Coinsurance in Health Insurance: What It Is and How It Really Works

Understanding coinsurance can make health insurance feel far less confusing—and help you avoid surprise medical bills. Coinsurance shows up on almost every health plan, but many people are unsure what it actually means in real life.

This guide breaks coinsurance down in plain language, with clear examples and practical tips so you can better predict what you’ll pay for care.

What Is Coinsurance in Health Insurance?

Coinsurance is the percentage of covered medical costs you pay after you’ve met your deductible.

• The insurance company pays a percentage.
• You pay the remaining percentage.
• This split continues until you hit your out-of-pocket maximum for the year.

Coinsurance only applies to covered services under your plan’s rules and usually only after your annual deductible has been met.

A simple coinsurance definition

If your plan says 20% coinsurance, that means:

• Your insurance pays 80% of the approved cost.
• You pay the remaining 20%, after your deductible is met.

Coinsurance vs. Copay vs. Deductible: Key Differences

These three terms are easy to mix up, but they each describe a different kind of cost.

Quick comparison table

How they work together

Think of it like this:

1. You pay premiums to keep your coverage active.
2. When you need care:
   • You may pay a copay (for example, a primary care visit).
   • For other services, you first pay your deductible.
3. After your deductible:
   • Coinsurance kicks in, and you share costs with the insurer.
4. Once all your spending (deductible + copays + coinsurance, depending on your plan rules) reaches your out-of-pocket maximum, the plan usually pays 100% of covered costs for the rest of the year.

How Coinsurance Works Step by Step

Let’s walk through a basic scenario so you can see coinsurance in action.

Example: 20% coinsurance plan

• Deductible: $1,500
• Coinsurance: 20% (you) / 80% (plan)
• Out-of-pocket maximum: $6,000

You have a procedure that your health insurer has negotiated to cost $3,000 (this is the allowed amount, which is often less than the list price).

1. If you haven’t paid any of your deductible yet:

   • You first pay $1,500 (your full deductible).
   • Remaining allowed cost: $3,000 − $1,500 = $1,500.

2. Now coinsurance applies to the remaining $1,500:

   • You pay 20% of $1,500 = $300.
   • Your insurance pays 80% of $1,500 = $1,200.

3. Your total cost for that procedure:

   • Deductible: $1,500
   • Coinsurance: $300
   • Total you pay: $1,800
   • Total plan pays: $1,200

4. All of what you paid generally counts toward your out-of-pocket maximum:

   • Out-of-pocket total so far: $1,800 toward your $6,000 limit.

Once you reach the $6,000 out-of-pocket maximum, your insurer usually pays 100% of covered in-network costs for the rest of that plan year.

What Does “70/30” or “80/20” Coinsurance Mean?

You’ll often see coinsurance described as splits like:

• 80/20 plan – Insurance pays 80%, you pay 20%.
• 70/30 plan – Insurance pays 70%, you pay 30%.
• 90/10 plan – Insurance pays 90%, you pay 10%.

These apply to the allowed amount for covered in-network services after your deductible.

👉 Higher insurer percentage (like 90/10) usually means you pay more in premiums but less per service.
👉 Lower insurer percentage (like 60/40 or 70/30) usually means you pay lower premiums but more when you actually use care.

Coinsurance Only Applies to the Allowed Amount

One confusing part of coinsurance is that it usually applies to the plan’s allowed amount, not the provider’s list price.

In-network vs. out-of-network

• In-network providers have contracts with your plan.

  • They agree to accept the insurer’s allowed amount as payment in full (minus your share).
  • Your coinsurance is based on this reduced rate.

• Out-of-network providers may:

  • Be subject to much higher deductibles and coinsurance, or
  • Not be covered at all, depending on your plan.
  • You may also be billed for any amount above the plan’s allowed amount (called balance billing) if not protected by specific balance billing rules in your region.

Because of this, many people find it significantly more predictable and often less costly to use in-network providers whenever possible.

When Does Coinsurance Start?

Coinsurance usually kicks in after your deductible is met, but there are important exceptions.

Common patterns (your plan can vary)

• Preventive care
  Many plans cover eligible preventive services (like certain screenings or vaccines) at no cost to you, even before the deductible.

• Office visits with copays
  Some plans charge a copay for primary care or specialist visits, instead of coinsurance, even before the deductible is met.

• Hospital care and major procedures
  Often subject to the deductible first, then coinsurance.

• Emergency room
  May have a copay plus coinsurance, depending on your plan.

👉 The exact rules are in your Summary of Benefits and Coverage (SBC) or your plan’s benefits summary, which is usually available through your insurer or employer.

How Coinsurance Affects Your Total Health Care Costs

Coinsurance directly affects how much you pay when you use your health insurance.

1. Coinsurance and your budget

High coinsurance can mean:

• Lower monthly premiums but
• Higher out-of-pocket costs if you need frequent or expensive care.

Low coinsurance (for example, 10% or 20%) can mean:

• Higher monthly premiums
• Lower cost per service and more predictable bills when you use care.

2. Coinsurance and the out-of-pocket maximum

Your out-of-pocket maximum is the safety net. It limits how much you’ll pay in a year for covered in-network care.

What typically counts toward it (plan rules apply):

• Deductibles
• Coinsurance payments
• Copays

What typically does not count:

• Premiums
• Costs for non-covered services
• Any balance-billed amounts from out-of-network providers (if applicable)

Once you hit the maximum, coinsurance usually stops for the rest of the year, and your plan pays 100% of covered costs in network.

Real-World Example: Comparing Different Coinsurance Levels

Imagine three plans, all with a $2,000 deductible and a $7,000 out-of-pocket maximum, but different coinsurance.

You have a covered surgery with a $20,000 allowed amount, and your deductible is not yet met.

Plan A: 50% Coinsurance

• You pay your $2,000 deductible.
• Remaining: $18,000.
• You pay 50% of $18,000 = $9,000, but your out-of-pocket max is $7,000.
• Once your spending hits $7,000 total, the plan pays the rest.
• Your total: $7,000 (you hit your max).

Plan B: 20% Coinsurance

• You pay your $2,000 deductible.
• Remaining: $18,000.
• You pay 20% of $18,000 = $3,600.
• Total you pay: $2,000 + $3,600 = $5,600, below your $7,000 max.

Plan C: 10% Coinsurance

• You pay your $2,000 deductible.
• Remaining: $18,000.
• You pay 10% of $18,000 = $1,800.
• Total you pay: $3,800, well under your $7,000 max.

Same procedure, same deductible, same maximum—different coinsurance, very different costs.

Where to Find Your Coinsurance Details

You can usually see your coinsurance listed as a percentage on:

• Your insurance ID card (sometimes in brief form).
• Your plan’s Summary of Benefits and Coverage (SBC).
• Your insurer’s online portal or app.
• Enrollment materials from your employer or marketplace.

Look for phrases like:

• “After deductible: 20% coinsurance”
• “You pay 30%”
• “Plan pays 70%, you pay 30%”

Be sure to check separately for:

• In-network coinsurance
• Out-of-network coinsurance (often higher, if covered at all)

Common Coinsurance Questions

Do I pay coinsurance if I haven’t met my deductible?

For many services, not yet. You usually pay the full allowed amount until your deductible is met. After that, coinsurance starts.

However:

• Some services may use copays, even before the deductible.
• Some services, especially preventive care, may be covered at no cost regardless of your deductible.

Always check how your specific plan handles each type of service.

Does coinsurance apply to prescriptions?

It depends on the plan. Some use:

• Copays for medications (for example, $10 generic, $40 brand).
• Coinsurance for some or all tiers (for example, 25% of the drug’s allowed cost).
• A mix of both, depending on drug tier and whether you’ve met your deductible.

Your plan’s drug formulary or benefits summary usually spells this out.

Does coinsurance apply before or after copays?

Typically:

• Copays apply separately for certain services (like office visits or urgent care).
• Coinsurance applies to other covered services (like imaging, surgery, or hospital care), after your deductible is met.

Both copays and coinsurance can count toward your out-of-pocket maximum, depending on your plan rules.

Practical Tips for Managing Coinsurance Costs

You can’t change your plan’s coinsurance mid-year in most situations, but you can manage how it affects you.

1. Use in-network providers whenever possible

In-network care usually means:

• Lower allowed amounts
• No balance billing from contracted providers for covered services
• More predictable coinsurance costs

2. Ask for estimated costs before non-emergency procedures

Many providers can give you:

• An estimate of the allowed amount
• A breakdown of what your insurer is likely to pay
• An approximation of your coinsurance

This isn’t always exact, but it can help you plan ahead.

3. Understand your deductible and where you stand

Knowing how much of your deductible and out-of-pocket maximum you’ve already met can help you decide:

• Whether to schedule elective procedures this year or next.
• How much to set aside from savings or a health spending account.

4. Review your Explanation of Benefits (EOB)

After a claim, your insurer usually sends an EOB, which shows:

• The provider’s charge
• The plan’s allowed amount
• What the plan paid
• What you owe (deductible, copay, and/or coinsurance)

If something doesn’t look right, you can contact your insurer or provider’s billing office for clarification.

5. Consider coinsurance when choosing a new plan

When comparing health insurance plans:

• Don’t just look at premiums.
• Pay attention to:
  • Coinsurance percentage
  • Deductible amount
  • Out-of-pocket maximum
  • The network of providers and hospitals

Plans with lower coinsurance may cost more each month but help protect you from very large bills if you end up needing significant care.

Quick Takeaways: What Coinsurance Means for You

To wrap it up, here’s a concise summary:

• Coinsurance is your percentage share of covered medical costs after you meet your deductible.
• It’s one piece of your total cost, along with premiums, deductibles, copays, and your out-of-pocket maximum.
• Typical splits look like 80/20, 70/30, or 90/10, where the first number is what the insurer pays and the second is your share.
• Coinsurance is usually based on the insurer’s allowed amount, especially for in-network providers.
• Once your costs reach your out-of-pocket maximum, coinsurance generally stops, and the plan pays 100% of covered in-network services for the rest of the year.

Understanding coinsurance gives you a clearer picture of how your health insurance actually works and helps you plan and budget more confidently for your medical care.