Glossary · Billing

Deductible, coinsurance, copay

A deductible is the fixed annual amount a patient pays before insurance begins sharing costs. After meeting the deductible, the patient pays coinsurance (a percentage of each covered service) or a copay (a flat fee per visit or service) until reaching the out-of-pocket maximum.

Verified May 8, 2026 · 6 sources ↓

Drawn from CMSCignaAetnaScmhCarecredit

Definition

Source · Editorial summary grounded in 6 cited references ↓

These three terms describe sequential layers of patient cost-sharing under most commercial and Medicare plans. The deductible resets annually and must be satisfied first—every covered dollar the patient pays toward eligible services counts down the balance. Only after the deductible is met does the insurer begin contributing its share. At that point, cost-sharing shifts to either coinsurance or copays depending on service type and plan design.

Coinsurance is a split expressed as a ratio—commonly 80/20 or 70/30—where the insurer absorbs the larger percentage and the patient pays the remainder on the plan's allowed amount. For example, a $2,000 MRI with 20% patient coinsurance yields a $400 patient obligation. Copays work differently: they are flat fees ($20, $50, $250) set by the plan for specific service categories regardless of what the provider actually bills. Copays are usually collected at the time of service and, depending on plan design, may or may not count toward the deductible.

All three mechanisms operate within a ceiling called the out-of-pocket maximum. Once cumulative deductible, coinsurance, and qualifying copay payments hit that ceiling within the plan year, the insurer covers 100% of additional covered services. Medicare Part B carries a separate structure: a $257 annual deductible (CY 2025) followed by 20% patient coinsurance on most outpatient and professional services, with no out-of-pocket maximum under traditional Medicare unless supplemental coverage applies.

Why it matters

Misreading a patient's cost-sharing structure directly affects collections, claim sequencing, and patient satisfaction. If a practice collects a copay from a patient who hasn't yet met their deductible, the collected amount likely underpays the actual patient liability—triggering a balance-bill and a complaint. Conversely, collecting the full allowed amount from a patient who has already met their deductible and owes only coinsurance creates overpayment and refund liability. For orthopedic practices billing high-cost services—total joint arthroplasty, spine surgery, multi-level arthroscopy—the distinction matters even more because coinsurance on a $30,000 allowed amount dwarfs a $50 copay. Inaccurate patient estimates based on wrong cost-sharing tier also raise exposure under price transparency rules and can trigger payor audits of patient collections practices.

Common mistakes

Where people most often go wrong with this concept.

Source · Editorial brief grounded in cited references ↓

Collecting a flat copay at check-in when the patient's deductible is unfulfilled—undercharging patient liability and creating a balance-bill scenario post-adjudication.
Applying coinsurance math to the billed charge rather than the payor's contracted allowed amount, which overstates the patient's share.
Assuming copays always count toward the deductible—many commercial plans exclude copays from deductible accumulation, so patients may be surprised they still owe full cost-sharing on non-copay services.
Forgetting that Medicare traditional Part B has no out-of-pocket cap—patients without Medigap or secondary coverage remain liable for 20% coinsurance on every covered professional service indefinitely within the year.
Failing to re-verify deductible accumulation status mid-year, especially for patients who had earlier hospitalizations under a different provider, causing practices to under-collect at the time of service.
Treating family and individual deductibles as interchangeable—once the family deductible is met, individual members are covered even if their personal accumulator hasn't reached the individual threshold.
Counting premiums or non-covered service payments toward the deductible—those dollars never reduce the patient's deductible balance.

Frequently asked questions

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01Does a copay count toward the deductible?

It depends on the plan. Many commercial plans explicitly exclude copays from deductible accumulation, meaning a patient who pays a $40 copay at every visit all year may still owe the full deductible when a hospital service or imaging claim is adjudicated. Always confirm this in the Summary of Benefits and Coverage.

02When does a patient start paying coinsurance instead of the full allowed amount?

Once the patient's accumulated deductible payments reach the plan's annual deductible threshold, the insurer begins paying its contracted share and the patient owes only their coinsurance percentage on subsequent covered services for the rest of the plan year.

03What is the Medicare Part B coinsurance rate for physician services in 2025?

Medicare Part B carries a 20% patient coinsurance on most covered outpatient and professional services after the $257 annual Part B deductible is met, per CMS CY 2025 rates. Traditional Medicare has no out-of-pocket cap, so the 20% obligation continues throughout the year unless a Medigap or secondary plan is in place.

04How does coinsurance differ from a copay for an orthopedic surgical case?

A copay is a fixed fee set by the plan regardless of procedure cost. Coinsurance is a percentage of the allowed amount, so for a high-value orthopedic procedure—say a total knee arthroplasty with a $25,000 allowed amount—20% coinsurance yields a $5,000 patient obligation, far exceeding any flat copay. Surgical cases nearly always trigger coinsurance rather than copay obligations.

05Can a patient's deductible status change mid-year in ways that affect my practice's collections?

Yes. A patient who had a hospitalization earlier in the year under a different system may have already satisfied part or all of their deductible. Always re-verify deductible accumulation through an eligibility check close to the date of service rather than relying on a benefit summary obtained at the start of the plan year.

06Does the out-of-pocket maximum apply to both deductible and coinsurance payments?

Yes. The out-of-pocket maximum is the ceiling on the combined total of deductible, coinsurance, and qualifying copay payments within a plan year. Once that ceiling is hit, the plan pays 100% of covered services for the remainder of the year. Under traditional Medicare Part B, no such cap exists absent supplemental coverage.

Sources & references

Editorial content was developed using the following public sources. Last verified May 8, 2026.

Mira AI Scribe

Mira can surface a patient's real-time cost-sharing status at the point of scheduling or check-in by pulling eligibility data and comparing it against accumulated deductible and out-of-pocket figures returned in the 270/271 transaction. When Mira detects that the deductible is unmet, it flags the encounter for full allowed-amount collection rather than copay-only collection and prompts the front desk accordingly. For surgical cases, Mira pre-calculates estimated patient coinsurance based on the procedure's contracted allowed amount and the patient's remaining deductible balance, enabling an accurate Good Faith Estimate compliant with the No Surprises Act. Where a plan applies a copay to office E/M visits (e.g., 99213–99215) but coinsurance to surgical global periods or facility-based procedures, Mira applies the correct collection logic per service category. Mira also flags encounters where a secondary payor (Medigap, employer secondary) may absorb residual coinsurance, preventing double-collection. All cost-sharing calculations are anchored to the plan's allowed amount for the specific CPT code, not the billed charge, ensuring the patient estimate is defensible under payor contract terms.

See Mira's approach

Related terms

Explanation of Benefits (EOB) Billing

An Explanation of Benefits (EOB) is a post-claim summary sent by an insurer to both the patient and provider that details what was billed, what the plan allowed, what the insurer paid, and what the patient owes—it is not a bill.

Prior authorization Billing

Prior authorization (PA) is a payer requirement that a provider obtain approval before delivering a specific service, procedure, or item—otherwise the claim will be denied regardless of medical necessity. Approval is granted when submitted clinical documentation meets the payer's coverage criteria.

Coordination of benefits (COB) Billing

Coordination of benefits (COB) is the process by which two or more health insurance plans divide payment responsibility for a single claim, establishing which plan pays first (primary) and which pays second (secondary) so that combined payments never exceed 100% of the allowed charges.