When reviewing a medical bill or insurance explanation of benefits (EOB), you may notice a charge labeled coinsurance. Understanding what coinsurance is—and when it applies—can help patients better anticipate healthcare costs and avoid surprises.
What is coinsurance?
Coinsurance is the percentage of the cost of a covered healthcare service that a patient is responsible for paying after they have met their insurance deductible. Unlike a copay, which is a fixed amount, coinsurance is calculated as a percentage of the total allowed cost of the service.
For example, if a health insurance plan includes 20% coinsurance, the patient pays 20% of the allowed cost of the service while the insurance company covers the remaining 80%.
Here’s a simple example:
- Total allowed cost of a procedure: $1,000
- Patient coinsurance: 20%
- Insurance pays: $800
- Patient owes: $200
Coinsurance is one of the main ways insurance companies share healthcare costs with members.
Why do patients owe coinsurance?
Patients owe coinsurance because most health insurance plans use cost-sharing structures to divide medical expenses between the insurer and the patient. These structures typically include:
- Deductibles: the amount patients must pay before insurance begins paying
- Copays: fixed amounts for certain services
- Coinsurance: a percentage of costs after the deductible is met
Coinsurance helps insurers keep premiums lower by ensuring that patients share part of the cost of care. It also encourages patients to be mindful of healthcare spending since they are responsible for a portion of each service.
When do patients not owe coinsurance?
There are several situations where patients may not owe coinsurance.
- The deductible has not been met yet
Before meeting the deductible, patients usually pay the full allowed cost of services rather than coinsurance. - Preventive services are covered at 100%
Many insurance plans fully cover preventive services such as annual physicals, screenings, and vaccines. In these cases, patients typically do not owe coinsurance. - The patient has reached their out-of-pocket maximum
Health insurance plans have an annual out-of-pocket maximum, which limits how much patients must pay for covered services in a year. Once this limit is reached, insurance generally covers 100% of additional covered costs, meaning coinsurance no longer applies. - Services are covered with a copay only
Some plans require only a copay for certain visits, such as primary care or urgent care appointments, instead of coinsurance.
The bottom line
Coinsurance is a common part of health insurance plans and represents the patient’s share of healthcare costs after the deductible is met. While it can increase out-of-pocket expenses, understanding how coinsurance works—and when it does or does not apply—can help patients better plan for their medical costs and make informed healthcare decisions.