What Does 90% Coinsurance Mean in Health Insurance?

Health insurance plans involve various cost-sharing mechanisms. Understanding these terms is important for managing healthcare expenses. This article clarifies 90% coinsurance, explaining its function and how it interacts with other plan features.

What Coinsurance Means

Coinsurance is a form of cost-sharing where the insured individual pays a specified percentage of covered healthcare service costs. This payment typically begins after the annual deductible has been fully met.

Coinsurance differs from a copayment, which is a fixed dollar amount paid at the time a service is received, such as a doctor’s visit or prescription refill. Unlike copayments, which are static, coinsurance amounts fluctuate based on the total cost of the medical service provided, as it is a percentage rather than a set fee. Coinsurance is billed after services are rendered and the actual costs are known, whereas copayments are often collected upfront.

How 90% Coinsurance Operates

When a health insurance plan specifies “90% coinsurance,” the insurance company covers 90% of the allowed cost for covered medical services after the deductible is satisfied. The individual pays the remaining 10%. This arrangement is often called a 90/10 split, with the first number representing the insurer’s share and the second the policyholder’s.

For example, if an individual with a 90% coinsurance plan incurs a $1,000 medical bill for a covered service after their deductible is met, the insurance plan pays $900. The individual pays the remaining $100. This calculation applies to each covered service until an annual limit is reached.

Interaction with Deductibles and Out-of-Pocket Maximums

Coinsurance works with other core health insurance components: deductibles and out-of-pocket maximums. A deductible is the amount an individual must pay for covered services each year before their plan contributes. Individual deductibles typically range from $1,700 to over $5,000 annually, and family deductibles from $2,500 to more than $10,000.

Once the annual deductible has been fully paid, the coinsurance provision activates, and the individual begins sharing costs with their insurer. This means that for a 90% coinsurance plan, the individual pays 10% of subsequent covered medical bills, and the insurer pays 90%. This cost-sharing continues until the individual reaches their annual out-of-pocket maximum.

The out-of-pocket maximum is the highest amount an individual pays for covered services within a policy year. This limit includes payments towards the deductible, copayments, and coinsurance. For 2025, federal regulations cap these maximums at $9,200 for an individual and $18,400 for a family on Marketplace plans. Once this maximum is reached, the plan pays 100% of allowed costs for further covered services for the rest of that policy year. Monthly premiums do not count toward this maximum.

Real-World Cost Scenarios

Practical examples illustrate how 90% coinsurance, deductibles, and out-of-pocket maximums interact. Consider a health plan with a $2,500 individual deductible, 90% coinsurance (individual pays 10%), and a $7,000 out-of-pocket maximum. These figures reset at the start of each policy year.

Scenario 1: Before Deductible

In the first scenario, imagine an individual incurs a $1,500 medical bill early in the year, before meeting their deductible. Since the bill is less than the $2,500 deductible, the individual would be responsible for paying the entire $1,500. The insurance plan would not contribute to this cost, and the remaining $1,000 of the deductible would still need to be met for future services.

Scenario 2: Deductible Partially Met

For a second scenario, suppose an individual faces a $15,000 medical expense after already paying $2,000 towards their deductible earlier in the year. First, the remaining $500 of the deductible must be paid ($2,500 deductible – $2,000 already paid). This leaves $14,500 of the bill subject to coinsurance.

With 90% coinsurance, the individual would pay 10% of $14,500, which amounts to $1,450. In this case, the total out-of-pocket cost for this service would be $500 (remaining deductible) plus $1,450 (coinsurance), totaling $1,950. The plan would cover the remaining $13,050.

Scenario 3: Reaching Out-of-Pocket Maximum

An individual has cumulative medical bills reaching $70,000 over the year. They would first pay their $2,500 deductible. Their financial responsibility for covered services would cease once payments, including the deductible and coinsurance, accumulate to the $7,000 out-of-pocket maximum. Beyond this $7,000 threshold, the health insurance plan would then pay 100% of all further covered medical expenses for the rest of the policy year.