What is coinsurance?

• A. A cost-sharing provision requires the insured to assume a portion of the cost of covered services
• B. A policy where the insured pays nothing
• C. A cap on total out-of-pocket expenses for a policy year
• D. A plan that pays a fixed amount per service

Answer: (A)

Coinsurance is a cost-sharing arrangement where you pay a portion of the costs for covered services after any deductible has been met. It’s shown as a percentage, and the insurer covers the rest. For example, with 20% coinsurance, a $100 service would cost you $20 and the insurer would pay $80 (until you reach your out-of-pocket maximum). This differs from a copayment, which is a fixed dollar amount paid at the time of service regardless of the total cost. Coinsurance also differs from the deductible, which is the amount you must pay before the insurer starts sharing costs (though many plans combine both). The coinsurance portion usually counts toward your out-of-pocket maximum, and the exact percentage can vary by plan and service.