What is the difference between a co-payment and co-insurance?

In health insurance, a co-payment, often referred to as a copay, is a fixed dollar amount that a policyholder pays for a covered healthcare service at the time of the visit. For instance, if a person visits a doctor and has a $30 copay, they will pay that amount regardless of the total cost of the appointment. This structure provides predictability for insured individuals because they know in advance what their out-of-pocket expense will be for certain services.

On the other hand, co-insurance is a cost-sharing mechanism where the insured pays a percentage of the total cost of a service after the deductible has been met. For example, if a patient has 20% coinsurance, they will be responsible for paying 20% of the total cost for a service, while their insurance covers the remaining 80%. This means that the out-of-pocket expense can vary based on the total cost of the service, making co-insurance a percentage rather than a fixed amount.

Understanding this distinction is essential for individuals when considering their health insurance plans, as it affects how much they will ultimately pay for different healthcare services.