What Is Coinsurance? Coinsurance vs Copay Explained for 2027

Updated October 2026 for the 2027 plan year

What is coinsurance and how does it work?

The short answer to “what is coinsurance” is cost sharing expressed as a percentage. You and your plan split each covered bill, for example 20% for you and 80% for the plan. It usually starts only after you meet your deductible.

The percentage applies to the allowed amount, which is the price your plan has agreed to pay an in-network provider. It does not apply to the provider’s higher list price.

A plan year with coinsurance moves through three stages:

1. Before the deductible: you pay the full allowed amount for most services, except preventive care and anything the plan covers with a copay first.
2. After the deductible: you pay your coinsurance percentage of each bill and the plan pays the rest.
3. At the out-of-pocket maximum: coinsurance stops and the plan pays 100% of covered, in-network care for the rest of the year.

That last stage is why coinsurance has a ceiling. For 2027 Marketplace plans, your deductible, copays and coinsurance for in-network care can add up to no more than $12,000 for an individual or $24,000 for a family. Many plans set a lower limit.

What does 20% coinsurance mean?

Twenty percent coinsurance means you pay one-fifth of the allowed amount for each covered service after your deductible, and your plan pays the other four-fifths. If the allowed amount for a visit is ten times larger, your 20% share is also ten times larger.

That scaling is the key difference from a copay. Coinsurance is easy to live with for small bills, but on a hospital stay, a surgery or an MRI it can be a large number. The out-of-pocket maximum is what keeps it from becoming open-ended.

Your monthly premium sits outside all of this. It never counts toward the deductible or the out-of-pocket maximum. See what is a premium for how it fits in.

What is a copay?

A copay, or copayment, is a fixed dollar amount you pay for a specific covered service, such as a primary care visit or a generic prescription. The amount is set in your plan, so you know the cost before you go.

Copays often apply to routine services. On many plans, a doctor visit or a generic drug has a copay even before you meet your deductible. On others, the copay starts only after the deductible. Your Summary of Benefits and Coverage says which.

Copays for covered, in-network care count toward your out-of-pocket maximum. Some plans also credit them toward the deductible, but many don’t, so check the plan details.

Copay vs coinsurance: what is the difference?

A copay is a fixed amount, and coinsurance is a percentage. A copay stays the same whatever the provider charges, while coinsurance rises and falls with the size of the bill. Both are cost sharing, and both count toward the out-of-pocket maximum.

Many plans use both. A plan might charge a copay for office visits and coinsurance for hospital care. That is why comparing plans by premium alone misses most of the story.

Does coinsurance change out of network?

Yes. PPO and POS plans that cover out-of-network care usually charge a higher coinsurance percentage for it, often with a separate deductible. HMO and EPO plans generally don’t cover out-of-network care at all except emergencies.

Out-of-network bills carry an extra risk called balance billing. A provider outside your network may bill you for the difference between its charge and the plan’s allowed amount, and that difference doesn’t count toward your out-of-pocket maximum.

The No Surprises Act limits this in three situations: emergency services, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services (CMS). Compare network types in HMO vs PPO vs EPO vs POS.

How does coinsurance differ by metal tier?

Marketplace metal tiers are built around how costs are split on average. Lower tiers leave you a bigger share through higher deductibles, copays and coinsurance, and higher tiers leave you a smaller one.

Source: HealthCare.gov plan categories. These are averages for a standard population, not the coinsurance on any one service. If your income is up to 250% of the federal poverty level, a Silver plan with cost-sharing reductions lowers your copays, coinsurance and deductible. More in Bronze vs Silver vs Gold vs Platinum.

How do copays and coinsurance apply to prescriptions?

Pharmacy benefits are where many people first ask what is coinsurance. Most plans sort drugs into tiers on their formulary, the plan’s list of covered drugs. Lower tiers, usually generics, often have a copay. Higher tiers, especially specialty drugs, often use coinsurance.

That matters if you take an expensive medicine. A coinsurance percentage on a specialty drug can reach your out-of-pocket maximum quickly. Check each plan’s formulary for your exact drugs and their tier before you enroll.

How should you compare cost sharing?

Once you know what is coinsurance and what is a copay, start with the care you actually use, then compare plans on the total you would pay in a year. Coinsurance, copays, the deductible and the premium only make sense together.

• Light users: focus on premiums and the copays for visits and drugs you use.
• Regular users: compare copays for specialists and prescriptions, and whether they apply before the deductible.
• Heavy or planned use: add a year of premiums to the out-of-pocket maximum. Coinsurance stops at that cap, so it is your realistic worst case.

Our guide to deductible vs out-of-pocket maximum shows how those caps work, and how to choose a health plan walks through a full comparison.

Frequently asked questions

Keep learning: health insurance terms A–Z, what is a deductible, what is a premium, how health insurance works and health insurance subsidies 2027.