The Role of Deductibles, Co-Pays and Coinsurance in Health Insurance

In today’s world, it is necessary to have health insurance coverage to pay for the high cost of medical treatments. However, the complexity of the health insurance jargon can leave many people confused, especially when it comes to understanding the role of deductibles, co-pays, and coinsurance. Here is an explanation of each and how they affect your health insurance coverage.


A deductible is the amount you pay before your insurance company begins to cover your medical expenses. For example, if you have a medical bill of $2,000 and your deductible is $500, you’ll pay the first $500, and your insurance company will pay the remaining $1,500. Deductibles usually reset annually, meaning you start over with the full deductible amount every year.

The higher the deductible, the lower the monthly premiums. So, if you are relatively healthy and do not use many medical services, choosing a high-deductible plan can save you money on your premiums. However, keep in mind that a high-deductible plan may lead you to pay more out of pocket if an unexpected medical emergency does occur.


A co-pay is a fixed fee you pay for the medical services you receive. For instance, you might have a $20 co-pay for doctor visits, while your insurance company covers the rest of the appointment’s costs. Co-pays usually apply to preventive care visits, specialist appointments, and prescription drugs. Co-pays generally do not count towards your deductible, meaning you’ll have to meet your deductible first before insurance starts covering the medical costs.


Coinsurance is the percentage of medical costs you pay after you’ve met your deductible. For example, let’s say you have a 20% coinsurance and a medical bill of $10,000. If you have already met your deductible, you would pay $2,000 (20% of $10,000), and your insurance company would cover the remaining $8,000.

Choosing the right combination of deductible, co-pay, and coinsurance depends on your medical needs and financial situation. A lower deductible plan may help keep your out-of-pocket costs lower if you or someone in your family has recurring or expensive medical needs. However, if you are relatively healthy or hardly see a doctor, a higher deductible plan may be more reasonable since it has lower monthly premiums.

In conclusion, instead of getting overwhelmed by the different terms and options, it pays to get good health insurance advice before settling on an insurance plan. Deductibles, co-pays, and coinsurance play a crucial role in how much you’ll pay when you receive medical treatment. Understanding these terms can help you make more informed decisions and choose the right health insurance plan for your needs.