What Is Coinsurance Vs Copay?

Find out the difference between coinsurance and copay in this detailed guide.

You might have heard of terms like coinsurance and copay. It is now high time that you know what these terms mean.

Regardless of whatever health insurance policy you have, it’s of paramount importance to know and understand the difference between a copay and coinsurance. Such costs together with a few other added elements can drastically alter the amount you will pay for health insurance and the extent to which your family will receive the coverage.

It is also essential for you to know these basic things so that you can make the correct healthcare decisions and choose the right insurance options for your family.

Here is our take on how healthcare insurance works. Let us jump right in!

What Is Coinsurance?

Coinsurance is a type of insurance where the cost is shared between the two parties; i.e. the company that provides the medical coverage and the policyholder. The cost is found out as a percentage of the amount for some health related assistance or prescription drug. The moment the policyholder attains his/her yearly deductible, he/she can begin paying the coinsurance, whereas the amount left is paid by the health insurance company.

Moreover, the insurance company can also use various coinsurance rates to every health service they offer. Therefore, you may end up paying a different amount for each medical assistance that is provided, such as a visit to the doctor, lab work, and prescription drugs etc.Every health insurance organization is different and the coinsurance cost that you have to pay differs from company to company. In addition to this, insurance agencies also usually use coinsurance to unapproved brands and drugs.

Typically, health maintenance organizations (HMOs) and exclusive provider organizations (EPOs) do not provide any insurance for out-of-network care. This means that the insured would have to pay out of his/her own pocket to enjoy the luxuries of these medical services.

What Is Copay?

A copay, also known as a copayment, is a fixed amount that the policyholder pays for some medical assistance. It is a method through which insurance companies share the charges of a health service. The money that is to be paid is found out by the insurance company and is based on the insurance plan, health assistance needed or the prescription drugs required.

Copays recorded in medical coverage plans come into force either prior to or after the policyholder has arrived at a yearly deductible. Once the policyholder has come to this amount, only then can he/she pay the copayment.

Medical plans that use copayments prior to the deductible or defer them for a certain aid are usually better and approved. This indicated that the insurance agency starts to select the rates early on. This is quite significant when you have to draw comparisons between various health related expenses. Theoretically, the copay costs might seem to be alike. However, that is nowhere near the truth. In all honesty, one copay cost might be more than the other once you start paying.

You should also look at how frequently the copays are used. It is not very difficult to figure that out for a visit to the doctor because you have to pay for every doctor’s visit.

However, hospital stays can be quite different. One one hand, some schemes ask for a copayment on a daily basis for the amount of time you remain in a hospital, whereas on the other hand, some require a copayment on a per-admission basis. Moreover, prescription drug copays also tend to be a little complicated.

What Are Out-Of-Pocket Maximums?

The moment you attain an out-of-pocket maximum, this means that your insurance agency will provide 100% coverage for all the health services for the span of the next entire year! You should know that whatever amount you spend on deductibles, copays, and coinsurance will add to your out-of-pocket maximum. However, dividends are not included together with any amount that you spend on services not included in your plan.

Difference Between Coinsurance and Copay

The between both coinsurance and copay lies in how the cost is split between the policyholder and the insurance company. Where a copay is a fixed amount that you pay in addition to your monthly dividend, coinsurance is the percentage of the amount that is divided between the policyholder and the insurance agency, and each party has to contribute to paying the total cost.

Which Should I Choose? – Coinsurance Or Copay

The answer to this question depends from person to person. This is because everyone’s financial status and health insurance requirements are different. However, there are some things that you can keep in mind to make the right decision for yourself.

In most cases, an individual does not pay a hefty amount of coinsurance with a policy that offers an inexpensive health insurance monthly dividend. If we take two health policies as an example, one with a monthly dividend of $500 and the other with $550. Considering these two very different monthly premiums, you should know that the coinsurance would be based on this information too. Thus, coinsurance for an emergency room visit might be 38% and 25% for the given policies, respectively.

When comparing coinsurance and copay, a copay seems to be the better option. This is because usually, copays do not add to medical coverage deductibles or out-of-pocket maximums. If you are someone who frequently buys prescribed medicines and has numerous visits to the doctor’s office, then you should definitely look for policies with lower copays.

Example Of Coinsurance and Copay

Now that you know about what exactly is coinsurance and copay, let us look at a small example for each.

A copay is a fixed amount that you pay for any medical assistance you may need. For example, you could have a $30 copay every time you visit your doctor, a $15 copay for your prescribed monthly medicines, and a $300 copay for an emergency room visit.

On the other hand, coinsurance is only a percentage of the amount you split between yourself and the insurance agency. For example, if you have 25% coinsurance and you pay for 25% of the bills, then your insurance company will cover the remaining 75%.


Health insurance can sometimes be a tricky business. But now you know everything about it and all that it entails, including aspects such as coinsurance and copay. Thus, you are totally ready to purchase the perfect health insurance policy to cater to your needs.

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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