What is the primary difference between a copayment and coinsurance in health insurance?

The primary difference between a copayment and coinsurance lies in how they are structured in a health insurance plan. A copayment, often referred to as a copay, is a fixed monetary amount that a patient is required to pay for specific services at the time of care, such as a doctor's visit or a prescription. This amount is predetermined by the insurance plan and remains constant, regardless of the total cost of the service.

On the other hand, coinsurance is a percentage of the costs for a covered service that the insured is responsible for after meeting their deductible. For instance, if a health insurance plan has a coinsurance rate of 20%, and the total cost of a medical service is $100, the insured would need to pay $20, while the insurance company covers the remaining $80.

Understanding this distinction is crucial for individuals navigating their health insurance options, as it impacts how much they will pay out-of-pocket for different services. The other choices do not accurately reflect the definitions and applications of copayments and coinsurance, leading to misconceptions about how they function within a health insurance policy.