What is "coinsurance" in a health insurance policy?

Coinsurance refers to a cost-sharing agreement between the insured and the insurer in a health insurance policy, where the insured is responsible for paying a certain percentage of the covered health expenses after the deductible has been met. This means that once the insured has paid their deductible, they will pay a specified percentage of the remaining healthcare costs, while the insurance company covers the rest.

This arrangement is designed to encourage responsible use of healthcare services, as it involves a shared financial responsibility between the insured and the insurer. For example, if the coinsurance is set at 20%, the insured would pay 20% of the costs of their medical bills while the insurer covers the remaining 80%.

In contrast, a flat fee paid per visit represents copayments, not coinsurance, which involve fixed amounts rather than a percentage of the total cost. Additional services coverage typically falls under specific provisions or riders, distinct from the definition of coinsurance. Lastly, a penalty fee for late premium payment is unrelated to how costs are shared once medical services are received. Understanding coinsurance is crucial in navigating the cost structure of health insurance policies effectively.