How does coinsurance work in health insurance?

Coinsurance is a cost-sharing arrangement in health insurance where the insured individual pays a percentage of the covered medical expenses after meeting their deductible. This means that once the insured has paid their deductible, they will then be responsible for a pre-determined percentage of the remaining costs while the insurance company covers the rest.

For example, if a health plan has a coinsurance rate of 20%, after meeting the deductible, the insured person would pay 20% of the subsequent medical bills, while the insurer pays the remaining 80%. This structure helps to balance the financial responsibility between the insurance provider and the insured, promoting more mindful use of healthcare resources.

In contrast, the other choices represent different aspects of health insurance, but they do not accurately describe coinsurance. Some might even involve a misunderstanding of how payments are structured. Understanding coinsurance is essential for estimating out-of-pocket costs and navigating coverage efficiently.