What Is Co-Insurance?

Updated: Nov 3, 2023
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Co-insurance is the percentage you pay out of pocket for covered medical services after your deductible is met, with the remaining balance covered by your insurance company. These percentages are predetermined based on your insurance plan and are paid after medical services are rendered.

  • Co-insurance is a cost-sharing mechanism in health insurance whereby policyholders and insurance companies split medical costs.
  • The policyholder must pay their deductible before co-insurance applies.
  • The co-insurance split isn't always even; the cost-sharing varies by plan and service. For example, a policyholder on a Gold plan may have co-insurance of 20% for hospital services, with the insurer covering the remaining 80%. However, under a Bronze plan, the split might be an even 50-50.
  • Co-insurance contributes to your annual out-of-pocket maximum. Once this is reached, your insurance provider will cover the entire cost of eligible medical services.

How Does Co-Insurance Work?

Co-insurance is based on shared financial responsibility for medical costs. Let's delve into how co-insurance works:

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    Percentage-Based Cost Sharing

    You only pay a percentage of the total cost, and your insurance provider pays the remainder.

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    Deductible Takes Precedence

    Co-insurance only applies after your deductible is met. Until the deductible is met, you will pay the full cost of medical services.

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    Varied Rates

    Co-insurance varies based on your health plan but typically ranges from 10% to 50%.

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    Out-of-Pocket Maximums

    Co-insurance usually contributes to your out-of-pocket maximum. Once you reach this limit, the insurance company generally covers 100% of covered medical expenses for the rest of the year.

Co-Insurance Example

Let's look at how co-insurance works with this example:

Alex has a health insurance plan with 20% co-insurance. In other words, he will only pay 20% of his medical bills once he has reached his deductible, and his insurance will cover the remaining 80%.


Alex has already met his annual deductible. He then has a medical procedure that costs $1,000.

Cost Breakdown:

  • Total Medical Bill: $1,000
  • Alex's Co-Insurance Payment (20% of $1,000): $200
  • Insurance Payment (80% of $1,000): $800

In this scenario, Alex pays $200 in co-insurance for the procedure, which counts towards his out-of-pocket maximum, and his insurance covers the remaining $800.

Co-Insurance vs. Copay

Co-insurance and copay are cost-sharing methods, but their mechanisms and applications differ. Here's the side-by-side comparison:



Percentage of covered medical expenses paid by the policyholder.

Fixed amount paid by the policyholder for a specific service or medication, regardless of its total cost.

Dependency on Service Cost

The amount you pay is a percentage of the total cost and, therefore, varies depending on the cost of the service.

Copays are fixed per health care service, regardless of the total cost.

Out-of-Pocket-Maximum Impact

Co-insurance payments count towards your annual out-of-pocket maximum.

Copays count towards your annual out-of-pocket maximum.

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Find the right health plan by comparing health insurance providers in your area, and learn the benefits and limitations of employer-provided health insurance to help you make an informed decision.


Dive into our frequently asked questions to clarify common uncertainties about co-insurance.

Related Content

To deepen your understanding and aid in your financial journey, we've curated a selection of related resources from MoneyGeek. These guides will illuminate further nuances of health insurance, ensuring you make informed choices.

  • Health Insurance Guide — This guide acts as your one-stop resource on the comprehensive world of health insurance, from basic concepts to intricate details.

  • Most Affordable Health Insurance — Uncover cost-effective health insurance options suitable for your budget, and understand the factors influencing affordability.

  • Average Cost of Health Insurance — Grasp a clear picture of the current market rates for health insurance to help you benchmark and evaluate your expenses.

  • Maximizing Your Health Insurance Plan — Make informed decisions with insights on selecting the best plan and leveraging its benefits to the fullest.

About Nathan Paulus

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Nathan Paulus is the director of content marketing at MoneyGeek. Nathan has been creating content for nearly 10 years and is particularly engaged in personal finance, investing, and property management. He holds a B.A. in English from the University of St. Thomas Houston.