"What is coinsurance?" is one of the most-searched health-insurance questions, and for good reason — it directly affects what you pay when you actually use care. The good news: it's simpler than it sounds. Here's the plain-English version with examples.
The quick answer
Coinsurance is your share of a covered medical cost, expressed as a percentage, that you pay after you've met your deductible. If your plan lists "20% coinsurance," you pay 20% of the plan-approved amount for a service and your insurer pays the other 80%.
How coinsurance works step by step
Coinsurance sits in the middle of how a plan shares costs across a year. The sequence usually goes like this:
- You pay the full negotiated rate for care until you meet your deductible.
- After the deductible, you pay coinsurance (your percentage) and the plan pays the rest.
- Every payment counts toward your out-of-pocket maximum.
- Once you hit the out-of-pocket max, the plan pays 100% for the rest of the year.
A real example
Imagine you have a $2,000 deductible and 20% coinsurance, and you need a procedure with a plan-approved cost of $6,000. You pay the first $2,000 (your deductible). Of the remaining $4,000, you pay 20% — that's $800 — and the plan pays $3,200. So your total for the procedure is $2,800, plus any coinsurance stops if you reach your out-of-pocket maximum along the way.
Coinsurance vs. copay
Don't confuse coinsurance with a copay. A copay is a flat fee (like $30 a visit) that often applies before the deductible. Coinsurance is a percentage that usually applies after. Most plans use both — copays for routine visits, coinsurance for larger services. Our copay vs coinsurance guide breaks down the difference.
How to lower your coinsurance
Plans with lower coinsurance (say 10% instead of 30%) shift more cost to the insurer, but usually charge a higher premium for it. If you expect significant care, paying more premium for lower coinsurance can save money overall; if you rarely use care, higher coinsurance with a lower premium may win. Staying in-network also keeps the coinsurance percentage at its favorable level.
The bottom line
Coinsurance is simply your percentage share of a bill after the deductible — capped by your out-of-pocket maximum. When comparing plans, look at the coinsurance rate alongside the premium and deductible to see the true cost of a big medical year. A licensed advisor can model how a plan's coinsurance would play out for your situation, free.
