What Is Coinsurance? How It Affects Your Health Costs
Coinsurance is the percentage of costs for a covered health care service that you pay after you have met your deductible. Your health insurance plan pays the rest of the percentage.
At a glance
- Term
- Coinsurance
- What it is
- Insurance cost-sharing term
- Section
- Health benefits and money
- In one line
- It’s the share of the bill you’re responsible for after you’ve paid your deductible, usually shown as a percentage.
What Coinsurance means
Coinsurance is a way you and your health insurance plan share the cost of your medical care. It is expressed as a percentage. For example, if your plan has an 80/20 coinsurance split, your insurer pays 80% of the cost of a covered service, and you pay the remaining 20%. This cost-sharing arrangement begins only after you have paid your annual deductible in full. The specific coinsurance percentage can vary between plans and may even be different for various types of services, such as a specialist visit versus a hospital stay.
Understanding how coinsurance fits with other insurance terms is key. First, you pay for your covered medical care out of pocket until you meet your deductible. Once your deductible is met, you and your insurer start sharing the costs through coinsurance. You will continue to pay your coinsurance percentage on all covered services until you hit your plan’s out-of-pocket maximum for the year. Once you reach that limit, your insurance plan will typically cover 100% of the costs for covered services for the rest of the plan year.
In a practical sense, you don’t usually pay your coinsurance amount at the time of your appointment. Instead, your doctor or hospital will bill your insurance company first. The insurance company then processes the claim and determines the allowed amount for the service based on its negotiated rates. You will later receive a bill from your provider for your share, which is the coinsurance percentage of that allowed amount. You can see this breakdown on the Explanation of Benefits (EOB) document sent by your insurer.
The main purpose of coinsurance is to split the financial risk of health care between you and the insurance company. A plan with lower monthly premiums might have a higher coinsurance percentage, meaning you would be responsible for a larger share of the costs when you do need care. Conversely, a plan with higher monthly premiums often comes with lower coinsurance. When choosing a health plan, it is helpful to consider your expected health needs to find a balance of premium, deductible, and coinsurance that works for your budget.
How it works on your bill
- First, check that you have met your annual deductible. Coinsurance does not apply until your deductible is fully paid.
- After a medical service, your provider bills your insurer. Your insurer determines the allowed, negotiated rate for that service.
- Your insurer pays its percentage of that allowed rate. For an 80/20 plan, the insurer pays 80%.
- You will receive a bill from your provider for the remaining percentage. In an 80/20 plan, your share is 20%.
- Review your Explanation of Benefits (EOB) from your insurer, which details this cost breakdown and shows how much you owe.
- Keep in mind that your coinsurance payments count toward your annual out-of-pocket maximum.
Coinsurance vs. similar terms
| Compared with | How Coinsurance differs | What the other term means |
|---|---|---|
| Copay | Coinsurance is a percentage of the cost you pay for a service after meeting your deductible. | A copay is a fixed dollar amount you pay for a specific service, often before your deductible is met. |
| Deductible | Coinsurance is the percentage share of costs you pay after your deductible has been fully paid. | A deductible is the total amount you must pay out of pocket for covered services before your insurance starts to pay. |
Common misconceptions
- Myth: Coinsurance is a fixed fee I pay at the doctor’s office. Coinsurance is a percentage of the final, negotiated cost, not a flat fee. The amount you owe varies with the cost of the service and is typically billed to you after your insurer has processed the claim.
- Myth: I start paying coinsurance on day one of my plan. Coinsurance only applies after you have met your plan’s annual deductible. Until then, you are typically responsible for 100% of the costs for most services.
- Myth: My 20% coinsurance is based on whatever the hospital charges. Your coinsurance is a percentage of the discounted rate your insurance plan has negotiated with in-network providers, not the provider’s original list price.
Related terms
When to bring in a professional
For questions about your specific plan’s coinsurance, the best sources of information are your insurance provider or your company’s HR department.
- You don’t understand your Explanation of Benefits (EOB) after receiving care.
- You receive a bill that you believe has calculated your coinsurance incorrectly.
- You are trying to estimate your total costs for a planned medical procedure.
- You are choosing a new health plan and want to understand how different coinsurance options would affect your total spending.
How this entry was made: drafted with AI assistance from general, widely published definitions, checked in a separate verification pass for invented numbers and claims, and edited by the Millennials Wellness editors. General information only, not medical, financial or legal advice. Last checked October 2026. Our ground rules · Back to the glossary