Suppose you recently turned 26, purchased your own health insurance through the Affordable Care Act (ACA), and have just been to your doctor. (Thankfully, you only have the common cold, not something else!) You were a little confused, though, when the receptionist asked you to pay a $20 copayment at the front desk before your visit.
Depending on what type of medical service you receive, you may have to pay either a copayment or coinsurance before you receive medical services. Sometimes, if you have an office visit, get bloodwork done, or have a medical procedure, you may have to pay both. So what are copayments and coinsurance? The terms sound pretty similar, right?
They’re similar in that they’re both forms of cost sharing that you pay when you need medical care. But you pay them at different times, and they’re needed for different reasons.
Here’s a quick guide to the difference between a copayment and coinsurance.
Before you get the lowdown, make sure you have a health insurance policy in the first place. Call a licensed UnitedHealthcare insurance agent at 1-800-273-8115 or search uhone.com for more information.
A copayment (or copay, as it’s sometimes called) is a fixed amount that you pay for a covered healthcare service after you’ve paid your deductible.
“A copay is decided upon with every insurance contract and is a set amount that the patient is responsible for according to their policy,” explains Adria Gross, CEO and founder of MedWise Insurance Advocacy in Monroe, New York. Very often there are copays for your primary doctor, specialists, hospital visits, and urgent care visits, as well as other listings of copays depending on your policy, she adds. The amount of each copay can vary for different services — such as getting medications, lab tests, and specialist visits — within the same plan.
Let’s say your health insurance pays $100 for a visit to the doctor. Your copay is $20. If you’ve fully paid your deductible, you owe only $20, but if you haven’t met your deductible, you could pay as much as $100.
Coinsurance, on the other hand, is the amount you are responsible for even after you’ve met your deductible. “It goes according to a percentage of what is on your health insurance policy agreement,” explains Gross. An example, she notes, would be a patient being responsible for 20% of the bill and their insurance company paying the other 80%.
For example, suppose you break your arm in January, before you’ve started to pay down your deductible. You’ll need a lot of treatment. Your healthcare plan will allow up to $12,000 in costs. If you have a $3,000 deductible, you’ll need to pay that first $3,000 yourself. But after that, you’ll need to pay only 20% of the remaining $9,000, or $1,800 — in other words, your coinsurance. So your total out-of-pocket cost would be $4,800 — your $3,000 deductible plus your $1,800 coinsurance.
For additional advice, call a licensed UnitedHealthcare insurance agent at 1-800-273-8115, and let them help figure out what a health insurance policy might cost you. Explore uhone.com for more information.
You can’t use copayments or coinsurance to pay down your deductible, but you can use them for your out-of-pocket maximum. (That’s the limit on what you’ll have to pay out of pocket during your health insurance’s plan year.)
If you have a plan with a $2,000 out-of-pocket maximum and you’ve paid out that amount in the form of copayments, coinsurance, and your deductible, for example, the insurance company will then pay for all covered services for the rest of the year (up to any policy or calendar-year limits), with no additional cost-sharing contributions from you.
Just as an FYI, the out-of-pocket maximum for an ACA marketplace plan in 2022 can’t be more than $8,700 for an individual or $17,400 for a family.
Keep in mind that your out-of-pocket limit doesn’t include:
It depends. Generally, plans with low monthly premiums have higher copayments and higher coinsurance. Plans with higher monthly premiums have lower copayments and lower coinsurance.
But it’s worth taking a look at all the expenses you might have to pay for your health insurance plan, not just cost-sharing totals. You should be aware of what your monthly premiums cost, as well as your copayments, coinsurance, deductible and out-of-pocket maximum.
Everyone’s risks are different. “If you rarely go to a hospital or doctor, higher coinsurance and deductibles with lower premiums might be a better decision,” says Gross. But if you have a chronic health condition or see doctors very frequently, you might want to have a lower coinsurance and deductible with a higher premium. “It’s always best to first try to determine how much your medical bills are annually and decide from there,” stresses Gross.
One source of advice is a licensed UnitedHealthcare insurance agent. Call 1-800-273-8115 to get information about what health insurance policy might be right for you. Visit uhone.com to browse available options.
Healthcare.gov. “Coinsurance.” Retrieved from https://www.healthcare.gov/glossary/co-insurance/ Accessed March 30, 2022.
Healthcare.gov. “Copayment.” Retrieved from https://www.healthcare.gov/glossary/co-payment/ Accessed March 30, 2022.
Healthcare.gov. “Out-of-Pocket Maximum/Limit.” Retrieved from https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/ Accessed March 30, 2022.