The Short Answer
Coinsurance is the percentage of a covered medical cost that you pay after you’ve met your deductible. Your insurance company pays the rest. It’s usually written as a split, such as “80/20,” meaning the insurer pays 80% of the bill and you pay the remaining 20%.
Coinsurance is one of the main ways health insurance shares costs between you and your insurer once your coverage kicks in.
How Coinsurance Works
Health insurance costs are shared in a sequence. First you pay your deductible — a set amount you must cover out of pocket before your plan starts paying. After you hit your deductible, coinsurance begins: you and the insurer split covered costs by the percentage stated in your plan, until you reach your out-of-pocket maximum.
Example: Your plan has a $2,000 deductible and 20% coinsurance. You have a procedure that costs $10,000.
- You first pay the $2,000 deductible.
- That leaves $8,000. With 20% coinsurance, you pay 20% of that $8,000 = $1,600.
- Your insurer pays the other 80% = $6,400.
- Your total out-of-pocket for the procedure is $2,000 + $1,600 = $3,600 (assuming you haven’t hit your out-of-pocket maximum).
Coinsurance vs. Copay
Coinsurance and copays are both forms of cost sharing, but they work differently:
- A copay is a fixed dollar amount you pay for a specific service — for example, $30 for a doctor’s visit or $15 for a prescription. You know the exact cost up front.
- Coinsurance is a percentage of the total cost, so the dollar amount you pay varies with the size of the bill.
Many plans use both: a copay for routine office visits and coinsurance for larger services like surgeries, hospital stays, or imaging.
The Out-of-Pocket Maximum
There’s a built-in limit on how much coinsurance can cost you. Once your total out-of-pocket spending for the year — deductible, copays, and coinsurance combined — reaches your plan’s out-of-pocket maximum, your insurer pays 100% of covered services for the rest of the year. You stop paying coinsurance entirely at that point.
This is an important protection. It means a serious illness or major procedure can’t cost you an unlimited amount, even with coinsurance.
In-Network vs. Out-of-Network Coinsurance
Your coinsurance percentage is usually lower when you use in-network providers. A plan might have 20% coinsurance in network but 40% out of network. Out-of-network care can also fall outside your out-of-pocket maximum protection in some plans, leaving you exposed to much larger bills. Staying in network is one of the simplest ways to keep coinsurance costs predictable.
Why Plans Use Coinsurance
Coinsurance keeps you partly responsible for the cost of your care, which insurers use to discourage unnecessary spending and keep premiums lower. Plans with lower coinsurance (and lower deductibles) usually charge higher monthly premiums, while plans with higher coinsurance tend to have lower premiums. Choosing a plan is a trade-off between what you pay monthly and what you’d pay if you need care.
The Bottom Line
Coinsurance is your share of a covered medical bill — a percentage you pay after meeting your deductible, with your insurer covering the rest. Understanding your plan’s coinsurance percentage, deductible, and out-of-pocket maximum together gives you a realistic picture of what care will actually cost you in a given year.
Frequently Asked Questions
Do I pay coinsurance before or after my deductible?
After. You first pay your full deductible out of pocket. Once the deductible is met, coinsurance kicks in and you and your insurer split covered costs by the plan’s percentage.
What does “80/20 coinsurance” mean?
It means after your deductible, your insurance pays 80% of a covered bill and you pay 20%. The first number is always the insurer’s share, the second is yours.
Is coinsurance the same as a premium?
No. A premium is the fixed amount you pay every month to keep your insurance, whether or not you use care. Coinsurance is what you pay toward an actual medical bill when you receive covered care.
Does coinsurance count toward my out-of-pocket maximum?
Yes. Coinsurance, your deductible, and copays all count toward your out-of-pocket maximum. Once you reach that limit, your insurer pays 100% of covered services for the rest of the plan year.
Why is my coinsurance higher out of network?
Insurers negotiate lower prices with in-network providers and encourage you to use them by charging a lower coinsurance percentage. Out-of-network care costs the insurer more, so your share is higher — and sometimes not subject to the same out-of-pocket cap.
Can a plan have no coinsurance?
Some plans use only copays for most services rather than coinsurance, especially for routine care. But many plans apply coinsurance to larger expenses like hospital stays. Always check the plan’s summary of benefits to see how it splits costs.