Insurance policies help you pay for your medical needs, but they rarely cover 100% of the cost of your care. As a patient, you are responsible for paying some of the cost. This cost can be characterized as either a co-pay or co-insurance. A co-pay is a fixed dollar amount, while co-insurance is a percentage of the total cost that you are responsible for.
So if your insurer requires you to pay $20 per brand name prescription, that $20 is your co-pay, which is also commonly used for doctor visits. For example, some insurance plans may require you to pay a $10 (or $20 or $50) co-pay per doctor visit.
On the other hand, some insurers use co-insurance to share the cost of care with you. Once you have met your insurance plan's deductible, you would then be required to pay for a percentage of your care instead of a fixed dollar amount. For example, your plan may cover 80% of the cost of your hospital visit, but you must pay the other 20%. The 20% you are responsible for is your co-insurance.
You may notice that there are certain advantages to having a co-pay rather than co-insurance. While there are some situations in which the co-insurance amount may actually be less than a co-pay, co-pays are more predictable and tend to keep out-of-pocket expenses under control.
Source:
Health Insurance Resource Center. "Health Insurance Glossary." http://www.healthinsurance.org/glossary. Accessed June 16, 2008.
