Insurance Health Insurance Health Insurance Coinsurance Coinsurance and Your Out-of-Pocket Costs By Mila Araujo Mila Araujo Facebook Twitter Mila Araujo is a certified personal lines insurance broker with more than 20 years of experience in the insurance industry. She currently serves as the director of personal insurance for Ogilvy Insurance where she works with some of the world's largest insurers and manages the needs of thousands of clients with the help of her broker team. As an insurance expert, has written about homeowners, auto, health, and life insurance for The Balance. Mila received the Bernard J. Finestone Award in General Insurance from McGill University in 2001. learn about our editorial policies Updated on May 17, 2022 Reviewed by Samantha Silberstein Reviewed by Samantha Silberstein Twitter Samantha Silberstein is a Certified Financial Planner, FINRA Series 7 and 63 licensed holder, State of California Life, Accident, and Health Insurance Licensed Agent, and CFA. She spends her days working with hundreds of employees from non-profit and higher education organizations on their personal financial plans. learn about our financial review board Share Tweet Pin Email Photo: JGI/Tom Grill / Getty Images Coinsurance, a term found in every health insurance policy, is your out-of-pocket expense for a covered medical or healthcare cost after the deductible, which generally renews annually, has been paid on your healthcare plan. Generally expressed as a percentage amount and outlined in the coinsurance clause of the policy, coinsurance allows the policyholder to share the cost of the insured service with the insurance company—your insurance company pays the portion of the cost of the service that is insured, and you pay the remainder. Key Takeaways Coinsurance is your out-of-pocket expense for a covered cost after you have paid the deductible on your healthcare plan.The insurance company generally pays a greater percentage of any medically necessary healthcare service, and you pay the rest.If you have two health insurance plans, and one has a different coinsurance clause, you may be able to coordinate benefits to cover more of the cost.Once you meet your annual deductible, you will only be responsible for the coinsurance amount listed in your policy. Coinsurance Percentage Breakdown The insurance company generally bears a higher burden, paying the majority of the cost (the greater percentage) of any medically necessary healthcare service. Common divisions are 70/30 or 80/20, wherein your insurance company would pay either 70% or 80%, and you would pay the remaining 20% or 30%, respectively, out of pocket, after the deductible is met. If your medical bill is $1,500, and you have a $500 deductible, the portion of the bill to which coinsurance will apply is $1,000. With a 20% coinsurance clause, you would pay $700 ($500 + $200 [20% of remaining $1,000]). The sum total, $700, is known as your "out-of-pocket" expense. The insurance company, paying the majority of the cost at the higher percentage, would pay the remaining $800. Your Coinsurance at Work for You If you are fortunate enough to have coverage under two health insurance plans (for example, under a spouse or domestic partner plan), and one of them has a different coinsurance clause, one plan acts as the primary plan when filing your health insurance claim. In most cases, the primary plan's coinsurance will apply to your expenses first, and the secondary plan's coinsurance will apply to anything your primary plan hasn't paid for. The process of using two insurance plans to cover a cost is called "coordination of benefits." It's important to note that those enrolled in Medicare may want to check with their providers and coverages first as the coordination of benefits may be different across different scenarios and to ensure your bills are sent to the right payers, in the right order. Note Policy deductibles renew and are paid annually. In other words, once your required annual deductible is paid each year, you will only be responsible for the coinsurance amount ("co-pay") listed in your policy for the remainder of that year. Understanding how coinsurance, coordination of benefits, and deductibles work on your health plan can save money each year. It's important to fully read all conditions of a policy before you make your choice or sign a waiver of health insurance, for any policy. If you have questions, speak to your representative to fully understand your options. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Healthcare.gov. "Coinsurance." FAIR Health Consumer. "Having More Than One Health Plan." Government of the District of Columbia. "Understanding Your Health Insurance," Page 2.