What is co-insurance?
Co-insurance is a type of cost-sharing arrangement commonly found in health insurance plans. It is the percentage of medical expenses that you’re responsible for paying after you have met your deductible.
For example, if a health insurance plan has a co-insurance requirement of 20% and you’ve already met your $1,000 deductible, and then you have a $500 medical expense, you would be responsible for paying 20% of the remaining $500, or $100. The insurance company would pay the remaining $400.
Co-insurance generally exists between your deductible and your out-of-pocket maximum. Once you've paid your full deductible, co-insurance kicks in, and you pay a percentage of expenses. This stops when you hit your out-of-pocket maximum for the year, at which point the insurance company pays 100% of covered medical expenses.
When do you pay co-insurance?
Co-insurance is typically applied to the total cost of a medical service after the deductible has been met.
This is different than a copay, which is a fixed payment for a specific service, such as a doctor's visit or a prescription drug. A copay is applied to the cost of the specific service.