What is coinsurance in health insurance?

Coinsurance refers to the arrangement in health insurance where the insured pays a specified percentage of the costs of covered healthcare services after the deductible has been fulfilled. In practice, once an individual meets their deductible, they are responsible for a certain percentage of the costs for any subsequent medical care, while the insurance company covers the remainder. This structure helps to share healthcare costs between the insurer and the insured, ensuring that the insured has a financial stake in their healthcare decisions and encouraging more prudent use of medical services.

For example, if a health plan has a coinsurance rate of 20%, after the individual meets the deductible, they would pay 20% of the costs for covered services, and the insurance company would pay the remaining 80%. This system contrasts with a copayment, which is a fixed dollar amount the insured pays per service regardless of the total cost, and does not directly apply here. Similarly, the overall cost of services (the total amount an insured pays) and the portion covered by the insurer do not accurately reflect the concept of coinsurance, as coinsurance specifically pertains to the percentage-sharing after the deductible has been met.