Understanding insurance terms: deductibles, copays, and coinsurance

Sometimes it can feel like insurance companies have their own language. Here’s a brief guide to some of the most commonly used terms to help you understand what they’re saying.

What’s a deductible?

A lot of plans have something called a deductible. This is the amount of money you need to pay out of pocket before your insurance will start helping you cover the costs of your medical visits or procedures. It’s set by your insurer and usually resets annually.  

Here’s an example: Devon has a plan with a $500 deductible. They see a doctor that charges $250 per visit. Devon would pay the full amount for the first and second visits. After paying $500, Devon’s deductible is met. For any future visits (not just with that provider, but with any other care Devon receives), their insurer would start to cover some or all of the cost, with Devon paying either a copay, coinsurance, or nothing, depending on their plan.  

What is a Copay?

Simple. A copay is a flat fee you pay for each visit. It’s set by your insurer and might even appear on your insurance card. (Keep in mind, for most plans, psychiatrists are considered “specialists.”)

Here’s an example: Let’s say your copay is $30 (and that you’ve already met your deductible, if you have one). Each time you visit a specialist, you’ll just pay $30.  

What is Coinsurance?

With coinsurance, you and your insurer share the cost of care. You’ll be responsible for a percentage of the total cost, and your insurer will cover the rest.  

Here’s an example: You’ve met your deductible, and your coinsurance is 20%. That means you’re responsible for 20% of the total cost of a visit, while your insurer will pay the other 80%.