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How do copays, coinsurance and deductibles work?

Medically reviewed by Leigh Ann Anderson, PharmD. Last updated on Nov 3, 2022.

Official answer


Copays, coinsurance and deductibles are terms that apply to the cost-sharing that many Americans pay as part of their medical insurance plans. These dollar amounts have a wide range but may go up to thousands of dollars per year based on your specific health plan.

Jump to the Health Care Insurance Glossary below for a quick explanation of relevant terms.

What is a copay?

A copay (copayment) is a set amount that you pay for a service or product, such as a doctor visit or a medication. You will usually pay this at the time of your visit, or you might be billed for it. You may need to meet your annual deductible before you start paying copays.

Copays are usually determined by your health insurance. You may have a different copay for various services, such as medications, lab tests, and visits to primary care doctors, specialists, urgent care centers or the emergency room.

  • For example, you might pay a $20 copay each time you see the doctor for a sick visit. However, for preventive healthcare check-ups and preventive medicines like vaccines you should not have to make a copayment.
  • For a prescription, your copay for “preferred”, “Tier 1”, or generic medications may be low, for example $10 or $20, and increase for non-preferred drugs that may be brand name drugs or medicines not on the health plan drug formulary. You pay this amount each time you get a prescription refill. Generics typically have lower copays than brand name drugs. In some cases, you may be responsible for the full cost of your medicine until you meet your deductible.
  • You will typically pay copays for each visit or refill, or until you reach your annual out-of-pocket maximum set by your health plan (which could be in the thousands of dollars).

Your insurance plan will have a list of copays for you to review for various medicines, doctor visits and medical services. Contact them to determine your insurance deductible, copay, coinsurance or out-of-pocket maximum.

Related: Generic Drug FAQs

What is a deductible? Copay vs. deductible

A deductible is the dollar amount you pay for health care services before your insurance plan starts to pay.

  • For example, you may have a $2,000 deductible per year before your insurance plan will pay for any medical services or medications.
  • After you have met the amount of your deductible by paying out of your own pocket, and your insurance plan has a record of this amount, you will then pay either a set copay or a coinsurance for services or products.
  • In most cases your copay will not go toward your deductible amount.

How do I know if I have met my deductible?

If possible, set up an online portal with your health insurance plan to be sure these expenses are accounted for.

  • When items are billed through your insurance card (even if you are still paying your deductible), your health plan will document these items so you can see how close you are to meeting your deductible.
  • It is important you make sure that your insurance company is aware of any covered out-of-pocket expenses you have paid for yourself so that this amount can be applied to your deductible.
  • Keep all of your receipts for anything you pay for out of your pocket, especially if you paid for something without your insurance card.
  • Bottom line: even if you are paying out of pocket for something, you should still have the medical facility submit the charges through your insurance card so they can be applied to your deductible.

Some plans have separate deductibles for certain services, like prescription drugs. Family plans may have both an individual deductible and a family deductible which applies to all family members.

Your deductible amount is typically reset back to the maximum dollar amount once per year on your plan renewal date. You will have to pay your deductible each year before payments are made by your health plan.

Can you have both a copay and deductible? Yes, your plan may include both but typically you will be required to pay your deductible first, before you make any copayments.

Most health plans pay the full cost of certain preventive benefits, like vaccines, mammograms or yearly annuals even before you meet your deductible. Check your health plan details for benefit descriptions.

What is a high deductible plan?

Certain plans, known as “high deductible plans” are less expensive than other plans but have a higher deductible (for example, $4,000 per year).

One advantage to these plans, besides having a lower premium, is you may be able to set up a pre-tax Health Savings Account (HSA) through your employer. You can use the HSA to help pay for your expenses now or in the future. Some employers may contribute extra dollars to your HSA, too, as a benefit.

What happens if you don't meet your deductible?

At the end of your plan year, if you still have a deductible to pay you will not owe it. However, when your new yearly plan starts, you will start over with your full deductible amount.

  • For example, if your deductible is $4,000 and you have only paid $2,500 out of pocket towards your annual amount, your $4,000 deductible will begin again on the day your annual plan restarts.
  • This can be especially difficult if you have a large amount of medical expenses towards the end of your plan year. You may get close to paying off your deductible, but then when the annual plan restarts, you will be responsible for paying yet another full annual deductible before the insurance will pick up any costs.

What happens if I pay more than my deductible?

If for some reason you pay more than your annual deductible, your insurance company will reimburse you for the overpayment. Contact your insurance plan and explain your situation so that they can document it, and investigate for a refund.

To avoid this scenario, be sure to review your Explanation of Benefits (EOB) sent to you by the insurance company and match it up with any medical bills you may have.

Is it better to have a low or high deductible?

In general, health plans that cost less (with lower premiums) have higher deductibles, and plans that are more costly have lower deductibles. Which plan is best for you will depend upon your circumstances, such as age, health and ability to pay for your premiums.

To determine your specific costs, call your the customer service phone number listed on the back of your insurance card, or look at your plan online.

What is coinsurance? Is coinsurance the same as a copay?

No, coinsurance is not the same as a copay. Coinsurance is the percentage of costs that you pay after you have met your deductible (such as a 20% coinsurance). For example, if a doctor’s visit cost $100, you will pay 20% (or $20) once you have met your full deductible. If you still have not met your deductible, you pay the full amount of the doctor’s visit, or $100.

As another example, say these are your yearly plan benefit fees:

  • $3,000 deductible
  • 20% coinsurance
  • $8,000 out-of-pocket maximum

Let’s say you have surgery and a hospital stay and the allowable fee charged to you is $10,000. If your deductible is $3,000 (and you have not met it), you will pay the first $3,000 out of pocket. If your coinsurance is 20%, you will also pay 20% of the remaining amount ($7,000) which equals $1,400 (your coinsurance). You are responsible for $4,400 and your insurance will pay $5,600.

In math terms: $10,000 (charge) - $3,000 (deductible) = $7,000 (x20%) = $1,400 (coinsurance).

Let's also say you have an out-of-pocket maximum of $8,000. This means you’ll only pay up to that amount per year, and after that your insurance pays 100% of all covered services for the rest of the plan’s calendar year.

What are preventive benefits?

Most health plans must cover certain preventive services at no cost to you. These may include annual well exams, vaccines and cancer screening tests such as a mammogram or colonoscopy. These services will be paid for even if you have not met your deductible, and you typically would not have a copay or coinsurance, either.

There are many other preventive services offered. Your health plan can give you a full outline of these services and how often you can receive them. Preventive services are offered to both adults and children.

Examples of preventive services included in health plans include:

  • Blood pressure screening
  • Cholesterol screening
  • Cancer screenings, for example, mammograms, colonoscopies or cervical cancer
  • Immunizations
  • Depression or other mental health screenings
  • HIV screening; PrEP medication
  • Tobacco use screening
  • Type 2 diabetes screening
  • Obesity screening
  • Well-baby and well-child visits
  • Birth control (in most cases)

This is not a complete list, so be sure to contact your health plan for a full description of preventive services. These services are also subject to changes as determined by the health plan or government.

What is an Explanation of Benefit?

You may have received an Explanation of Benefit (or "EOB") in the mail or online from your insurance company. What is an EOB? An EOB will tell you how much your insurance paid for a particular covered medical service or product, and what your shared costs are, if any. You should receive one of these forms each time a healthcare provider submits a bill to be paid through your insurance.

Be sure that the amount of money you owe on your EOB matches the bill your doctor or medical facility sends to you. If not, call the insurance company or medical billing office to investigate the difference. Mistakes can be made, so take the time to review these EOB documents.

Health Care Insurance Glossary

Copay - A copay is a set dollar amount that you pay for a medical service or product, such as a doctor visit or a medication. You will usually pay this at the time of your visit. For example, your copay each time you see the doctor for a sick visit may be $20. Prescription copays may be $10 for generics or $60 for non-preferred brands.

Coinsurance - Coinsurance is a percentage (%) of a medical charge that you are responsible for paying. For example, if you have a 20% coinsurance and have met your deductible, you will pay 20% of that charge. If a doctor’s visit costs $150, you will pay $30 (20% of $150) as your coinsurance.

Deductible - A deductible is an amount you are required to pay before your insurance will pay towards your expenses. For example, some plans have a $2,000 per year deductible. Once you meet this amount, your insurance will then pay for covered services, minus any copays or coinsurance you may be responsible for.

Explanation of Benefit (EOB) - A mailed or online document that explains what was paid to the medical provider for a service or product, based on your plan coverages. If you owe the provider anything, it will be outlined in this document. Your bill from the doctor and your Explanation of Benefit should be the same dollar amount. EOBs can be inherently difficult to understand; if you need help call the insurance company.

High deductible health insurance plan - High deductible plans have a higher deductible, for example $4,000 or $5,000 per year, but may be less expensive to buy (they have a lower premium). With these types of plans, you may also be able to set up a pre-tax Health Savings Account (HSA) through your employer. You can use the HSA to help pay for your medical expenses now or in the future.

Out-of-pocket maximum - Out-of-pocket maximum is the maximum amount you would pay per year for medical expenses based on your insurance plan. Once you meet your out of pocket maximum, the health insurance company then pays for 100% of covered medical expenses. Yo uno longer have copays or coinsurance.

Health insurance premium - Your health insurance premium is the dollar amount you pay for medical plan benefits. This may be taken out of your paycheck if your employer provides health insurance, or the government may take it out of your social security if you have Medicare Part B. In 2022, the Part B premium is $170.10 a month and will decrease slightly to $164.90 in 2023. Part C premiums are billed through the private insurance company associated with your Medicare Advantage plan.

Preventive benefits - Preventive benefits are the doctor visits, health screenings, procedures and immunizations (vaccines), among other benefits, that are provided typically at no cost to you through your insurance. Check your plan benefits to determine your full benefits.