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Coinsurance vs. Copay

January 23, 2019

Insurance can be really confusing, like coinsurance vs. copay. What does that even mean? Which is better?

When I started my first job with benefits, I called my mom – crying – trying to understand which health plan I should choose. It was all just gibberish to me. I was so emotional because I didn’t want to make a mistake on such an important decision. When your pocketbook and health are at stake, making the right decision is important.

So, let’s take the jargon out of insurance and break down coinsurance vs. copay.

COINSURANCE

The percentage of costs of a covered health care service you pay after you’ve paid your deductible.

Say what? Let’s say your dental insurance plan’s allowed amount for a crown is $100 and your coinsurance is 20%. If you’ve paid your deductible: You pay 20% of $100, or $20.

Still confused? Think about coinsurance like splitting the check with your friends. Coinsurance is merely how you break down the check. Will 2 couples share the check 50/50? Then your “coinsurance” on the check is 50%.

Dental benefit: Coinsurance levels usually vary by type of service with basic preventive and diagnostic usually covered at the highest levels. Be sure to check your benefits booklet.

COPAY

A payment made by a beneficiary in addition to that made by an insurer.

Huh? Let’s say your health insurance plan’s copay is $20 for normal services and $40 for special care. If you go to see your primary care physician than your copay is $20, which you pay upon arrival at the doctor’s office. Any costs above your copay amount are handled at your coinsurance coverage rate.

Still scratching your head? Think of a copay like getting a burrito at Chipotle. You pay for your burrito, chips and guac before you get your food. So, your “copay” for your burrito is about $8. This metaphor is a little flimsy because your visit at Chipotle won’t rack up any other costs, but hopefully, you get the idea.

Dental benefit: Many dental insurance plans do not have copays for diagnostic or preventive care. Boom, instant savings! Be sure to check your benefits booklet to know of any copays you may have.

Important note: Coinsurance and copays are your only out-of-pocket costs once you meet your deductible unless you’ve reached your annual maximum. But remember that costs and levels on the 2 items vary by your plan’s design. Make sure to log on and find the details of your coverage. And if you need help understanding how your coverage applies to the care you need, use our cost estimator!