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What is the difference between 'co-insurance' and a 'co-payment'?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

Co-insurance is a percentage of the cost the insured pays after deductible (e.g., 20%); a co-payment is a fixed dollar amount per service (e.g., $30 per office visit)

  1. A Co-insurance is a percentage of the cost the insured pays after deductible (e.g., 20%); a co-payment is a fixed dollar amount per service (e.g., $30 per office visit)
  2. B Co-payments are paid annually
  3. C There is no difference
  4. D Both are the same as deductibles

Why this is the answer

Cost-sharing in health insurance has three main components, often confused. Deductible: the amount the insured pays out of pocket before the plan begins to share costs (e.g., $1,500). Co-payment (copay): a fixed dollar amount paid per service (e.g., $30 for an office visit, $150 for an emergency room visit). Co-insurance: a percentage of the cost the insured pays after the deductible is met (e.g., 20% of the bill, with insurance paying 80%). Out-of-pocket maximum: the most the insured can pay in a year; once reached, the plan pays 100%. Understanding these mechanisms helps the insured estimate their actual cost for care and compare plans. Plans with lower premiums often have higher deductibles, copays, and co-insurance.
Source: NAIC Model Outline, Cost Sharing

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About this topic: Health Insurance Basics

Health insurance basics cover the types of health coverage, the risk and underwriting concepts behind them, and the terms every policy uses — premium, deductible, coinsurance, copayment, out-of-pocket maximum. This is one of 7 Health Insurance questions on health insurance basics, each with a full explanation on a single study page.

New to this exam? Our Insurance exam guide explains the format, scoring, and how to prepare.

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