What is coinsurance in health insurance?

Coinsurance in health insurance refers to the percentage of costs for covered services that the insured individual is responsible for paying after meeting their deductible. It is a form of cost-sharing between the insurance company and the insured.

Here's how coinsurance typically works:

1. Deductible: Before coinsurance comes into effect, the insured individual must first meet their annual deductible. The deductible is the amount the individual must pay out of pocket for covered services before the insurance company begins to contribute.
2. Coinsurance Percentage: Once the deductible is met, the insurance plan's coinsurance percentage comes into play. The coinsurance percentage represents the portion of the covered service costs that the insured individual is responsible for paying.
3. Split of Costs: After the deductible is satisfied, the insurance company pays its share of covered services according to the terms of the policy, while the insured individual pays the remaining portion based on the coinsurance percentage. For example, if the coinsurance is set at 20%, the insurance company would cover 80% of the eligible costs, and the insured would be responsible for paying the remaining 20%.
4. Out-of-Pocket Maximum: Coinsurance is typically applicable until the insured individual reaches their out-of-pocket maximum. This maximum is the total amount the insured person is required to pay in a given year for covered services. Once the out-of-pocket maximum is reached, the insurance company typically covers 100% of the eligible costs for the remainder of the policy year.

It's important to note that coinsurance applies to covered services and not all services may be eligible. Additionally, the specific coinsurance percentage, deductible amount, and out-of-pocket maximum can vary depending on the health insurance plan and policy.

Understanding your coinsurance obligations is essential for budgeting and managing healthcare expenses. Reviewing your health insurance policy documents or contacting your insurance provider can provide more specific information about your coinsurance responsibilities and how they apply to your coverage.