What Does '20% Coinsurance' Mean?

Coinsurance is an insurance term that indicates the percentage of a covered service that you're responsible for. For example, if your dental insurance plan says your coinsurance for a root canal is 20 percent, you're expected to pay 20 percent of the cost of your root canal. Most types of insurance, including health, dental and vision, may have coinsurance for services, depending on the terms of your policy.

Coinsurance and Premiums

• Your premium is the amount you pay each month to be covered by your insurance plan. Plans with lower out-of-pocket costs have higher premiums, and plans with higher out-of-pocket costs have lower premiums. If you're looking at two health insurance plan options, for example, the less expensive plan may have 30 percent coinsurance for specialist visits, and the more expensive plan may have 20 percent.

Copays and Coinsurance

• Most insurance plans, including car insurance, health insurance, dental insurance and vision insurance, have out-of-pocket costs. In addition to coinsurance, there may be a copay, which is a set cost for a specific type of health care service. For example, your plan may have a $15 copay for primary care doctor visits and a $30 copay for a visit to a specialist. The difference between a copay and coinsurance is that a copay is the same amount regardless of the cost of the service. For example, if your copay for a primary doctor visit is $10, the copay stays $10 whether the doctor charges $100 or $200. With coinsurance, you would pay a percentage, so if you had a 20 percent coinsurance on primary doctor visits, and the visit cost $100, you would pay $20. If the visit was $200, you would pay $40.

Deductibles and Coinsurance

• The other type of out-of-pocket cost you may see is a deductible. Deductibles are the amount you're expected to pay for covered services before the plan will start paying. If your plan has a $500 deductible, you are responsible for $500 of medical expenses that the plan covers before the plan will begin paying benefits. A higher deductible lowers your monthly premium. Deductibles are paid before you start paying coinsurance. If you're hospitalized, for example, and your bill is $1000, and your plan has a $500 deductible with 20 percent coinsurance, your total out-of-pocket cost would be $600.

Coinsurance and Your Policy

• If your insurance policy has coinsurance, you should also check what your plan's out-of-pocket maximum is. This is the most you would have to pay out-of-pocket in a given year. Your coinsurance amount may vary depending on the type of service. With health, vision and dental insurance, there may be a provider network, and your coinsurance amount may change depending on whether the service is in-network or out-of-network. Generally, if your provider is in-network, your coinsurance will be lower than with an out-of-network provider.