Why You Might Still Owe Money After Meeting Your Healthcare Deductible (2024)

Coinsurance is a type of cost-sharing to pay for health care. With coinsurance, both you and your insurance provider pay part of a medical bill.

This article will explain what coinsurance is, how it works, and how to figure out how much you will have to pay.

What Is Coinsurance?

With most health insurance plans, patients pay a set amount for certain medical services they get throughout the year. This is called an annual deductible.

Under most health plans, patients still have to pay some of the cost of their care, even after they meet their deductible. However, their insurance plan will pay some, too. This arrangement is called coinsurance.

Once the patient has met their deductible and coinsurance starts to apply, the patient pays a percentage of the cost of additional medical services they receive (note that coinsurance amounts are based on the health plan's network-negotiated rate, rather than the amount that the medical provider bills).

The patient's percentage of the cost typically ranges from 10% to 40%, depending on the health plan. The health plan will pay the other 60% to 90%.

In most cases, coinsurance applies to the same services that would have counted toward the deductible if the deductible had not yet been met. In other words, the patient pays 100% of the plan-approved amount for those services until the deductible is met, and then switches to paying the coinsurance percentage instead.

But some services, such as prescription drugs, can be covered with coinsurance even before the deductible is met, depending on the plan specifics.

Coinsurance does not apply to services that are covered in full without a deductible, like some preventive care services. It also does not apply to services that are covered with a copay instead of coinsurance, like seeing your primary care provider (if that's how your health plan is structured).

Out-of-Pocket Maximum

Coinsurance is part of the total amount the health insurance company can require patients to pay in cost-sharing during the year. This is called the out-of-pocket maximum. Deductibles, copays, and coinsurance are included in the amount.

Once the amounts paid in deductibles, copayments, and coinsurance add up to a patient’s out-of-pocket maximum, their health plan will start to pick up the full cost of covered in-network care for the rest of the plan year (assuming the patient follows all of the plan's rules for things like prior authorization, primary care physician referrals to see a specialist, step therapy, etc.).

That means the patient’s coinsurance percentage will be 0% for the rest of the plan year.

Limits

Under the Affordable Care Act (ACA), plans are limited by federally-determined maximum out-of-pocket limits. The exception is any plans that existed before the ACA went into effect or during the transition (called grandfathered or grandmothered plans). And there's also an exception for health plans that aren't regulated by the ACA at all, such as short-term health insurance policies.

The limit applies to in-network treatment for essential health benefits. However, plans often set out-of-pocket maximums that are lower than the federal cap. For 2023 health plans, the cap is $9,100 for an individual and $18,200 for a family.

How to Calculate Coinsurance

Some aspects of paying for health care are easier to calculate than others. For example, you’ll know how much you have to pay for deductibles and copays because they are fixed amounts set by your insurance plan.

Calculating a health insurance coinsurance amount is harder because coinsurance is a percentage of the total cost of service rather than a set amount. That means the amount of coinsurance can be different for each service you get.

If a service does not cost that much, then the coinsurance amount will be small. However, if the healthcare service was expensive, the coinsurance will be higher, too.

What’s key to remember is the out-of-pocket maximum on your plan. If your policy includes 20% coinsurance, that does not mean you pay 20% of all your health care costs during the year.

Once your spending hits your out-of-pocket maximum for the year, you’re done paying as long as the care you get is in-network and you follow the other rules your insurance provider has, like preauthorization requirements.

(As discussed in more detail below, Original Medicare does not have a cap on out-of-pocket costs. So under Medicare Part B— which covers outpatient care and has a 20% coinsurance—there is no limit to how high a person’s coinsurance charges can be. This is why most Medicare beneficiaries either have supplemental coverage—from Medigap, an employer/retiree plan, or Medicaid—or Medicare Advantage coverage, which does have a cap on out-of-pocket costs.)

Real-World Example

Let’s say that you have a health insurance plan with these features:

• Annual deductible: $1,500
• Coinsurance: 20% coinsurance
• Out-of-pocket maximum: $3,000

In February, you cut your finger and need stitches. The approved amount for the care based on your policy’s network negotiated rates is $2,400.

You have to pay the first $1,500 because that’s your deductible. That leaves a $900 bill. You’ll have to pay 20% of that amount in coinsurance, which is $180.

That means you’ll pay a total of $1,680 for the stitches, and your insurance policy will pay $720.

In July, you have surgery to remove your gallbladder. The procedure will cost $16,000, after your health plan’s network negotiated discount. You have already met your deductible for the year, so you will only have to pay coinsurance (20% of the cost).

You might think your coinsurance responsibility would be $3,200 because that’s 20% of $16,000.

However, you will not have to pay the full $3,200 because your plan has a maximum out-of-pocket of $3,000 for the whole year.

You already paid $1,680 when you had stitches. When you subtract that amount from your out-of-pocket maximum ($3,000) you’ll get $1,320. That’s how much you will have to pay for your surgery.

Your insurance will pay the rest ($14,680) and will now cover 100% of your approved claims for the rest of the year.

What About Medicare?

The ACA put rules in place that limited maximum out-of-pocket costs on all non-grandfathered health plans. Rules that came later also allowed grandmothered plans to stay in use and not be subject to limits on out-of-pocket maximums.

The exception is Medicare, which is not subject to the ACA’s rules for out-of-pocket limits.

Medicare on its own—without a Medigap plan, a supplemental employer-sponsored plan, or additional coverage from Medicaid—does not have a cap on out-of-pocket costs.

Medicare Part B covers outpatient care, which can include ongoing, high-cost health care services such as dialysis. The plan has a small deductible that must be met ($226 as of 2023). After that, a patient pays 20% coinsurance and there is no limit on how high the bill can get.

Without supplemental coverage, coinsurance can add up to high out-of-pocket costs. That’s why most Medicare beneficiaries have supplemental coverage or Medicare Advantage, which has a cap on out-of-pocket costs.

Medicare Part A has a per-benefit-period deductible that will cover 60 days in the hospital. After that time is up, a patient has to start paying part of the bill—and there’s no cap on how high the patient’s out-of-pocket costs can get. But supplemental coverage will pick up some or all of these costs as well.

Summary

Coinsurance is a type of cost-sharing where you and your health insurance provider both pay a percentage of a medical bill.

You will have to pay costs for health care services you receive until you meet your deductible. Then, your insurance plan will start covering their percentage in coinsurance and you will pay yours.

Once you pay the amount of your out-of-pocket maximum—which includes deductibles, copays, and coinsurance—your insurance plan will pay all the costs for covered in-network services until the end of the plan year.

People who have Original (Traditional) Medicare have different rules around coinsurance and out-of-pocket costs. If they don’t have supplemental coverage, their costs for care can be very high, as Original Medicare does not have a cap on out-of-pocket costs.

A Word From Verywell

Although your health plan likely has a coinsurance of 10% to 40%, you almost certainly also have a cap on how high your total out-of-pocket costs (including coinsurance) can be. Knowing exactly how much you’ll owe in coinsurance for a specific medical procedure can be difficult, since it depends on the rate that your health plan has negotiated with the doctor or hospital for that service.

But the billing office should be able to help you estimate it, and you can rest assured that your total costs will not exceed your annual maximum out-of-pocket limit, as long as you stay in-network and get any prior authorization required by your health plan.