If you’ve ever had health insurance, you’re probably familiar with at least one of these terms. In industry-speak, they’re called “cost-sharing” because they shift some of the financial burden of a medical bill back onto the patient. The key takeaway about copay and coinsurance is that they are NOT the same, and while both have pros and cons, one is riskier than the other.
COPAY = SET FEE
- Strength: Predictability
- Drawback: You pay full copay, even if your service costs less
You pay whenever you receive a service. A common example is that every time you see your primary care doctor, you have to pay a $40 copay. That goes straight to your doctor’s office. The rest of your bill will be submitted to your health insurance as a claim. Copays are common for doctor’s office visits and prescriptions.
COINSURANCE = SET PERCENTAGE
- Strength: You never pay more than the service costs
- Drawback: Hard to know cost up-front
Once your deductible is met, this is your share of the bill after your insurance pays their half – for example, an 80-20 split where you pay 20% after the insurance pays the other 80%. Coinsurance is common for hospitalizations.
With a copay, you know what your cost responsibility is going to be before receiving your care – it’s always the same set fee. With coinsurance, you only know what percentage you’ll pay, so it pays off to do your homework and research the price of your procedure beforehand.