What is the difference between copayment and coinsurance?

Copayments and coinsurance can apply to almost any healthcare service or prescription medication.

A copayment is a set amount the beneficiary must pay out of pocket, no matter the total cost of the service or medication.

There is a $45 copayment for a Tier 3 medication. 

Coinsurance is expressed as a percentage of the cost of the service or medication.

The coinsurance for a Tier 4 medication is 33 percent.

To determine the out-of-pocket expense, you need to know the cost of the medication.

A one-month supply of a non-steroidal anti-inflammatory medication costs $160.98. The coinsurance would be $53.12. 

Another medication, a sulfa drug, costs $313.75. The coinsurance would be $103.35.

Both Original Medicare and Medicare Advantage use copayments and coinsurance.  

Examples include 20 percent coinsurance for hospital outpatient services and 30 percent coinsurance for a diabetes self-management training program.

When evaluating Medicare coverage, either Original Medicare or Medicare Advantage, pay attention to applicable copayments and coinsurance. If there’s concern, talk to the pharmacist to find out liability for a medication or the physician’s billing service to determine the coinsurance for a test.

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