Coinsurance
What Is Coinsurance?
Coinsurance is the percentage of a covered expense that a policyholder must pay after meeting their insurance deductible. Instead of paying a fixed dollar amount, coinsurance requires the policyholder and insurance company to share costs according to a predetermined percentage.
Coinsurance is most commonly used in health insurance policies, though it can also appear in property insurance policies.
Why It Matters
Coinsurance affects how much you pay out of pocket for medical care or other insured losses. Even after reaching your deductible, you may still be responsible for part of the costs.
Understanding coinsurance helps individuals estimate healthcare expenses and choose insurance plans that match their financial situation.
How Coinsurance Works
Coinsurance usually appears as a percentage split between the insurer and the policyholder.
For example:
- 80/20 coinsurance means the insurer pays 80% of the cost
- the policyholder pays the remaining 20%
Coinsurance generally applies after the deductible has been met and continues until the policyholder reaches their out-of-pocket maximum.
Example
If a health insurance policy has 20% coinsurance and a medical procedure costs $1,000, the policyholder would pay $200 while the insurance company pays $800.
Coinsurance vs Deductible
- A deductible is the amount paid before insurance coverage begins.
- Coinsurance is the percentage of costs shared after the deductible is met.
FAQs About Coinsurance
Does coinsurance apply before the deductible?
Usually no. Coinsurance typically begins after the deductible has been satisfied.
Is coinsurance the same as a copayment?
No. A copayment is a fixed fee, while coinsurance is a percentage of the total cost.
Does coinsurance have a limit?
Yes. Most health plans include an out-of-pocket maximum that caps total annual costs.
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