Copay vs Coinsurance

Health insurance has become a necessity nowadays, especially for the middle class, to benefit from the best health care. We need to be familiar with specific terms while discussing health insurance. They include copay, coinsurance, and deductibles. They are all interlinked but not alike. These terms are related to sharing of health expenses between a person and his health insurance company. Copay and coinsurance are used most of the time interchangeably. They are slightly different in their terms and policies. For example, the share of cost divided among both parties and your vulnerability to the financial perils.


It refers to the fixed amount paid by the policyholder in treatment while the insurer will bear the rest. For example, your insurance policy has a copay clause of $200, and your treatment costs you $500, you will pay $200 and the rest of it i-e $300, will be covered by your insurer. You will pay a fixed price no matter how much treatment costs you, and the insurer will handle the rest.

  • Facets

Following are the key features of copay:

  • You pay a fixed price
  • The insurer handles a large sum.
  • Copay percentage depends on the medical care you are undergoing.
  • Low copayment means you will pay a small amount during the claim, but your premium payment will be higher.
  • Higher the copay, lesser will be the premium payment, but you will have to pay a more considerable sum during the claim.
  • Copay clauses are primarily imposed for the health insurance policies of senior citizens.
  • Some insurance companies have an obligatory copay clause.
  • Some insurance companies come up with an option of voluntary copayment, which allows them to lessen their premium amount.
  • You can get the treatment without having cash.
  • While undergoing cashless treatment, your insurance provider can offer to settle your charges directly with the hospital.
  • During a Reimbursement Claim, the insurance provider will repay all the expenses while you were being treated.
  • Insurance providers levy copay clauses primarily for metropolitan cities where the cost of treatment is higher than towns and cities.
  • Copayments can add up speedily if you are visiting your doctor frequently.
  • Copay counts towards deductible under some policies.


Coinsurance refers to the fixed percentage of your medical expense which you bear after paying your deductibles. For example, your treatment costs you $100. The coinsurance offered by your health insurance company is 10%, so you will have to pay 10% of $100, which is $10 if you have paid your deductible. If you haven’t paid your deductibles, you will pay the total amount i-e $100, for your healthcare. A deductible is a money you must pay each year before sharing your medical treatment expenses with your insurance company.

  • Facets

Following are key features of coinsurance plans:

  • Coinsurance plans protect insurers from large claims.
  • The percentage is fixed.
  • Before the coinsurance plan starts, you have to pay the deductibles.
  • The percentage sticks to the out-of-pocket maximum you pay each year before the company pays the rest.

How Copay and Coinsurance Works Together

Sometimes you may end up paying both copay and coinsurance in case of availing complex health care services. For example, visiting your doctor costs you $20 copay, and your coinsurance for hospitalization is $30. Let’s say your doctor sees you three times, so your copay is $60. It seems like paying copay and coinsurance at the same time. You are paying for doctor’s visits and hospital services.

If you have a copay for a doctor’s visit, but the doctor performs a test or draws blood, then you will have to pay for that. This way, you will be paying a copay for the doctor’s visit and expenses of the lab. If you haven’t paid your deductible amount yet, you will pay the lab bills all by yourself.

Some insurance plan’s copays apply to some situations only. For example, some copays apply to ER visits, but they abjure if you are admitted to the hospital. If you are not hospitalized, you will have to pay the copays for ER visits in such plans. But in the worst scenarios, if you get hospitalized, you will pay your deductible and coinsurance up to the out-of-pocket maximum of policy instead of paying copay.

Copay and Coinsurance for Prescribed Medicine

Health insurance plans cover specific drugs. They will guide you about the medicine included in the plan and the cost-sharing policy. The health plan divides the drugs into tiers. The number of tiers varies from plan to plan. Let’s say the lowest tier includes cheap medicines. The second tier comprises pills from a brand that are a bit expensive. Tiers 4 and 5 have the most costly drugs but some plans decide the medicines in 6 tiers. The higher the tier number, the higher will be the cost of treatment. You will pay the copay amount depending on the tier and the number of days of supply. For example, for the lowest tier, a copay of $20 for 100 days’ supply.

For high tiers like 4 or 5, the company plans may step back from cost-sharing and switch to coinsurance. The coinsurance on expensive drugs reduces the financial risk for the insurer. Most prescription drugs need copay that is fixed. However, prescriptions with expensive medications will make you pay a percentage of coinsurance instead of copay. In some scenarios, if someone pays thousands of dollars for certain drugs and completes the plan’s out-of-pocket maximum of the year, the company will start paying 100% of the drug cost for the remaining year. The out-of-pocket maximum is the entire amount of money you have to pay for covered medical care facilities in the 1-year plan. Deductibles and coinsurance are health care costs that count towards the out-of-pocket maximum.


Copay, coinsurance, and deductible clauses are included in some policies. We should avail the policies that don’t have them. In emergencies, you have to pay a portion of your billings which can be challenging if you are short of cash. It would be beneficial to go with insurance companies that don’t implement such terms and clauses. While availing of health insurance, check all terms and conditions and go for the one best suits you.