What is coinsurance in health insurance?

Coinsurance is a crucial component of health insurance that refers specifically to the arrangement in which the insured pays a percentage of the costs of a covered healthcare service after the deductible has been satisfied. In this structure, the insurance provider typically covers the majority of the costs, while the insured is responsible for paying a predetermined percentage of the remaining balance.

For example, if a policy includes an 80/20 coinsurance clause, it means that once the deductible is met, the insurance will cover 80% of the costs for a covered service, and the insured would be responsible for covering the remaining 20%. This aspect of health insurance encourages individuals to be more mindful of their healthcare choices, as they bear some financial responsibility for the services they utilize.

Understanding coinsurance is essential for navigating health insurance plans, as it directly impacts how much an individual might pay for medical services after meeting their deductible.