Coinsurance in US Health Insurance

Coinsurance is a term you will find in every US health insurance policy. It is your own share of the cost of medical treatment or care once you have paid your deductible, which usually resets every year.

Coinsurance is usually stated as a percentage and set out in the cost-sharing clause of your policy. In most cases, you and the insurer split the cost of the service: your insurance pays the covered share of the treatment and you pay the rest.

1Coinsurance at a glance

• Coinsurance is what you pay out of your own pocket once you have reached the full deductible of your US health insurance plan.
• The insurer usually covers the larger percentage of any medically necessary service. You pay the remaining share yourself.
• If you have two US health insurance plans and one has a different coinsurance clause, you may be able to coordinate the benefits so that more of your costs are covered.
• Once you have met your annual deductible, you are only responsible for the coinsurance amount set out in your policy.
  You can find the key terms and facts about US health insurance here.

2How coinsurance percentages break down

The insurer usually carries the larger share of the cost (typically as a higher percentage) of every medically necessary service.

Common splits are 70/30 or 80/20. The insurer covers either 70% or 80%, and you pay the remaining 20% or 30% respectively. Naturally, these percentages only apply once the deductible has been met.

So if your medical bill comes to $1,500 and you have a deductible of $500, you pay that $500 first. Coinsurance then applies to the remaining $1,000. With an agreed coinsurance of 20%, you pay a total of $700: the $500 deductible plus $200 in coinsurance.

In the US, that total of $700 is called your “out-of-pocket” cost. At $800, the insurer covers most of the bill in this case thanks to its higher coinsurance percentage.

3Your coinsurance in action

If you are lucky enough to be covered by two US health insurance plans (for example through your spouse's or partner's insurance) and they have different coinsurance clauses, one of them acts as your primary insurance when you file a claim. In most cases, the primary plan's coinsurance applies to your costs first, and the secondary plan's coinsurance applies to anything the primary plan did not cover. Using two plans to cover your costs in this way is called “coordination of benefits”.

Your deductible resets and is paid every year. That means once you have met your annual deductible, you only pay the coinsurance share set out in your policy for the rest of the year. By the way, do not confuse coinsurance with a "copay", which is a fixed amount per doctor's visit or prescription.

If you understand how coinsurance, coordination of benefits and deductibles work in your plan, you can save money every year. Read all the terms of a policy in full before you choose a US health insurance plan or sign a waiver. Here you will find an overview of US health insurance in more detail, and our page Health in the USA covers everything else about medical care. If you have questions, talk to your insurance agent so you understand your options exactly.

In short

• Coinsurance is your percentage share of treatment costs once the annual deductible has been paid.
• Common splits are 80/20 and 70/30. The insurer carries the larger share.
• Example: with a $1,500 bill, a $500 deductible and 20% coinsurance, you pay $700 and the insurer pays $800.
• With two plans, the primary plan pays first and the secondary covers what the primary did not (coordination of benefits).
• Not to be confused with a copay, a fixed amount per doctor's visit or prescription.

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