What is co-insurance?

Co-insurance is defined as the percentage of costs that the insured is required to pay for healthcare services after they have met their deductible. This means that once the policyholder has paid the deductible amount, they then share the cost of covered medical expenses with the insurance company, typically at a predetermined ratio. For instance, if you have an 80/20 co-insurance plan, after meeting the deductible, the insurance company would cover 80% of the costs, while the insured would pay the remaining 20%.

This concept of sharing costs is designed to encourage insured individuals to be mindful of their healthcare expenses while also providing them with insurance coverage. Co-insurance differs from a flat fee, which would involve a fixed payment for services, and it is not related to the total annual cost that the insurance company pays or the amounts associated with preventive services. Understanding co-insurance is crucial for policyholders as it directly affects their out-of-pocket expenses for medical care.