Terms of Insurance: Co-pay, Co-insurance, Deductible

A client of mine trying to decide on a plan asked today, “What does 40% coinsurance after deductible mean and what is the difference between 20% coinsurance and 40%?”

Here are some useful terms to understand when trying to answer this question:

Deductibles, co-insurance and co-pays are all amounts you may have to pay for health care services. Here’s how they work together.


  • A deductible is the amount you pay for health care services before your health insurance begins to pay.

For example, if your deductible is $1,500, you would pay 100 percent of your health care charges until the amount you paid reaches $1,500. After that, some services you receive may be covered at 100 percent, or you may have to pay co-insurance.

These are some other words you may see.

  • After deductible: This lets you know that the insurance company start sharing costs with you for a service after you’ve met your deductible.
  • No deductible: You don’t have to pay toward your deductible for this service. You’ll still have to pay any co-pays.
  • Before deductible: The insurance company cover this service before you’ve met your deductible. You’ll still have to pay any co-pays.


  • Co-insurance is your share of the costs of a health care service. It’s usually figured as a percentage of the total charge for the service. You pay co-insurance plus any deductibles you still owe.

Say you’ve already paid out (or met) your $1,500 deductible and your co-insurance is 20 percent. For a $100 health care bill, you would pay $20 and your insurance company would pay $80.


  • A co-pay is a fixed amount you pay for a health care service, usually when you receive the service. The amount can vary by the type of service. You may also have a co-pay when you get a prescription filled.

For example, a doctor’s office visit might have a co-pay of $30. The co-pay for an emergency room visit will usually cost more, such as $150. However, there is a maximum amount you will pay for co-insurance and co-pays. This is called the co-insurance and co-pay maximum.

The answer to my clients questions about the difference between a 20% and 40% co-insurance is that you are responsible for twice the amount of the bill at 40% than at 20% after you have satisfied the deductible.

In terms of Obamacare if you are expecting a lot of health insurance costs in the coming year, you should buy a plan that has a low deductible (the amount beyond which the insurance company pays) and low co-insurance for the medical services and drugs you expect to require in the coming year. This will cost you more per-month but your out-of-pocket expenses will be lower (generally the silver, gold, and platinum plans).

You should know that the maximum out-of-pocket costs (deductibles and co-payments) for any Marketplace plan for 2014 are $6,350 for an individual plan and $12,700 for a family plan.

Also, all new private health plans must cover and eliminate cost-sharing (co-payment, co-insurance, or deductible) for proven preventive measures such as immunizations and cancer screenings. Additional preventive measures include free well-woman visits, screening for gestational diabetes, domestic violence screening, breast-feeding supplies, and contraception, all with no cost-sharing.

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