Understanding Patient Cost Shares: How Much Do Patients Really Owe?
If you’ve ever looked at an Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) and wondered how to determine patient cost shares, you’re in the right place!
Today, we’re breaking it all down—deductibles, co-pays, and co-insurance—so you can confidently interpret these documents and know exactly what a patient owes after a claim has been processed.
- Patient cost shares include deductibles, co-pays, and co-insurance—out-of-pocket expenses patients must cover.
- Deductibles reset annually, and patients must meet them before insurance covers a portion of costs.
- Co-pays are fixed fees for services and should be collected at check-in to prevent billing errors.
- Co-insurance is a percentage of medical costs patients owe after meeting their deductible.
- EOBs and ERAs provide details on what the patient owes—understanding adjustment codes prevents billing mistakes.
- Checking out-of-pocket maximums ensures patients stop paying once their annual cap is reached.
What Are Patient Cost Shares?
Before diving into how to determine patient cost shares, let’s define what they actually are.
Patient cost shares refer to the portion of medical costs a patient pays out of pocket for services. These are typically divided into three categories:
- Deductibles – A fixed amount the patient must pay before insurance starts covering costs.
- Co-pays – A set fee for specific services, usually due at the time of visit.
- Co-insurance – A percentage of medical costs the patient pays after meeting their deductible.
Not all insurance plans include all three types of patient cost shares. Some plans may have high deductibles with no co-pays, while others have co-pays but minimal co-insurance. Understanding these details is crucial for both medical providers and patients.
Deductibles: The First Layer of Patient Cost Shares
A deductible is the amount a patient must pay out of pocket before their insurance begins covering expenses.
Here’s the key thing: deductibles reset every policy year. And no, that doesn’t always mean January 1st!
While most insurance plans follow a January–December policy year, some patients have policies that renew in October, July, or any other month. This means that at the beginning of a new policy year, a patient’s deductible resets, and they must start paying out of pocket again before insurance kicks in.
In-Network vs. Out-of-Network Deductibles
Most plans have separate buckets for in-network and out-of-network deductibles.
- If a patient sees an in-network provider, their costs go toward the in-network deductible.
- If they visit an out-of-network provider, they have to pay toward a separate, typically higher, out-of-network deductible.
For example, if a patient has a $1,000 in-network deductible and a $2,500 out-of-network deductible, they could meet their in-network deductible first but still owe thousands if they seek care outside their network.
💡 Pro tip: Always verify a patient’s effective date and deductible status when checking benefits to avoid surprises!
Co-Pays: The Flat Fee in Patient Cost Shares
Unlike deductibles, a co-pay is a fixed amount that a patient pays for certain medical services.
Co-pays are due at the time of service. The patient agrees to these charges when they sign up for their plan, so medical offices should collect them upfront at check-in.
Different Levels of Co-Pays
Gone are the days when every doctor’s visit had the same co-pay. Now, insurance companies often have multiple tiers:
| Service Type | Typical Co-Pay |
|---|---|
| Primary Care Visit | Lowest ($10–$40) |
| Specialist Visit | Higher ($50–$80) |
| Urgent Care | Mid-range ($50–$100) |
| Emergency Room | Highest ($100–$500) (waived if admitted) |
Knowing which co-pay applies depends on:
- The type of provider (Primary care? Specialist? Urgent care?)
- The place of service (Doctor’s office? Hospital? Walk-in clinic?)
- The insurance contract the provider has with the payer
For example, if an urgent care clinic is contracted as a primary care provider, it may need to collect the PCP co-pay instead of an urgent care co-pay.
🚨 Over-collecting or under-collecting co-pays can lead to compliance issues and patient refunds! Make sure your billing team understands the contracts in place.
What is a Health Insurance Copay? | BlueCrossMN
Co-Insurance: The Percentage-Based Cost Share
Unlike co-pays (which are a flat fee), co-insurance is a percentage of the allowed amount that a patient must pay after meeting their deductible.
How Co-Insurance Works
After the deductible is met, insurance begins paying a percentage of the covered expenses, while the patient pays the rest.
For example:
| Plan Type | Insurance Covers | Patient Pays |
|---|---|---|
| 80/20 Plan | 80% of allowed amount | 20% out of pocket |
| 70/30 Plan | 70% of allowed amount | 30% out of pocket |
So, if a patient has an 80/20 plan and receives a $1,000 service (after insurance discounts):
- Insurance covers $800
- Patient pays $200 co-insurance
💡 Important: Patients may still owe co-insurance even if their deductible is met. They’ll continue paying this percentage until they hit their out-of-pocket maximum for the year.
Identifying Patient Cost Shares on an EOB or ERA
Now that we understand deductibles, co-pays, and co-insurance, let’s talk about how to find them on an Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA).
Every EOB/ERA includes:
- Patient name
- Date of service
- CPT codes (procedure codes)
- Billed amount (what the provider charged)
- Allowed amount (what insurance approves per contract)
- Adjustments (contractual write-offs)
- Patient responsibility (what the patient owes)
Example Breakdown from an ERA
| Charge | Billed Amount | Allowed Amount | Applied to Deductible | Co-Insurance (20%) | Insurance Pays |
|---|---|---|---|---|---|
| Office Visit | $150 | $100 | $50 | $10 | $40 |
In this case, the patient’s $50 went toward their deductible, and they still owe $10 in co-insurance.
Understanding Adjustment and Remark Codes
- PR (Patient Responsibility): Indicates what the patient owes
- CO (Contractual Obligation): Shows the amount adjusted per contract
- CO-45: The contractual write-off (not a denial)
- PR-1: Deductible applied
- PR-2: Co-pay applied
- PR-3: Co-insurance applied
How to Read an EOB for Patient Cost Shares
An Explanation of Benefits (EOB) is a statement from the insurance company that details how a medical claim was processed. Even though it looks like a bill, it’s NOT—it’s simply an explanation of what was covered, adjusted, and what the patient still owes.
Key Sections of an EOB
Every EOB is different, but they all contain the same essential information. Here’s what to look for:
| Section | What It Tells You |
|---|---|
| Patient Information | The name and ID of the insured person |
| Provider Information | The doctor or facility that billed for the service |
| Date of Service | When the service was provided |
| Procedure Code (CPT/HCPCS) | The specific treatment or service performed |
| Billed Amount | The amount the provider charged for the service |
| Allowed Amount | The maximum amount the insurance will pay per contract |
| Insurance Payment | How much the insurance actually covered |
| Adjustments | Any reductions per the provider’s contract with the insurance |
| Patient Responsibility | What the patient must pay (deductible, co-pay, co-insurance) |
Identifying Patient Cost Shares on an EOB
Let’s say a patient visits a doctor for an office visit. Here’s what an EOB might look like:
| Charge | Billed Amount | Allowed Amount | Deductible Applied | Co-Insurance (20%) | Co-Pay | Insurance Pays | Patient Owes |
|---|---|---|---|---|---|---|---|
| Office Visit | $200 | $150 | $50 | $20 | $30 | $100 | $50 |
In this case:
- The doctor charged $200, but the insurance company only allows $150 based on the contract.
- $50 was applied to the deductible, meaning the patient pays this out-of-pocket.
- A 20% co-insurance was applied to the remaining amount after the deductible ($100 × 20% = $20).
- A $30 co-pay was collected at the time of service.
- The insurance covered $100, leaving the patient responsible for $50 ($50 deductible + $20 co-insurance – $30 co-pay already collected).
💡 Important Tip: If an EOB doesn’t match what the front desk collected, double-check insurance benefits to ensure patients are billed correctly.
How to Read an ERA for Patient Cost Shares
An Electronic Remittance Advice (ERA) is the electronic version of an EOB, usually sent directly to the provider’s billing system.
While ERAs contain the same information as an EOB, they also include adjustment codes that help explain how payments were processed.
Common Adjustment Codes on an ERA
When reviewing an ERA, you’ll see codes next to the charges. These codes help explain why a certain amount was adjusted, covered, or assigned to the patient.
| Adjustment Code | Meaning |
|---|---|
| CO-45 | Contractual Adjustment (Not a denial—this is the amount the provider must write off) |
| PR-1 | Deductible Applied (Patient owes this) |
| PR-2 | Co-Pay Applied (Patient was responsible at the time of service) |
| PR-3 | Co-Insurance Applied (Patient owes a percentage of the covered amount) |
| CO-42 | Charges exceed the contracted amount (Provider must write off this difference) |
| PR-100 | Non-Covered Charges (Patient is responsible, usually for an uncovered service) |
Example of an ERA Breakdown
| Charge | Billed Amount | Allowed Amount | CO-45 (Adjustment) | PR-1 (Deductible) | PR-3 (Co-Insurance 20%) | Insurance Pays | Patient Owes |
|---|---|---|---|---|---|---|---|
| MRI Scan | $800 | $500 | $300 | $200 | $60 | $240 | $260 |
- The provider billed $800, but the insurance company only allows $500 per contract.
- The contractual adjustment (CO-45) is $300, meaning the provider writes off this amount.
- $200 was applied to the deductible (PR-1), so the patient owes this out-of-pocket.
- 20% co-insurance was applied to the remaining $300 ($60).
- The insurance paid $240, leaving the patient responsible for $260.
💡 If you see PR-100, the patient may be billed for a non-covered service—double-check the policy to confirm!
Understanding patient cost shares—including deductibles, co-pays, and co-insurance—is essential for accurately interpreting EOBs and ERAs, ensuring patients are billed correctly, and preventing costly errors in healthcare billing.
How to Verify If a Patient Has Met Their Out-of-Pocket Maximum
A patient’s out-of-pocket maximum is the most they will pay for covered services in a policy year. Once they reach this amount, insurance covers 100% of eligible expenses.
To verify this:
- Check the EOB/ERA – It will often indicate if the patient has hit their out-of-pocket maximum.
- Call the insurance company – If unsure, contact the insurer to confirm how much the patient has left to pay for the year.
- Look for PR-0 – If you see PR-0 on an ERA, it means the patient has met their max and owes nothing further.
💡 Patients who reach their out-of-pocket max usually have chronic conditions or major medical events, so keep an eye out for this to avoid incorrect billing!
FAQ: Understanding Patient Cost Shares
What are patient cost shares?
Patient cost shares are the out-of-pocket expenses a patient must pay for medical services before insurance covers the rest. These typically include deductibles, co-pays, and co-insurance. The exact amount varies by insurance plan and resets every policy year, meaning costs can change annually.
How do I know if a patient has met their deductible?
Check the patient’s Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA). These documents will show how much of the deductible has been applied. You can also call the insurance provider to confirm. Deductibles reset every policy year, which may not always be January 1st.
What is the difference between a deductible and co-insurance?
A deductible is a fixed amount a patient must pay before insurance begins covering costs. Co-insurance, on the other hand, is a percentage of medical expenses the patient owes after meeting their deductible. For example, in an 80/20 plan, the patient pays 20% and insurance covers 80%.
Do co-pays count toward the deductible?
It depends on the insurance plan. Some plans apply co-pays toward the deductible, but many do not. Instead, co-pays are a flat fee the patient pays at the time of service, separate from deductible and co-insurance obligations. Always check the patient’s policy details.
What happens when a patient reaches their out-of-pocket maximum?
Once a patient meets their out-of-pocket maximum, insurance covers 100% of covered services for the rest of the policy year. This includes deductibles, co-pays, and co-insurance. Patients should no longer receive bills for in-network, covered services unless they have additional non-covered expenses.
How can I tell if a charge was applied to the deductible or co-insurance?
Look at the PR (Patient Responsibility) codes on the EOB or ERA. PR-1 indicates a deductible charge, while PR-3 indicates co-insurance. If the insurance has already paid a portion of the bill, it’s likely a co-insurance charge rather than a deductible payment.
Why do some patients have different co-pays for different services?
Many insurance plans have tiered co-pays based on the type of provider. A primary care visit usually has a lower co-pay than a specialist, urgent care, or emergency room visit. Understanding the insurance contract and taxonomy ensures the correct co-pay is collected.
What does CO-45 mean on an ERA?
CO-45 is a contractual adjustment code, meaning the provider must write off that portion of the charge because of their agreement with the insurance company. It’s NOT a denial but a reduction based on the provider’s contract. Patients do not owe this amount.
How do I prevent over-collecting or under-collecting patient payments?
Ensure your billing staff understands insurance contracts, place-of-service codes, and adjustment codes. Always verify deductibles, co-pays, and co-insurance before collecting payments. Using ERAs and EOBs correctly helps prevent errors and unnecessary refunds or patient complaints.
Can a patient have two different deductibles?
Yes! If a plan offers out-of-network benefits, a patient will have separate in-network and out-of-network deductibles. These must be met independently, meaning a patient could pay thousands toward their out-of-network deductible before seeing any insurance payments for those services.
Final Tips for Identifying Patient Cost Shares
- 🔹 Always check the EOB or ERA before billing the patient to ensure accuracy.
- 🔹 Know your adjustment codes—they explain exactly why an amount was paid, adjusted, or assigned to the patient.
- 🔹 Train your front desk and billing staff on how to read ERAs and EOBs to avoid over-collecting or under-collecting payments.
- 🔹 Keep an eye on policy year start dates—patients may be surprised when their deductible resets!