In health plans, what is coinsurance?

Coinsurance is a cost-sharing arrangement in health insurance where the insured pays a certain percentage of the costs for covered services after they have met their deductible. This means that once a policyholder has satisfied their deductible requirement, they are responsible for a specific percentage of the remaining costs for healthcare services, while the insurance company covers the rest. For instance, if a health plan has a coinsurance rate of 20%, after the deductible is met, the insured will pay 20% of the subsequent medical bills, and the insurer will pay 80%. This structure incentivizes insured individuals to seek necessary care while sharing a portion of the financial responsibility with their insurer.

The other options do not accurately describe coinsurance: the flat fee for each visit pertains to copayments, the total annual out-of-pocket limit refers to the maximum amount an insured would pay in a year before the insurance covers 100% of costs, and the initial premium reflects the amount paid for maintaining the insurance coverage, not the shared costs after deductibles are satisfied.