How does a copayment differ from coinsurance?

The distinction between copayment and coinsurance lies in their structure of payment. A copayment is a fixed amount that a patient pays for a healthcare service, such as a visit to a doctor or the purchase of a prescription drug. This amount is predetermined by the insurance policy, making it a straightforward and predictable expense for the patient.

On the other hand, coinsurance is calculated as a percentage of the total cost of a healthcare service or item. This means that after the deductible has been met, the patient pays a percentage of the costs, while the insurance provider covers the remainder. This method can lead to varying out-of-pocket expenses depending on the total amount billed for medical services.

Understanding this difference is crucial because it impacts how patients budget for their healthcare costs. With copayments, patients can anticipate their expenses more easily, whereas coinsurance can lead to fluctuating costs that depend on the total bill of the service consumed. This knowledge aids in navigating insurance plans and understanding potential out-of-pocket costs.