What is 'Coinsurance' in health insurance?

Coinsurance is a key concept in health insurance that refers to the percentage of costs that insured individuals must pay out-of-pocket after they have met their deductible. This means that when you receive medical care, you are responsible for a certain percentage of the costs, while your health insurance covers the remaining percentage. For example, if you have a coinsurance rate of 20%, this means that after your deductible is met, you will pay 20% of the covered healthcare costs, and your insurance will pay the other 80%.

Understanding coinsurance is important as it impacts how much you ultimately pay for healthcare services. It differs from a copayment, which is a fixed dollar amount you pay at the time of service, and from premiums, which are the set amounts you pay regularly for coverage. Moreover, it’s not merely the amount that is not covered by the insurance policy; that detail usually pertains to exclusions or limitations of coverage. Coinsurance, therefore, establishes a shared responsibility between you and your insurer, promoting cost-sharing and often reducing the premium costs for the policyholder.