What does 'coinsurance' in a health insurance policy refer to?

Coinsurance in a health insurance policy refers to the shared costs between the insured individual and the insurer after the deductible has been met. It is expressed as a percentage, where the insured pays a certain percentage of the covered healthcare costs, while the insurer pays the remaining percentage. For example, if a health plan includes a coinsurance rate of 20%, the insured would be responsible for paying 20% of the costs for services received, while the insurer would cover the remaining 80%.

This arrangement encourages both the insured and the insurer to share the financial responsibilities associated with healthcare costs, promoting a more responsible use of medical services. Coinsurance comes into effect after the deductible has been paid, distinguishing it from the out-of-pocket maximum and the deductible amount, which have different roles in the cost-sharing structure of health insurance. Understanding coinsurance is essential for managing healthcare expenses effectively and planning for potential medical costs.