During your search for health insurance quotes you will find some very common terms associated with this process. For instance, a premium is the amount you pay for the policy and a deductible is the amount you will pay before the insurance pays. But there are two other important aspects to health insurance quotes and it is important to know the difference between them or it could be very costly; these are copayments and coinsurance amounts.

The first difference between copayments and coinsurance is when you pay them. Copayments are paid up front for medical services, and they are a fixed amount; which is the second difference. Coinsurance is paid later, after the bill is totaled up, and it is a percentage amount. Let's take for example that you go to your doctor for a broken arm, you will have a preset copayment (or copay) for the visit. So, if your copay is $20, you will hand over that amount (with your non-broken arm of course) to the person behind the counter. This amount remains the same each time, no matter the reason for visiting your doctor.

A few days later after you are recovering from your injury, a statement from your insurance company will arrive. This statement shows the total charges from your doctor, $1000 in this case. It will also include the amount you have already paid, which was your copay of $20, and the balance due of $980. Most insurance companies have negotiated rates with a doctor, which means that the doctor has agreed to take a lower amount as payment. For this example your doctor has agreed to a $480 deduction leaving a remaining bill of $500. If you have already met your deductible for the year and you have a coinsurance rate of 80/20, the insurance will pay 80% of $500 (or $400) and you will pay the remaining 20% of the $500 (or $100). In this example, the total you paid to your doctor was $120, $20 copayment and $100 coinsurance. As discussed earlier, coinsurance is a percentage amount of services rendered, whereas the copayment is a fixed amount. Therefore, if your coinsurance amount had been a higher percentage your total out of pocket would have been more.

As you can see from the example above, copayments and coinsurance have a significant impact on your out of pocket expenses. Both of these concepts involve sharing the cost of your health care, but in different ways. Bear in mind that these amounts can vary greatly from one insurance company to another which is why it's very important when comparing health insurance quotes to take the copayment and coinsurance rates into consideration.