visit (sometimes waived if you’re admitted)

These amounts can vary based on your insurance plan and the type of care. In-network visits usually come with lower copays than out-of-network services.

Your copay amounts are often listed right on your health insurance ID card for easy reference.

What Is Coinsurance?

Coinsurance is your share of the cost for a healthcare service, expressed as a percentage, and it typically applies after you’ve met your annual deductible.

Here’s how it works:

Let’s say your plan has 20% coinsurance. After meeting your deductible:

• You go in for a covered service that costs $1,000.
• Your insurance pays 80% ($800).
• You pay 20% ($200)—this is your coinsurance.

According to recent industry data, the most common coinsurance rates range from 10-30%, with 20% being the standard for many employer-sponsored plans.

When Does Coinsurance Apply?

Coinsurance usually kicks in for higher-cost services, such as:

• Hospital stays
• Specialist procedures
• Outpatient surgeries
• Imaging tests (MRIs, CT scans)

Because coinsurance is based on a percentage of the total bill, your costs can vary widely depending on the service.

Key Differences Between Copay and Coinsurance

Let’s break down the core differences to help you see how each affects your healthcare expenses.

Feature	Copay	Coinsurance
Type of Payment	Fixed dollar amount	Percentage of the total cost
When You Pay	At the time of service	After claim is processed
Applies Before Deductible?	Usually, yes	No, only after deductible is met
Cost Predictability	High – easier to budget	Variable – depends on service cost
Example	$30 for a doctor visit	20% of a $1,000 surgery = $200
Network Status Impact	Often doubles for out-of-network providers	Typically increases by 20-30% for out-of-network care

Overall, copays offer predictability, while coinsurance amounts vary based on the total cost of services.

Common Scenarios and Cost Examples

Understanding how these insurance components work together can be easier with practical examples. Let’s look at some common healthcare situations and how costs might apply.

Routine Care Example:

A patient with a $1,500 deductible, $25 PCP copay, and 20% coinsurance might experience the following costs:

Annual preventive physical is typically covered at 100% with no copay or coinsurance required. This is mandated by the Affordable Care Act for most plans.

For a strep throat diagnosis, the patient would pay their $25 PCP copay at the time of service, regardless of whether they’ve met their deductible. Their prescription antibiotic might require a separate $15 copay.

Major Medical Event Example: 

For more significant health events, costs accumulate differently throughout the year:

An MRI for knee pain might cost $1,200. If the patient hasn’t met their deductible, they would pay the full amount, which would count toward their deductible.

If they later need knee surgery costing $10,000, they would first pay the remainder of their deductible. After that, they would pay 20% coinsurance on the rest of the bill, with insurance covering 80%.

As patients approach their out-of-pocket maximum (often $4,000-$8,000), their financial responsibility decreases. Once they reach this limit, insurance typically covers 100% of remaining eligible expenses for the calendar year.

These examples demonstrate how costs can shift dramatically depending on the type of service, whether the deductible has been met, and how close the patient is to their out-of-pocket maximum.

How Deductibles and Out-of-Pocket Maximums Affect Copay and Coinsurance

Your deductible and out-of-pocket maximum are two other pieces of the puzzle that determine how much you pay—and when.

Copays and Deductibles

• Copays often apply regardless of whether you’ve met your deductible.
• For example, you might still pay $25 for a doctor visit even if your deductible hasn’t been reached.
• Whether copays count toward your deductible varies significantly by plan. According to a 2023 Kaiser Family Foundation survey, approximately 65% of employer plans apply copays toward the deductible, while 35% do not. Always check your specific plan details.

Coinsurance and Deductibles

• Coinsurance starts only after your deductible is fully met.
• Until then, you’re paying 100% of eligible costs.

Out-of-Pocket Maximum

This is the most you’ll pay in a year for covered services in your plan’s network. It includes:

• Copays
• Coinsurance
• Deductibles

Once you hit this maximum, your insurer pays 100% of covered costs for the rest of the year.

Copay vs. Coinsurance: Which Is Better?

The right choice depends entirely on your individual health needs and financial situation. Let’s examine the advantages and disadvantages of each:

Copays: Pros and Cons

Pros:

• Predictable, upfront costs
• Easier to budget for routine care
• Often don’t require meeting your deductible

Cons:

• May not count toward deductible
• Can add up with frequent visits

Coinsurance: Pros and Cons

Pros:

• Shared cost means lower bills for minor services (after deductible)
• Typically included in plans with lower monthly premiums

Cons:

• Unpredictable costs for expensive services
• Requires deductible to be met before it kicks in

Ideal Scenarios

• Copay-friendly plans work well if you have regular check-ups, ongoing prescriptions, or chronic conditions.
• Coinsurance-heavy plans may suit people who are healthy, rarely use care, and want to save on monthly premiums, but are willing to pay more if something big comes up.

Special Considerations for Telehealth and Recent Legislation

The healthcare landscape continues to evolve with technological advances and new regulations. These changes affect how copays and coinsurance function in modern healthcare delivery.

Telehealth Visits

The landscape for telehealth coverage continues to evolve:

• Many plans now offer lower copays for telehealth visits (often $5-15 less than in-person visits)
• Some plans may apply different coinsurance rates for virtual care
• During the COVID-19 public health emergency, many telehealth copays were waived entirely, though most have returned

Legislation Impact

The No Surprises Act (effective January 2022) has important implications:

• Protects patients from surprise bills for out-of-network emergency services
• Coinsurance for emergency services must be calculated based on in-network rates
• Helps prevent scenarios where patients face unexpectedly high coinsurance bills

How to Compare Health Plans Using Copay and Coinsurance

When comparing health insurance plans, you’ll want to look beyond just the monthly premium. Copays and coinsurance can dramatically change how much you actually spend over the year.

Review the Summary of Benefits and Coverage (SBC)

This document gives a side-by-side breakdown of how different services are covered, including:

• Copay amounts
• Coinsurance percentages
• Deductible and out-of-pocket limits

Questions to Ask:

When evaluating insurance plans, ask specific questions about how costs will apply to your expected healthcare needs. 

• What’s the copay for my regular doctor or specialist?
• What’s the coinsurance rate after the deductible?
• Does the plan cover preventive care at no cost?
• What happens if I use an out-of-network provider?
• Do my prescription medications fall under copay or coinsurance?

Compare Real-Life Scenarios

To truly understand the financial impact of different insurance plans, try calculating what you would pay under various scenarios relevant to your health situation. For example, estimate your costs for two specialist visits per month under competing plans, accounting for both copays and potential coinsurance.

Calculate what you might pay for unexpected events like a single emergency room visit or a hospital stay costing $10,000. Don’t forget to include your current prescription regimen in these calculations, as medication costs can vary dramatically between plans.

This practical approach to comparing plans highlights the true cost beyond just the monthly premium and helps identify which plan structure best matches your healthcare utilization patterns and financial preferences.

Frequently Asked Questions

Do you pay both a copay and coinsurance?

Not for the same service. Your plan will specify whether a copay or coinsurance applies, not both at the same time for a single visit.

Are copays applied to the deductible?

It depends on your specific plan. Check your Summary of Benefits and Coverage (SBC) document to confirm. Approximately 65% of employer plans do count copays toward the deductible.

How do copays and coinsurance work with HSAs?

If you have a high-deductible health plan (HDHP) with an HSA:

• Most preventive care services are covered at 100% before meeting the deductible
• For non-preventive services, you’ll typically pay the full cost until you meet your deductible
• After meeting the deductible, you’ll pay either copays or coinsurance as specified by your plan
• You can use your HSA funds tax-free to pay for qualified medical expenses, including copays, coinsurance, and expenses applied to your deductible

How do copays and coinsurance apply to telehealth visits?

Most plans now cover telehealth visits with either a copay (typically $5-15 lower than in-person visits) or standard coinsurance after the deductible is met. Check with your insurer for specific telehealth benefits.

Can copays or coinsurance change mid-year?

Generally, no. These are contractual elements of your plan that remain fixed during the plan year. However, they may change during annual renewal or if you switch plans.

How do prescription drug tiers affect copays and coinsurance?

Most plans use a tiered structure for prescriptions:

• Tier 1 (generics): Lowest copay ($5-15)
• Tier 2 (preferred brand): Medium copay ($30-45)
• Tier 3 (non-preferred brand): Higher copay ($60-100)
• Tier 4+ (specialty drugs): Often coinsurance (25-50%) rather than fixed copays

Conclusion

Understanding the difference between copay and coinsurance helps you budget smarter and avoid unexpected bills.

Copays provide predictability with fixed costs paid at the time of service, making them ideal for frequent, routine care. Coinsurance offers shared costs based on percentages, which works well if you rarely need medical care but can lead to higher out-of-pocket expenses for costly procedures.

With copays, you know exactly what you’ll pay for each visit, regardless of the actual service cost. With coinsurance, your costs will fluctuate based on the total bill, but only after meeting your deductible.

We strongly encourage you to review your plan details carefully before making a decision. Pay special attention to the Summary of Benefits and Coverage document, which outlines exactly how costs apply to different services. The time invested in understanding these details can save you significant money and prevent unwelcome surprises when seeking care.

Remember that choosing the right health insurance plan is both a financial and healthcare decision. The right balance of copays and coinsurance can lead to better care and significant savings when aligned with your specific healthcare needs.

For more personalized guidance, consider consulting with a licensed insurance advisor who can help match your healthcare needs and financial situation with the most appropriate plan structure.