Copays, Coinsurance, and Out-of-Pocket Maximums Explained

These three terms describe the different ways you share the cost of care with your plan. A copay is a fixed dollar amount for a service, coinsurance is a percentage you pay after meeting your deductible, and the out-of-pocket maximum is the annual ceiling on what you'll pay before the plan covers eligible costs in full. Here's how they work together.

Copay

A copay is a set fee you pay for a specific service—for example, a flat amount for an office visit. It doesn't change based on the total bill. Under LifeX group health benefit plans, copays do not count toward your deductible, but they do count toward your out-of-pocket maximum. That distinction trips people up, so it's worth remembering: copays move you closer to your annual ceiling, just not toward your deductible.

Coinsurance

Coinsurance is a percentage of the cost you pay after you've met your deductible. If your plan pays 90% of a covered service and you pay 10%, that 10% is your coinsurance. It applies once your deductible is satisfied. For out-of-network care on a PPO, you'd typically meet your deductible and then pay a coinsurance percentage on those services—the specific percentages are in your Summary of Benefits and Coverage.

Out-of-pocket maximum

The out-of-pocket maximum is the most you'll pay in a plan year for covered services. Once your combined deductible, copays, and coinsurance reach that cap, the plan covers eligible in-network costs at 100% for the rest of the year. Like the deductible, this runs on the calendar year and resets January 1.

How they fit together

Think of it as a sequence over the year:

1. Before the deductible: you pay for covered services (copays apply to certain services and count toward your out-of-pocket max).
2. After the deductible: you pay coinsurance—your share of the percentage—until you hit the out-of-pocket maximum.
3. After the out-of-pocket maximum: the plan pays eligible in-network costs in full for the rest of the calendar year.

The bottom line

Copays are flat fees, coinsurance is a percentage after your deductible, and the out-of-pocket maximum is your annual safety ceiling. The specific dollar amounts and percentages depend on your plan, so check your Summary of Benefits and Coverage for the figures that apply to you.

This article explains general health-coverage terms and is not a description of any specific plan's benefits. For the amounts that apply to you, see your Summary of Benefits and Coverage and plan documents.