When navigating your healthcare insurance, it’s common to come across terms like copay and coinsurance. Though they both refer to ways you share the cost of medical services, they work in very different ways. Let’s talk about the key differences between copays and coinsurance. We’ll provide examples, and show how each might apply to physical therapy.

What is a Copay?
A copay (short for copayment) is a fixed amount you pay for a medical service. It’s set by your insurance company and stays the same every time you receive the service, regardless of what procedures are performed. For example, if you have a $30 copay for a Physical Therapy visit, you will pay $30 for every visit, regardless of the total cost of the visit.
Copays are predictable because you always know how much you need to pay upfront. This makes them desirable for many. However, copays don’t typically count toward your deductible or out-of-pocket maximum, which are other important parts of your health plan that you should understand as well.
What is Coinsurance?
Coinsurance is different. Instead of a fixed amount, it is a percentage of the total cost of the visit. For example, if you have 20% coinsurance and the cost of a visit is $100, you will pay 20% of that amount ($20), and your insurance will cover the rest ($80).
Coinsurance is variable and can be less predictable than copays because your payment depends on the total cost of the service. However, your coinsurance payments may count toward your deductible and out-of-pocket maximum, which helps reduce your overall costs over time.
One thing to note is that typically plans that have coinsurance do not start paying until your deductible is met.
More Details
To further complicate and confuse you. Some insurance plans can have copays for some services, and coinsurance for others. It is always best to look into your own plan and call your insurance if you have any questions. We are always willing to look into things for you as well.
Historically, most plans had copays for most things. However I have noticed over the last 5-10 years that most plans are switching to coinsurance. This is likely for a couple reasons including the rise in higher deductible plans as well as shifting some of the financial liability to the consumers.
Another thing that we’ve seen a lot of lately has been differing copays and coinsurances for the same services, but provided at different locations. For example, it has been quite common for patients to have a $40 copay to go to Physical Therapy at a hospital setting, while only being $20 to go to a private practice like HealthSpan PT. I assume that this the insurance company trying to recoup the extra cost that occurs when going to the hospital.
Copay vs. Coinsurance: Key Differences
Here’s a quick comparison chart to help you better understand the differences between a copay and coinsurance:
Feature | Copay | Coinsurance |
Definition | A fixed amount you pay for a healthcare service. | A percentage of the total cost of a healthcare service. |
Amount | Stays the same for each service. | Varies depending on the total cost of the service. |
Examples | $20 for a doctor visit, $30 for a specialist visit. | 20% for physical therapy, 30% for a hospital stay. |
Predictability | Very predictable—fixed amount each time. | Less predictable—depends on the cost of the service. |
Counts Toward Deductible | Typically does not count toward your deductible or out-of-pocket maximum. | Usually does count toward your deductible and out-of-pocket maximum. |
Let’s look at a couple examples.
Example Scenarios
Scenario | Service | Cost | Your Responsibility | Insurance Coverage |
Scenario 1: Copay | PT Visit | $100 per visit | $25 copay per visit | Insurance covers the rest ($75) |
Scenario 2: Coinsurance | PT visit | $100 per session | 30% of $100 = $30 per session | Insurance covers the rest (70% = $70) |
Physical Therapy (10 Visits) | $100 per session x 10 = $1,000 | $25 Copay = $250 30% Coins = $300 | Insurance covers the rest | |
Which Is Better: Copay or Coinsurance?
Neither copay nor coinsurance is necessarily "better"—it really depends on your healthcare needs, your preference for budgeting, and the structure of your health insurance plan. Here’s a quick breakdown of when each might be more useful:
Copay: Ideal for those who have regular, predictable healthcare needs like doctor visits, routine checkups, and prescription medications. With a copay, you know exactly what you’ll pay each time, which makes it easier to budget.
Coinsurance: Often more beneficial for people who need more complex or expensive medical services, like surgeries or hospital stays. While coinsurance can be less predictable, it’s usually designed to share costs in a more balanced way when the services are higher in price.
Conclusion
Understanding the difference between a copay and coinsurance is key to managing your healthcare expenses. Both copay and coinsurance are ways your insurance and you share the cost of healthcare, but they affect your wallet in different ways. By knowing how each works, you can make more informed decisions about your healthcare and better budget for the costs that come with it.
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