What does coinsurance refer to in health insurance?

Coinsurance is a key term in health insurance that indicates the percentage of medical expenses that the insured is required to pay after they have met their deductible. This means that once an insured individual has paid their deductible—an amount they must pay before their insurance begins to contribute—they will share the costs of additional medical services with their insurer based on a predetermined percentage. For example, if an individual has a coinsurance rate of 20%, they will pay 20% of the costs of their covered medical services, while the insurance company will cover the remaining 80%.

This arrangement is designed to reduce overall insurance costs and encourage insured individuals to make informed decisions about their healthcare utilization. It contrasts with other terms in health insurance, such as premiums (the monthly cost of coverage) or out-of-pocket maximum limits (the cap on total expenses one pays in a year), and helps outline the shared financial responsibility for healthcare expenses between the insured and the insurance provider.