Coinsurance is a type of cost-sharing arrangement in which the policyholder and the insurer share the cost of healthcare expenses. Specifically, coinsurance refers to the percentage of the healthcare costs that the policyholder is responsible for paying after the deductible has been met.
For example, let’s say you have a health insurance plan with a $1,000 deductible and 20% coinsurance. If you undergo a medical procedure that costs $10,000, you would be responsible for paying the first $1,000 (the deductible). After that, you would be responsible for paying 20% of the remaining $9,000, or $1,800.
Coinsurance typically kicks in after the deductible has been met, and it’s designed to encourage policyholders to be cost-conscious when seeking medical care. By sharing some of the cost, the insurer encourages the policyholder to seek out cost-effective care and avoid unnecessary or overly expensive medical treatments.