What is coinsurance?

Coinsurance is defined as the percentage of medical expenses that a policyholder is responsible for paying after they have met their deductible. This means that once the deductible has been satisfied, the insurance company will cover a certain percentage of the eligible medical costs, while the policyholder pays the remaining percentage. For example, if a policy has an 80/20 coinsurance clause, the insurer pays 80% of covered medical expenses, and the policyholder pays 20%.

This concept is crucial for understanding how health insurance plans share costs between the insurer and the insured and is distinct from other terms like copayments or deductibles. Many plans use coinsurance to encourage policyholders to take an active role in their healthcare spending, as they have to pay a portion of the costs out of pocket.

In contrast, a flat fee for services rendered pertains to copayments, which are a fixed dollar amount for specific services rather than a percentage of total expenses. The coverage amount before the deductible is met usually relates to the overall coverage and terms of the policy itself, not to coinsurance. Finally, total out-of-pocket expenses reflect the maximum amount a policyholder would pay across all services in a given year, which can include deductibles, copayments