What Is Coinsurance? How the 80/20 Split Actually Works

Coinsurance is the percentage of a medical bill you pay after your deductible is met. It sounds simple — but BillKarma data shows patients underestimate their total cost-sharing by an average of $1,800 because they calculate only their deductible and forget that coinsurance can stack thousands of dollars of additional exposure on top of it. Here is exactly how coinsurance works and how to calculate your real out-of-pocket costs.

1. How coinsurance works

Coinsurance is triggered once you have paid your full deductible for the year. At that point, instead of paying 100% of covered costs, you pay a fixed percentage — and your insurer pays the rest.

Here is a concrete example on a plan with a $3,000 deductible and 20% coinsurance:

Now the same scenario, but the deductible is only partially met (you have $1,500 remaining on your $3,000 deductible):

2. Coinsurance vs. copay: key differences

Many plans use both. You might have a $35 copay for a primary care visit (no deductible applies) and 20% coinsurance for a hospital stay (applies after deductible). Both count toward your out-of-pocket maximum. For a deeper look at the deductible-coinsurance relationship, see our deductible guide.

3. Coinsurance vs. deductible: the sequence

Deductible and coinsurance are sequential, not simultaneous. The order matters:

1. Phase 1 — Deductible: You pay 100% of covered costs until your annual deductible is met.
2. Phase 2 — Coinsurance: After the deductible is met, you pay your coinsurance percentage (e.g., 20%) on each covered service. Insurance pays the rest.
3. Phase 3 — Out-of-pocket max: Once your total payments (deductible + copays + coinsurance) reach your OOP max, insurance pays 100% for the rest of the year.

The most common mistake: patients in Phase 1 see a large bill and assume they have insurance coverage because they have insurance. Coverage does not mean the insurer pays immediately — you must exhaust your deductible first. Understanding which phase you are in determines how to budget for upcoming care. Track your phase status through your insurer’s member portal or on each EOB. See our out-of-pocket maximum guide for detail on Phase 3.

4. Common coinsurance splits: 80/20, 70/30, 60/40

Lower-premium plans typically have higher coinsurance percentages. A 60/40 plan may cost $150/month less in premiums than an 80/20 plan — but if you need a $20,000 surgery, you pay $8,000 vs. $4,000 in coinsurance. The premium savings ($1,800/year) do not offset a $4,000 difference in a bad year. Run the math before choosing based on premium alone.

ACA metal tier and coinsurance: The ACA’s metal tiers are largely defined by coinsurance and cost-sharing levels (the “actuarial value” — how much of total costs the plan covers on average):

• Bronze (60% actuarial value): You pay ~40% of total costs on average — typical coinsurance 30–40%
• Silver (70%): You pay ~30% on average — typical coinsurance 20–30%
• Gold (80%): You pay ~20% on average — typical coinsurance 10–20%
• Platinum (90%): You pay ~10% on average — low coinsurance, highest premium

5. In-network vs. out-of-network coinsurance

Most plans have different coinsurance rates for in-network and out-of-network providers. The out-of-network rate is typically much higher — or care is simply not covered:

On a PPO plan, going out of network for a $10,000 procedure at 40% coinsurance costs you $4,000 vs. $2,000 in-network — a $2,000 difference on just one procedure. Additionally, out-of-network providers can balance bill you for the difference between their charge and the insurance allowed amount, a protection you don’t have in-network. Always verify network status before receiving care. See our plan type comparison for how network types affect your coinsurance exposure.

6. Coinsurance for prescriptions

Most prescriptions are subject to flat copays rather than coinsurance — but specialty drugs are often an exception:

• Tier 1 (generic drugs): Typically $5–$15 flat copay
• Tier 2 (preferred brand): Typically $30–$60 flat copay
• Tier 3 (non-preferred brand): Typically $60–$100 flat copay
• Tier 4–5 (specialty drugs): Often 25–33% coinsurance instead of a flat copay. A specialty biologic drug costing $8,000/month at 25% coinsurance = $2,000/month out of pocket before hitting your OOP max.

Specialty drug coinsurance is one of the fastest paths to hitting your out-of-pocket maximum. If you take specialty medications, calculate whether your annual specialty drug coinsurance alone will push you toward your OOP max — if so, plan other care accordingly.

7. Medicare coinsurance in 2026

Medicare has its own coinsurance structure, separate from private insurance:

No OOP max on Original Medicare: Unlike ACA marketplace plans, Original Medicare Parts A and B have no annual out-of-pocket maximum. If you have a long hospitalization or chronic disease requiring Part B services, your 20% coinsurance exposure is theoretically unlimited. This is the primary reason Medicare beneficiaries purchase Medigap (Medicare Supplement) insurance — Medigap covers the Part A and Part B coinsurance, effectively capping your exposure.

8. Calculating your maximum coinsurance exposure

If you have a scheduled procedure, you can calculate your maximum out-of-pocket cost in advance. Here is the formula:

1. Get the allowed amount. Call your insurer’s pre-authorization line and ask for the allowed amount for the procedure’s CPT code at the specific facility. Or use Medicare rates as a rough benchmark — Medicare typically pays 80–120% of what commercial insurers pay for common procedures.
2. Subtract your remaining deductible. Check your member portal for your year-to-date deductible accumulation. Subtract from your annual deductible to find what you still owe.
3. Apply coinsurance to the remainder. After your deductible, multiply the remaining allowed amount by your coinsurance percentage.
4. Check your remaining OOP max. Your maximum exposure is capped at your remaining out-of-pocket maximum. If you are close to your OOP max, your actual cost may be much lower than the coinsurance calculation suggests.

Example: $15,000 allowed amount procedure. $800 deductible remaining. 20% coinsurance. $6,000 OOP max, with $4,200 already paid toward it.

• You pay $800 deductible first.
• 20% of remaining $14,200 = $2,840 coinsurance.
• Total = $3,640.
• But your remaining OOP max is $6,000 − $4,200 = $1,800.
• Your actual cost: $1,800 (capped by OOP max, not the coinsurance formula).

Frequently asked questions

Sources

• HealthCare.gov: Coinsurance Definition and Examples
• Centers for Medicare & Medicaid Services: 2026 Medicare Cost-Sharing
• Kaiser Family Foundation: Employer Health Benefits Survey (2025)
• IRS: Publication 969 — Health Savings Accounts (2026)
• Consumer Financial Protection Bureau: Medical Cost-Sharing Survey (2025)