Coinsurance Definition | OnlineHealthIns.com Glossary

Coinsurance

Also known as: Cost-Sharing Percentage

The percentage of a covered service's cost you pay after meeting your deductible, with your insurance plan paying the rest.

Coinsurance is the share of costs you and your health plan split after you've met your deductible. It's expressed as a percentage, commonly written as something like "20% coinsurance," meaning you pay 20% of the allowed cost and the plan pays 80%.

Coinsurance typically only applies after your deductible has been satisfied for the year.
It applies to the plan's negotiated or "allowed" rate, not necessarily the provider's full billed charge.
Coinsurance payments generally count toward your out-of-pocket maximum.

Because coinsurance is a percentage rather than a flat fee, the dollar amount you owe can vary a lot depending on how expensive the service is. A 20% coinsurance on a $200 office visit is very different from 20% coinsurance on a $30,000 hospital stay.

People sometimes confuse coinsurance with a copay. A copay is a fixed dollar amount regardless of cost; coinsurance scales with the price of the service, which is why big procedures can generate large coinsurance bills even on a plan with a modest deductible.

Example

After meeting her $2,000 deductible, a member has 20% coinsurance on a $10,000 outpatient procedure, so she owes $2,000 and the plan pays the remaining $8,000.

Good to Know

Coinsurance can produce a much larger bill than expected for costly procedures, which is exactly why the out-of-pocket maximum exists as a backstop.

Related Terms

Deductible — The amount you must pay out of pocket for covered care each year before your health plan starts sharing costs through copays or coinsurance.

Out-of-Pocket Maximum — The most you'll have to pay in a plan year for covered services before your health insurance starts paying 100% of covered costs.

Copay (Copayment) — A fixed dollar amount you pay for a specific covered service, like a doctor visit or prescription, regardless of the service's actual cost.