Coinsurance is a cost-sharing mechanism commonly used in health insurance, and sometimes in property insurance, where the insured individual pays a fixed percentage of covered expenses after meeting the deductible. For instance, in an 80/20 coinsurance plan, the insured pays 20% of medical costs, and the insurer covers the remaining 80%. Coinsurance typically applies once the policy’s deductible is satisfied and is distinct from copayments, which involve a fixed dollar amount at the time of service. Health insurance policies often include an out-of-pocket maximum to limit the total amount the insured pays within a specific period.
Key Points:
- Coinsurance is the portion of covered expenses that the insured individual must pay, usually expressed as a percentage, after meeting the deductible.
- It comes into effect after the deductible is met and can vary in percentage depending on the insurance plan.
- Health insurance policies often have an out-of-pocket maximum to protect individuals from excessive costs.