Copay VS Coinsurance: Know The Difference

copay vs coinsurance: know the difference text overlaying image of a filing cabinet with medical bills written on it Health insurance can be confusing. With all the terms like deductibles, premiums, copayments, and coinsurance, some of which people often mistake for each. Those last two – copayments (or copays) and coinsurance – can be particularly problematic when it comes to confusion. Not only that, but many people are not sure when they will be required to pay them, or how they add to their out-of-pocket costs. But simply being aware of the difference between the two, and knowing how they work in your plan, can save time and energy. As well as money that would otherwise be wasted.

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What Are Copays?

A copay is a predetermined amount of money you must pay when you use a medical service at the point of service. Health insurance policies typically specify copayment amounts in advance, and the amount will be different for each type of service. Examples of services that might require copayments include visits to your primary care physician, appointments with a specialist, prescriptions drugs, and emergency room visits. You might, for instance, have to pay $20 each time you see your primary care physician.


After you pay your copayment for a covered service, the insurance company will often pay for the rest. Especially for preventive care. For example, your annual check-up is a service your plan covers. So, you will only be responsible for your copay in this case. You should always check your plan’s benefits summary for specifics. But in general, copays are not included in the calculation of your maximum out-of-pocket costs.

What Is Coinsurance?

Most health insurance plans require that you pay coinsurance, or a percentage of the cost of care. With most plans, you’ll first have to meet your annual deductible. Then your insurance company will begin to cover your care, but you will have to split the cost. Your coinsurance share will depend on your plan, but you might have to pay 20% of each bill, for example. 


In addition, the coinsurance percentage you’ll have to pay may vary depending on the type of medical treatment you receive. For example, you might have to pay a different amount of coinsurance for things like office visits, tests, and medications. 


And, if you have a preferred provider organization (PPO) plan, you’ll most likely have to pay different amounts of coinsurance. Depending on whether or not the healthcare provider you see is in your plan’s network. For example, coinsurance for a primary care physician in your network could be 20%, while coinsurance for a primary care physician outside of your network could be 75%. That means you can lower your out-of-pocket expenses by trying to get care from in-network providers whenever possible. 

How Much Should You Expect to Pay in Coinsurance?

You won’t know exactly how much you’ll end up paying in coinsurance each year, but you can estimate your out-of-pocket costs by thinking about how much care you anticipate needing. The coinsurance you pay on that care will be a chunk of your out-of-pocket expenses, in addition to your monthly premium and your annual deductible. 


Your share of your medical costs will be determined by the type of plan you choose. You can choose from Bronze, Silver, Gold, or Platinum plans, each of which will require that you pay a different percentage of your medical costs:


  • Bronze – 40/60, You pay 40% while your insurer pays the remaining 60%
  • Silver – 30/70, 30% is your responsibility while your insurer pays 70%
  • Gold – 20/80, you pay 20% and your insurer covers 80%
  • Platinum – 10/90, your insurer pays 90% while you cover only 10%


How Copayments and Copays Work

As pointed out above, a copay is a predetermined amount that you have to pay for a covered service at the point of service, but coinsurance is the percentage of the total bill that you are responsible for. Both are some of the out-of-pocket costs of health insurance, but they function very differently. The difference between a copay and coinsurance can be broken down as follows:


  • Copayments are a set price you pay for services. You are responsible for the copays before and after you’ve met your deductible 
  • Coinsurance is a percentage of your medical bills you have. Coinsurance is only charged after you’ve met your deductible for the year.


What this means is that a $20 copay will always be $20. But your 20% coinsurance fee will vary with the price of the service. And these costs, as always, will vary depending on the plan you choose. In general, though, your copayments and coinsurance will be lower if you choose a plan with higher premiums.

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Copay and Coinsurance Example

To make things a little clearer, here’s a further example of how copays and coinsurance work: Let’s say your health insurance plan has a $3,000 deductible, $50 copays for specialists, 80/20 coinsurance, and a $6,000 out-of-pocket maximum on an individual plan (and you have no dependents covered by your plan). This $6,000 maximum means that once you pay that amount in covered medical expenses in a given year, your insurance company will begin to cover everything, and you will no longer have to pay coinsurance. 


Now let’s say you go in for your free annual checkup (a preventative service) and bring up the fact that your shoulder has been bothering you lately. Your primary care physician refers you to an orthopedic surgeon for further evaluation. When you see this specialist, you will pay your $50 copay at the point of service.


The consulted specialist suggests an MRI to evaluate your shoulder pain. The price of the MRI is $1,500, and since you haven’t met your deductible for the year, you will have to pay the whole bill for this test. The MRI finds that you have torn your rotator cuff and will require surgery to repair it. The price tag for this operation is $7,000. After spending $1,500 on the MRI, you will have to pay $1,500 more in order to meet your $3,000 deductible before your insurance will cover any of the surgical costs. That leaves $5,500 to pay for the surgery, and since you have an 80/20 plan, your 20% coinsurance payment would be $1,100. 


With meeting your deductible and paying your coinsurance and copayment, the total cost of repairing your torn rotator cuff would be $4,150. But remember, in this scenario, your plan has a $6,000 out-of-pocket maximum, which you would be close to meeting after this surgery.

What Should You Look for in a Plan?

Since everyone’s financial situations and requirements for health insurance vary, there is no one plan that will work for everyone. But when shopping for a plan, there are some considerations that can help narrow down your options.


For example, if you’re looking at a plan with lower monthly premiums, you’re most likely going to have a higher coinsurance percentage. Take two health care plans with different monthly premiums of $200 and $450 as an illustration. These two plans may have 30% and 20% coinsurance for ER visits, respectively. So, when looking at plans with lower premiums, you should always consider that your out-of-pocket expenses, including your coinsurance payments, might be higher.


And when it comes to the copayments included in the plans that you are looking at, keep in mind that copayments are typically not applied toward meeting deductibles. You should look into plans with lower copays if you anticipate spending a lot of money on prescription drugs. Or making multiple trips to the doctor each year.

In-Network vs Out-Of-Network

As mentioned above, some plans have different deductibles, copayments, and maximum out-of-pocket expenses if you see an in-network healthcare provider than if you see out-of-network providers. This is because doctors and hospitals that are part of your plan’s network have agreed to provide you with care at reduced costs. 


These reduced costs mean that it’s important to seek care from a provider who is part of your insurance’s network if at all possible. And when looking at plans, make sure your preferred doctors and hospitals are included in the plan’s network. If you find that you are frequently seeing out-of-network providers with the plan you have. You might want to make a change to your plan during the next Open Enrollment Period. Speak to an EZ agent about your options.


  • Does coinsurance apply before I meet my deductible?

No, it doesn’t. If you have a 20% coinsurance, they will only begin to cover their 80% after you’ve met your deductible.

  • Do all health insurance plans have copays and coinsurance?

No. You may not be required to pay a copayment for certain medical services with some plans. These plans, however, typically have higher monthly premiums. And there are also catastrophic health plans, for example, with very high deductibles and no coinsurance at all.

  • Are copays and coinsurance tax deductible?

If your out-of-pocket medical expenses exceed 7.5% of your AGI, you may be able to claim a tax deduction for all of your medical expenses. Including your copays and coinsurance. The excess of your healthcare costs over 7.5% of your adjusted gross income is tax deductible.

  • Do copayments and coinsurance count toward out-of-pocket maximums?

Your out-of-pocket maximum includes not only your deductible, but also any copays or coinsurance payments you may have made. Your regular premium payments don’t count toward your maximum.

  • Is it better to have a higher or lower coinsurance percentage included in your plan?

A lower coinsurance percentage means you’ll have to pay less out-of-pocket for covered medical services. But if you have a lower coinsurance percentage, you might have a higher deductible and premiums. 



When you are searching for a health insurance plan, the plan descriptions will always include the premiums (the amount you pay on a monthly basis to maintain the plan), deductibles, copays, coinsurance, and out-of-pocket maximums. Pay close attention to all of these costs, not just the plan’s premiums. So you can get a feel for the true amount you’ll be paying for your healthcare.


If you are generally healthy, a cheaper plan that has higher deductibles could work for you. However, if you expect to have significant healthcare costs, it may be worth it to pay higher monthly premiums for a plan that will cover more of those costs.

EZ Can Help

If you need help finding the right plan for you, EZ.Insure is here to help. We can quickly evaluate all of the health insurance plans in your area. Your personal agent will help you sort through the various plans available to you. And explain all of the costs that come with each one. And the best part is that all of our services are completely free! To get your free quotes, simply enter your zip code in the box below, or give us a call at 877-670-3557.

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Everything You Need To Know About Premiums & Deductibles

everything you need to know about premiums & deductibles text overlaying image of a man thinking There are a lot of moving parts involved in health insurance. As well as a lot of terminology to learn in order to understand your plan and its costs. Two of the most important terms to understand are premiums and deductibles. These are the two out-of-pocket expenses associated with your health insurance plan that will end up costing you the most money. Understanding  these two terms, the difference between them, and how each operates will help you to better choose the best plan for your budget. Below we’ll explain how these two health insurance costs are interdependent and have an impact on each other. 

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Like a Netflix or Spotify subscription, premiums are a monthly payment you make to maintain a service. In this case your health insurance plan. If you purchase an individual plan on the Health Insurance Marketplace, you will pay your premiums in their entirety. But you might be eligible for subsidies or tax rebates. If your employer offers a group health plan, the cost of your health insurance premiums may be partially or entirely covered by your employer.


How much you pay in premiums will vary based on several factors. Such as the policy you choose, the number of people in your family, and the insurance company you go through. In addition, when determining your premium, insurance companies may take into account factors such as your age, where you live, and whether or not you smoke cigarettes. For instance, because healthcare costs are assumed to increase with age, premiums for older adults are higher.

Individual vs. Family Health Plan Premiums

Premiums for individual health plans and family health plans function in the same way. There is only one payment required each month, so the cost itself is the only difference. The cost of your premium will be higher the more people who are covered by it. But, if you do the math, you might find that you’re paying less per person for a family plan than you would if you all had your own separate plans. 


The only time this might not be the case is when someone in your family has significant health issues and another person rarely sees the doctor. In this case, it might be better to find plans that have lower premiums and higher deductibles for the healthier family member. And a plan with higher premiums and a lower deductible for the family member who needs more medical care. Let’s see why by taking a closer look at how deductibles work. 


In most cases, your insurance plan will have an annual deductible. Which you will have to meet before your health insurance begins paying for any of your medical care costs.  “Meeting” your deductible means that you will have to pay that amount in covered expenses to get coverage for anything other than preventive care. So, if your plan has a $2,000 deductible, for example, you’ll have to pay $2,000 out-of-pocket for things like lab work, minor surgeries, tests done at your doctor’s office, etc., and then your insurance plan will begin covering those things. 


There are a variety of ways deductibles can work, and which medical expenses will count towards meeting them. Health insurance policies for individuals and families may include a deductible structure. In which the insurance company is not obligated to pay for services until the deductible has been met. But in some cases, a plan may cover some medical expenses before the deductible is met while excluding others. In addition, certain expenses like copayments won’t count towards your deductible.

Individual vs. Family Deductibles

Health insurance deductibles can either be applied per person or per family. The way individual deductibles work is fairly straightforward, while family deductibles can be a bit  more complicated.


  • Individual – First, the easy part. If you have an individual health insurance policy, the money you spend on qualified medical expenses will count toward meeting your deductible. Once your plan’s deductible is met, you and your insurance company will begin dividing the remaining costs. Meaning you will pay what’s known as “coinsurance,” or a certain percentage of each bill. You’ll do this until you reach your policy’s out-of-pocket maximum.
  • Family – This is where things can get confusing, because your plan might have both an individual deductible and a family deductible. There are two main categories of family deductibles: embedded and aggregate. An aggregate deductible works the same as an individual deductible. Your plan will have one deductible, and everyone on the policy will be paying towards it. 

Embedded deductibles, though, is where the confusion sometimes comes in. With an embedded deductible plan, there is both a family deductible and an individual deductible. So, each member of the family has a separate deductible in addition to the family’s deductible. Once a family member’s deductible is met, the insurance policy begins covering 100% of that person’s healthcare costs. Everyone else in the family will still have to meet their own deductible after that member’s deductible is met. 


In addition, there is also a family deductible with these plans. And all family members will begin to have their expenses covered once the family deductible is met. Everyone will have to only pay their coinsurance until the out-of-pocket maximum is reached, once the family deductible is met.


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The cost of your premiums and the amount of your deductible will depend on a variety of factors. It is difficult to give an accurate estimate of what you’ll pay without knowing your unique circumstances. Wut we can say that the average monthly premium price in the country is $456 per month. 


Check out our state-by-state health insurance guides to learn more about how the health insurance market is regulated in your state. And to get a baseline estimate of the costs. You can also learn more about the health insurance plans that are available in your state. As well as ways to reduce the cost of your coverage.


As for deductibles, the average nationwide deductible amount depends on the metal tier you choose for your plan: Bronze, Silver, Gold, or Platinum. Keep in mind, lower deductibles mean a higher premium.

The average annual deductible amount for each tier is as follows:


  • Bronze – $7,482
  • Silver – $4,890
  • Gold – $1,650
  • Platinum – $745

How Premiums and Deductibles Work Together

Insurance premiums and deductibles are interrelated costs. Your plan’s premiums will be higher if the deductible is lower, for example. So, generally, your plan will either have a higher monthly premium with a lower deductible, or a lower premium with a higher deductible.  


If you’re wondering which type of plan would be better for you. Consider that a higher premium with a lower deductible would be more appropriate for someone who has a pre-existing condition and needs to see the doctor frequently. And if you don’t often see the doctor or generally spend a lot on medical services, having a higher deductible won’t be as much of an issue for you. And you might be better off spending less on your premiums.


  • How can I lower my premiums?

If you have individual coverage, and your household’s annual income is less than or equal to 400% of the federal poverty level, you might be eligible for subsidies or tax rebates. Which can lower the price of your premiums. If you have group health insurance through your employer, they might offer you reduced health insurance premiums or other incentives if you are able to meet certain health and wellness criteria.

  • What will increase my premiums?

Your health insurance premiums may increase for a variety of reasons. Including but not limited to inflation, adding family members to your plan, and relocating to an area with a higher cost of living. It’s also possible that your monthly health insurance premiums will go up if you opt for a plan with more generous benefits. Consider the policy’s premium in light of its benefits before making your decision.

  • Are premiums tax deductible?

If you have a plan through either the federal or state Health Insurance Marketplace, your premiums are tax deductible. If you’re self-employed, health insurance premiums are tax deductible. And you may also be able to deduct the premiums you pay for long-term care insurance. Before submitting a tax deduction claim, you may want to consult a tax expert.

  • Is a high or low deductible plan better for me?

If you do not anticipate having many medical expenses during the next plan year, selecting a health insurance policy that has a high deductible could give you the best value. When you anticipate having a lot of medical expenses in the near future, such as if you plan on having a baby, selecting a plan with a low deductible could help you get the most value out of your coverage.

  • What does “no-charge” deductible mean?

If you have a plan with a “no-charge” deductible, your plan will pay 100% of eligible medical expenses after you meet your deductible for the year.  No-charge deductibles tend to be higher. But if you plan on using a lot of medical services for the year, it might balance out when you are no longer required to pay anything out-of-pocket.

How EZ Can Help

EZ.Insure provides access to local, highly trained insurance agents. Who will shop around for the best policy at the most affordable price. We can save you hundreds of dollars a year by searching both on and off the Marketplace for a plan that fits your needs. We can also find out if you’re eligible for any local discounts. And then apply them to your plan for you. And the best part is that we do all of this for free! To find out how much you could be saving, simply enter your zip code on the box below for free, instant quotes. Or call us at 877-670-3557 to speak to an agent who can answer all of your questions and find you the perfect plan.

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Could You Be Looking Forward to an Insurance Rebate?

When we pay for health insurance, we want to know that our money is going where it should be going. Contributing to premiums can be expensive, and until recently, we’ve had to trust that insurance companies were doing the right thing and putting those premium dollars towards getting the best care possible. Thankfully, insurance companies are now required by law to spend a certain percentage of premiums on medical costs as opposed to administrative costs. If they don’t, you will receive a medical loss ratio (MLR) rebate.

Background of the MLR Provision

a calculator and pen sitting on top a pile pf papers with numbers.
Insurance companies are required by law to spend a certain percentage of premiums on medical costs. If they don’t, you will receive a medical loss ratio (MLR) rebate.

Before the Affordable Care Act (ACA) was passed in 2010, insurance companies could decide for themselves how much of your premium dollars went towards medical costs and quality improvements, and how much went towards their administrative costs. If an insurance company had particularly high administrative costs, then you were stuck paying their bills and getting less in return. You had no recourse, and most likely, no way of knowing. 

While some states had minimum standards before the ACA, there were no nationwide standards, and little review or enforcement. However, the ACA set a standard maximum percentage of premiums that insurance companies are allowed to put towards their own administration, marketing, and profits. Insurance companies are now also required to publicly report their percentages in each state where they operate. What’s more, if they don’t meet these standards, you can look forward to getting a MLR rebate.

The Standards

So how much of your premium dollars need to go towards actual healthcare? If you are a small employer (less than 50 people), then 80% must be spent on care and improvements. If you are a large employer, that number rises to 85%. That means that up to 20% of small group plan premiums still goes in the pockets of the insurers, but you can rest assured that it will never be more than that.

The Rebates

Insurers failing to meet the standards must pay a rebate based on a 3-year average of their financial data. While most seem to meet the requirements, many rebates have been paid out to policy holders since 2012. In 2019, insurers returned $312 million to the small group market, which broke down to an average of $1190 per employer. Most of that (93%) was given back as a lump sum. So if you do receive this money, what do you do with it?

What Do You Do with an MLR Rebate?

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If you do find yourself with one of these MLR rebate checks, it is your responsibility as an employer to use it a certain way. There are a few steps you should follow when figuring out how to deal with this rebate:

  • Determine which plan the rebate applies to – generally, the rebate only applies to one plan that an employer has offered (such as a PPO or HDHP), and can only be given to employees who are participating in that plan.
  • Determine how much of the rebate relates to employer contributions vs employee contributions towards the plan’s premiums – if you are contributing to your employees’ premiums, then you can keep the same percentage of the rebate as the percentage you have contributed. The rest is considered “plan assets” and must benefit your employees. So, for example, if employees contribute 50% of the premium, then 50% of the rebate would need to be used for the benefit of plan participants.
  • Determine who will get the rebate – distribution of the rebate only needs to be “fair” and “reasonable.” You don’t need to spend all your time figuring out exactly how much each employee contributed and give them each an exact percentage. You can make it easy on yourself and give a flat amount to everyone. You can also decide to only give the money to current plan participants if it will cost you too much to distribute it to everyone who ever participated in the plan.
  • Determine how to distribute the rebate – you have four choices of ways to give the rebate to your employees:
    • Cash
    • Premium reductions
    • An added benefit
    • A premium holiday

Thanks to provisions in the ACA, you can now feel a little bit more comfortable knowing that your premium dollars are being put towards the health of you and your employees. 

Anything that adds transparency to the insurance market is definitely a good thing. And so is a little bit of money back in your pocket!