What’s the Difference Between Coinsurance and Copays?
Many health care plans require you to make a copay or pay a fixed amount each time you receive a service. Before reaching your deductible, you’ll pay all costs out of pocket, except for covered preventive services. Once you reach your deductible, you’ll make copays, and your health insurance will pay for services based on the terms of the plan. Typically, you pay the copay directly to the service provider.
Coinsurance vs. Copay: How Much Is Paid
Your plan’s out-of-pocket maximum will apply to your coinsurance. For example, say your plan has an $8,000 annual cap. Once you’ve paid $8,000 in medical expenses, copays, and coinsurance, the insurance company will pay all covered costs for the rest of the plan year (though, again, you’ll continue to pay your monthly premiums and any non-covered expenses). Coinsurance percentage amounts vary according to the type of policy you have. The copay amount can vary based on the type of service. For example, your plan may require a $20 copay for doctor’s visits, $10 for prescription drugs, and $150 for emergency services. Your plan may also charge a higher copay for visits to out-of-network providers. The amount of copay and coinsurance you pay, along with your deductible, depends on the level of health care coverage you have. Copays limit your out-of-pocket costs for a particular service or doctor’s visit to a specific dollar amount, such as $25. But since coinsurance is a percentage of the visit’s cost, there’s no actual cap other than your plan’s out-of-pocket maximum. In other words, you could ultimately spend much more for higher-cost services with a coinsurance payment compared to a flat-rate copayment.
Special Considerations
Health insurance plans offered through the marketplace come in four categories that provide different levels of coverage: Bronze Silver Gold Platinum
Bronze plans charge the lowest monthly premiums but require you to pay more out of pocket when you need medical care. On the other hand, platinum plans require you to pay less out of pocket but have high monthly premiums. Typically, services provided within the network or by “participating providers” cost less than those offered by out-of-network (or non-participating) providers. But some plans won’t cover any out-of-network costs. Choosing a health insurance plan with the lowest monthly premium might not give you the lowest health care costs. According to the U.S. Center for Medicare and Medicaid Services, you can expect to pay a higher coinsurance percentage, higher copays, and a higher deductible if you buy a plan with a lower monthly premium.
Out-of-Pocket Expenses
It’s helpful to understand a couple of other insurance terms, especially when comparing plans and considering all of your expenses:
Out-of-pocket costs: This is the amount you’ll pay yourself, including your deductible, copays, and coinsurance, as well as the costs of any services that your plan doesn’t cover. Your monthly premiums aren’t included.Out-of-pocket maximum: This is the maximum amount of annual out-of-pocket costs for covered services. After you reach this limit, the insurer will pay all covered costs for the rest of the plan year. You’ll still need to pay your monthly premiums and any expenses for out-of-network services or care that your plan doesn’t cover.
