Definition
What Is Coinsurance?
Last updated
Coinsurance is your share of the cost of a covered prescription or health care service, calculated as a percentage, such as 20%, of the plan's allowed amount, generally paid after you've met your deductible. Unlike a flat copay, coinsurance rises and falls with the price of the drug, so it can result in a higher bill for expensive medications.
How it affects what you pay
Because coinsurance is a percentage rather than a flat fee, it tends to matter most for expensive brand-name and specialty drugs, where even a modest percentage can translate into a large dollar amount (HealthCare.gov Glossary, coinsurance). CMS's uniform glossary gives the standard example: if the allowed amount for a covered service is $100 and your deductible is already met, a 20% coinsurance payment would be $20, with the plan covering the rest (CMS, Glossary of Health Coverage and Medical Terms). For prescriptions, this means a high-cost specialty drug with 20% coinsurance could cost far more out of pocket in a single fill than a low-cost generic with a flat copay. Coinsurance payments generally count toward your annual out-of-pocket maximum, after which your plan typically covers 100% of further covered costs for the rest of the plan year.
Example
Consider a hypothetical specialty drug with a plan-allowed amount and a 25% coinsurance rate, applied after the deductible is met. The dollar amount owed would rise and fall directly with the allowed amount of that specific drug, unlike a copay, which would stay fixed regardless of the drug's price. This is a general illustration, not a real plan's coinsurance rate or drug price.
Coinsurance versus copay
A copay is a fixed dollar amount, while coinsurance is a percentage of the cost. Many plans use flat copays for lower-tier generic and brand-name drugs and switch to coinsurance for specialty tiers, where a percentage-based model shifts some cost risk from the insurer to the patient. Check your Summary of Benefits and Coverage or your plan's formulary to see which model applies to a specific medication. Our guide on why prescriptions cost more before you meet your deductible explains how deductible and coinsurance interact in more detail.
Why coinsurance can be harder to predict
Because coinsurance depends on the drug's negotiated allowed amount, which you may not know in advance, it can be harder to budget for than a flat copay. Compare prescription prices on BetterBuyRx before filling an expensive prescription to get a sense of typical pricing, and ask your pharmacist to estimate your coinsurance amount before you commit to a fill if the drug is costly.
What to do if coinsurance makes a drug unaffordable
If a coinsurance percentage on a specialty or brand-name drug results in an unaffordable bill, ask your doctor about lower-cost alternatives, check whether a patient assistance program or copay card applies, and search your medication on BetterBuyRx to compare the cash price as a possible backup option.
Frequently asked questions
How is coinsurance calculated for a prescription?
It's calculated as a percentage of the allowed amount for the drug. For example, 20% coinsurance on a $100 allowed amount would be $20, though real prescription costs and percentages vary by plan and drug.
Do I pay coinsurance before or after my deductible?
Typically after. Most plans require you to pay 100% of the cost toward your deductible first, and coinsurance percentages apply to covered costs after the deductible has been met.
Which is usually cheaper, a copay or coinsurance, for expensive drugs?
It depends on the plan and the drug's price, but coinsurance on a very expensive specialty drug can sometimes cost more than a flat copay would, which is why some plans cap coinsurance for high-cost drug tiers.
Sources
Compare prices & find savings
This page is for cost and savings education only. It is not medical advice. Talk to your doctor or pharmacist about your specific medications and coverage. Prices vary by pharmacy, location, quantity, and eligibility.
Related terms & guides
- What Is a Copay?
Copay definition: what a fixed prescription copay is, how it differs from coinsurance, and how it affects what you pay at the pharmacy.
- What Is a Deductible?
Deductible definition: what you pay before insurance kicks in for prescriptions, how it resets, and how it interacts with copays and coinsurance.
- What Is an Out-of-Pocket Maximum?
Out-of-pocket maximum definition: the most you'll pay in a plan year, what counts toward it, and how it interacts with prescription costs.