Which statement best describes coinsurance?

Coinsurance refers to the arrangement in which the insured and the insurance company share the costs of covered medical expenses after the insured has met their deductible. The correct answer reflects the fact that coinsurance is expressed as a percentage, indicating how much of the healthcare costs the policyholder is responsible for versus how much the insurer will pay. For example, if a policy includes a coinsurance rate of 20%, once the deductible has been satisfied, the policyholder would pay 20% of the expenses, while the insurance company would cover the remaining 80%. This cost-sharing arrangement encourages responsible utilization of healthcare services and helps manage overall expenses within the health insurance framework.

Other options discuss aspects of health insurance that do not pertain to the definition of coinsurance. The annual premium relates to the total sum paid regularly for the coverage, while a fixed dollar amount refers more accurately to copayments rather than coinsurance. The insurer’s total expected payment does not encompass the shared nature of costs that coinsurance represents.