Key takeaways:
After you meet your health insurance deductible, you share medical costs with your insurer until the end of the plan year. Your percentage of those costs is called coinsurance.
Your coinsurance may be high (80% to 100%) or low (0% to 20%). Typically, it will be less than 50%.
Your coinsurance drops to 0% once you reach your out-of-pocket maximum for the year.
When you’re choosing an insurance plan, one important step is to estimate your medical costs for a typical year. Aside from your policy’s monthly premiums, you’ll also be responsible for coinsurance or a copay for the care you receive. Copay amounts are specified in policy documents, so you know what to expect. Your coinsurance bill can be trickier, because many factors affect the total.Understanding how coinsurance works and how it affects your out-of-pocket costs can make a big difference in your budget. Read on to learn more.
How does coinsurance work?
Coinsurance is a way for your insurer to share medical costs with you after you’ve met your deductible. It requires you to pay a portion of your medical costs (such as charges for tests and office visit fees), while your insurer pays the rest.
Your portion is expressed as a percentage. For example, if you have 20% coinsurance (a typical share for employer-sponsored health insurance), you pay 20% of medical costs, and your provider pays the other 80%. Higher coinsurance, such as 60% or 70%, would have you paying 60% or 70% of the bill.
How does coinsurance relate to your deductible?
Your health plan will likely have both a deductible and coinsurance. Your annual deductible is an out-of-pocket dollar amount specified in your policy documents. You have to pay that amount in full before your insurer begins covering any costs. Once you’ve paid all of that deductible amount, your coinsurance will kick in. Your insurer will begin paying a percentage of your medical costs as outlined in your plan, until the end of the year. Your deductible resets each year.
It is possible to get zero-deductible health insurance — in which case, your coinsurance would apply immediately. However, those plans will often have more expensive premiums.
If you have a high-deductible healthcare plan, you’ll generally pay lower premiums. Coinsurance doesn’t apply until you meet the deductible. It’s not uncommon for high-deductible health plans to have low coinsurance rates (even as low as 0%).
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How does coinsurance affect out-of-pocket costs?
Coinsurance has a significant effect on your medical bills, and the effect can be hard to predict. Since coinsurance operates as a percentage — rather than a fixed cost such as a copay — the dollar amount you owe for your share will change along with your total medical bill.
But that’s not the only reason your coinsurance burden is unpredictable. There are several other factors to watch out for:
Your coinsurance rate may be the same across the board or may be different depending on the service. For example, your plan may charge you:
20% for a visit to your primary care physician
35% for a specialist
40% for an emergency room visit
10% for medication
Your coinsurance percentage will vary based on whether your provider is in your plan’s network. Health plans usually impose different rates for in-network and out-of-network providers. Your out-of-network coinsurance rate will be higher.
If you use an out-of-network provider, you may have to pay an extra charge in addition to your coinsurance. Insurers calculate “usual, customary, and reasonable” (UCR) prices for providers’ services in a given location. They pay their share of the coinsurance on the UCR amount, as do you. But if your provider’s fee is higher than the UCR price, you will probably have to pay 100% of the difference.
All your coinsurance payments count toward your out-of-pocket maximum, which is set by your policy. Once you reach that maximum, you stop paying coinsurance, and your health plan covers 100% of in-network services for the rest of the year.
Medicare Part B coinsurance is 20% of the Medicare-approved price.
For employer-provided healthcare plans, 2021’s average coinsurance rates are 19% for primary care and 20% for specialty care, according to the Kaiser Family Foundation’s annual survey.
On the ACA marketplace, coinsurance varies by plan. Here are the estimated average splits:
| Metal level | Your coinsurance | Insurer pays |
|---|---|---|
| Bronze | 40% | 60% |
| Silver | 30% | 70% |
| Gold | 20% | 80% |
| Platinum | 10% | 90% |
Coinsurance also applies to prescription drugs. In private plans, the coinsurance percentages typically vary by prescription drug tier. In Medicare Part D plans, medication prices, copays, and coinsurance rates may vary by tier, while coinsurance also changes from one phase to another.
What are the financial benefits and risks of coinsurance?
| Financial benefits | Financial risks | |
|---|---|---|
| High coinsurance | If you’re OK with paying a larger share of your medical costs, you can lock in lower premiums. Healthy people needing only basic care don’t expect to face big medical bills, so they will take the risk of having to pay a bigger fraction of future costs. If you do have to pay out, bear in mind that your coinsurance payments count toward your out-of-pocket maximum. This means higher coinsurance costs could help you hit that limit sooner. | Consider your age, health, and care requirements. People with chronic health conditions, who need multiple medications. or hospital stays could find a high coinsurance percentage very costly. Even if your premiums are low, those monthly savings vanish when you have to pay a larger share of bills for expensive medical services. |
| Low coinsurance | People who need chronic care, expensive treatments, or pricey medications will have an easier time with low coinsurance. Having your insurer paying a larger share of your costs can help you hold on to more money over time, even if your monthly premiums are on the high side. | Plans with low coinsurance generally have higher premiums, meaning they’d eat up more of your monthly budget. When you have a plan with a low coinsurance rate, your contribution to your medical bills is smaller, so it takes longer to reach the out-of-pocket maximum. |
The bottom line
Understanding your health plan’s coinsurance can help you estimate your medical costs. Low coinsurance will benefit people needing ongoing care; even if premiums are higher, overall medical bills will be smaller. High coinsurance typically goes with lower premiums, so people who need only routine care will pay less each month and may not face costly bills at all. If they do need expensive care, of course, they owe a larger share of those bills. Once you hit your annual out-of-pocket maximum, you no longer pay coinsurance.
View All References (6)
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Healthcare.gov. (n.d.). Out-of-pocket maximum/limit.
Healthcare.gov. (n.d.). The 'metal' categories: Bronze, silver, gold & platinum.
Healthcare.gov. (n.d.). UCR (usual, customary, and reasonable).
Healthinsurance.org. (n.d.). High-deductible health plan (HDHP).
Kaiser Family Foundation. (2021). 2021 Employer health benefits survey.
Medicare.gov. (n.d.). Medicare costs at a glance.
GoodRx Health has strict sourcing policies and relies on primary sources such as medical organizations, governmental agencies, academic institutions, and peer-reviewed scientific journals. Learn more about how we ensure our content is accurate, thorough, and unbiased by reading our editorial guidelines.
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