What is coinsurance and how does it work? | Guardian Direct

What is coinsurance and how does it work?

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Coinsurance is the percentage of costs of a covered health care service you pay after you've paid your deductible.

Coinsurance is a type of cost-sharing, a way of splitting the cost of treatment between you and the insurance company. This design applies to medical and dental plans, but dental coinsurance features a few unique characteristics.

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The purpose of dental insurance

Dental insurance can help you budget for the cost of maintaining your oral health. Dental insurance generally covers a portion of the cost of a range of dental services from routine preventive care to dental surgery. Dental insurance also typically includes negotiated rates with a network of dentists, further reducing the cost of dental services. Dental benefits provide a way of helping you get care to preserve your oral health. 

How does 20% coinsurance work?

A 20% coinsurance rate means your insurance company will pay for 80% of the costs of your treatment, and you are responsible for covering the remaining 20%. Coinsurance can apply to cleanings, fillings, or many other types of dental care.

Let’s say you visit your dentist for your six-month checkup and cleaning. If the cost of your cleaning, exam, X-rays, and fluoride costs $300, you would pay $60 while your insurance company would cover the remaining $240. There’s not usually a difference between the amount of coverage at a general dentist or a specialist.

Coinsurance vs. copay: what’s the difference?

Copays and coinsurance share similarities except for one main differentiator: Coinsurance is a percentage of the total cost, but a copay may be one, set fee. Most dental plans work on coinsurance formulas.

Consider the previous example. Your policy may state that a root canal requires a copay instead of coinsurance. You may be asked to pay a flat fee of $100 for the service, regardless of the total procedure cost. 

One advantage of a copay is that it gives you a predictable amount to plan to pay. Coinsurance requires that you pay a percentage of the visit. So, the higher the total cost, the more you’ll end up paying.

Coinsurance - one part of dental care costs

Coinsurance and copays are classified as out-of-pocket expenses. In addition to your plan’s monthly premiums, these expenses add to your healthcare costs. Your costs can vary depending on how much treatment you need at one time, or the complexity of the procedure.

To understand how out-of-pocket expenses can add up, you need to understand three other key parts of many dental insurance plans: premiums, deductibles, and annual limits. 


Like health insurance, dental insurance plans charge a monthly premium that’s paid to the insurance company. Higher monthly premiums may mean your coinsurance amount is lower.  Conversely, lower monthly premiums may mean you will have to cover more out-of-pocket expenses for dental treatment.


A deductible is a set amount that you’re required to pay before your insurance company begins paying its portion. Different plans may have different deductible amounts. 

Annual limits

An annual limit is the maximum amount that insurance will pay for dental care each year. After the annual limit is reached, you are responsible for any costs beyond this set amount. 

In-network vs. out-of-network

Some plans, such as preferred provider organizations (PPOs), allow you to visit an out-of-network dentist for care. However, they may charge higher rates if you go out of network.

Network: Insurance companies form networks of providers who agree to a set of fees that are lower than their normal fees. The network saves you money and allows insurance companies to charge lower premiums for plans.

In-network: The dentists who agree to accept your dental insurance are considered in-network. Dental insurance companies negotiate lower rates for care with the providers that are in their networks.

Out-of-network: A dental provider your insurance plan has not negotiated a discounted rate with is classified as out-of-network.  If you choose to visit an out-of-network provider, you may be responsible for the entire bill or you may have to pay a higher coinsurance rate for care.

Keep tabs on annual maximum amounts

It’s s a good idea to keep your annual maximum in mind when planning your treatment schedule.  If you need more complex services, like crowns, implants, or dentures, costs can quickly add up. The annual maximum applies to the amount paid by the plan, not the total cost of treatment.

How to maximize dental coinsurance

Most dental insurance plans place an emphasis on preventive care. You may find your plan pays 80% or more for cleanings, exams, and X-rays twice each year.  If you need more extensive treatment, consider a phased plan that takes advantage of multiple insurance benefit years. For example, if you start treatment in the second half of the year and you know the annual maximum will renew in January, you could take advantage of two benefit years within a few months.

Selecting a dental insurance plan

There are a lot of factors to consider when buying a dental insurance plan. What is covered by each type of plan, the monthly cost of premiums, the cost of the deductible and copay fees are all important factors when choosing an insurance plan that will fit your budget and your life. 

This is not dental care advice and should not be substituted for regular consultation with your dentist. If you have any concerns about your dental health, please contact your dentist's office.


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Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice.(exp.06/22)

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