In health insurance, what does coinsurance mean?

Coinsurance refers to the arrangement in health insurance where the insured individual is required to pay a certain percentage of the medical expenses after the deductible has been met. This means that once the insured has paid their deductible—the amount they are required to pay out of pocket for healthcare services before insurance kicks in—the responsibility for covering medical costs is then shared between the insurer and the insured.

For instance, if a policy has a coinsurance of 20%, it means that after the deductible is paid, the insurer will cover 80% of the allowed medical costs while the insured will be responsible for the remaining 20%. This system helps to share the financial risk between the insurer and the insured, encouraging consumers to consider the cost of healthcare services and make informed choices regarding their care.

The other choices describe different aspects of insurance that do not accurately define coinsurance. A flat rate for all services or coverage of all costs upfront does not account for shared responsibility. When the insurer covers all expenses, there’s no coinsurance involved. Understanding coinsurance is crucial for insured individuals as it directly affects their out-of-pocket expenses in the event of medical care.