What does "coinsurance" mean in health insurance?

Coinsurance refers to a cost-sharing arrangement in health insurance where, after the insured has met their deductible, they are required to pay a certain percentage of the costs for covered healthcare services. This means that both the insurance company and the insured share the financial responsibility for medical expenses, which helps to keep overall insurance premiums lower and encourages the insured to consider the costs of healthcare services.

In this arrangement, for example, if a health plan has a coinsurance rate of 20%, the insured would pay 20% of the covered medical bills, and the insurance company would pay the remaining 80%. This system promotes cost-sharing between the insurer and the insured, encouraging patients to be more mindful of healthcare costs.

The other options do not accurately reflect the concept of coinsurance. A fixed amount paid before services are rendered describes a copayment, not coinsurance. The total amount covered by the insurer refers to coverage limits or benefits but does not specify the cost-sharing aspect. Finally, the maximum out-of-pocket expense indicates a cap on how much the insured would pay in a year before the insurance covers 100% of additional costs, which is a separate concept from coinsurance.