How is a copayment different from coinsurance?

A copayment and coinsurance are both forms of cost-sharing in health insurance, but they operate differently. A copayment is a fixed dollar amount that an insured individual is required to pay for a specific healthcare service at the time of service, such as a doctor's visit or a prescription. This amount remains the same regardless of the total cost of the service. In contrast, coinsurance is a percentage of the total cost of a service that the insured individual is responsible for paying after meeting their deductible.

The assertion that coinsurance is variable while copayment is a set dollar amount accurately captures the primary distinction between the two. With a copayment, an individual knows exactly how much they will need to pay upfront, while with coinsurance, the cost can fluctuate based on the overall price of the service, leading to potentially higher out-of-pocket expenses depending on the total bill.

Other options, such as restricting copayments to prescriptions or suggesting that coinsurance only kicks in after a deductible is met, aren't entirely representative of the broader applications and rules regarding these payment methods in insurance plans. Coinsurance typically does apply after the deductible is met, but it is not exclusive to that context. Additionally, copayments can apply to a variety of healthcare services,