What is coinsurance?
Quick answer
Coinsurance is the percentage of a covered cost you pay after you’ve met your deductible, while your insurer pays the rest. With 20% coinsurance, for example, you pay 20% of a covered bill and the plan pays 80%, until you reach your out-of-pocket maximum.
An example step by step
Say your plan has a $1,500 deductible, 20% coinsurance and a $6,000 out-of-pocket maximum, and you have a covered $10,000 hospital bill:
| Step | You pay | Plan pays |
|---|---|---|
| First $1,500 (deductible) | $1,500 | $0 |
| Remaining $8,500 at 20% / 80% | $1,700 | $6,800 |
| Total | $3,200 | $6,800 |
If more bills arrive later in the year, you keep paying 20% until your total spending reaches $6,000. After that, the plan pays 100% of covered care for the rest of the plan year.
Key terms side by side
| Term | What it is |
|---|---|
| Premium | What you pay each month to have insurance |
| Deductible | What you pay before the plan starts sharing costs |
| Copay | A fixed amount per service, such as $30 for a doctor visit |
| Coinsurance | A percentage of the cost after the deductible |
| Out-of-pocket maximum | The most you pay for covered care in a year |
Coinsurance vs copay
A copay stays the same no matter what the service costs. Coinsurance rises with the bill, so it matters most for expensive care like surgery or hospital stays. Many plans use both: copays for routine visits and prescriptions, coinsurance for bigger services.
Coinsurance in property insurance
The word has a different meaning in home and business property insurance. There, a coinsurance clause requires you to insure a building for a set share of its value, often 80%. If you’re underinsured, the insurer may pay only part of a claim.
Supplemental plans can help with out-of-pocket costs; see what hospital indemnity insurance is. This is general information, not financial advice; your plan documents give the exact rules.
Sources
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