What is the key difference between a copayment and coinsurance in a health plan?

• A. Copayment is a fixed amount; coinsurance is a percentage of covered costs.
• B. Copayment is a percentage; coinsurance is a fixed amount.
• C. Copayment applies after deductible; coinsurance applies before deductible.
• D. Copayment and coinsurance are interchangeable.

Answer: (A)

At the heart of how cost sharing works in health plans is the difference between a fixed dollar amount and a share of the cost. A copayment is a fixed amount you pay for a service or prescription when you receive it—for example, paying a set $25 for a doctor visit. The amount stays the same regardless of the total charge.

Coinsurance, on the other hand, is your share expressed as a percentage of the allowed charges after your deductible (in many plans) has been met. So if the allowed cost is higher, your dollar out-of-pocket grows because you’re paying a percentage of a larger amount.

That’s why the correct description is that copayment is a fixed amount and coinsurance is a percentage of covered costs. The other statements don’t fit because they either swap those ideas, tie them to the wrong timing relative to deductible, or say they’re interchangeable.