What is the difference between a copayment and coinsurance?

What is the difference between a copayment and coinsurance?

• A. Copayment is a fixed amount; coinsurance is a fixed amount.
• B. Copayment is a percentage of the cost and coinsurance is a fixed amount.
• C. Copayment is a fixed amount; coinsurance is a percentage.
• D. Copayment applies to all services; coinsurance applies only to drugs.

Answer: (C)

The key idea is how cost-sharing is calculated. A copayment is a fixed dollar amount you pay for a covered service at the time you receive it (for example, paying a set $25 for a doctor visit, regardless of the visit’s total charge). Coinsurance, by contrast, is a share of the costs expressed as a percentage of the allowed amount for the service (for example, you pay 20% of the covered cost after any deductible has been met). Because coinsurance depends on the service price, your out-of-pocket can vary with how much the service costs, while a copayment stays the same for that service. In many plans you’ll encounter one or the other depending on the service, and coinsurance typically applies after the deductible, whereas copayments are often paid upfront.

The key idea is how cost-sharing is calculated. A copayment is a fixed dollar amount you pay for a covered service at the time you receive it (for example, paying a set $25 for a doctor visit, regardless of the visit’s total charge). Coinsurance, by contrast, is a share of the costs expressed as a percentage of the allowed amount for the service (for example, you pay 20% of the covered cost after any deductible has been met). Because coinsurance depends on the service price, your out-of-pocket can vary with how much the service costs, while a copayment stays the same for that service. In many plans you’ll encounter one or the other depending on the service, and coinsurance typically applies after the deductible, whereas copayments are often paid upfront.