In health insurance, what does "coinsurance" refer to?

Coinsurance is a key aspect of health insurance that refers to the percentage of healthcare costs that the insured is responsible for paying after they have met their deductible. Once the deductible has been satisfied, the remaining covered expenses are typically shared between the insurance company and the insured based on a predetermined percentage. For example, if a plan has a coinsurance rate of 20%, the insured pays 20% of the costs for covered services, while the insurance company pays the remaining 80%. This arrangement helps to manage healthcare costs and encourages individuals to be more mindful of their healthcare spending, as they typically have to share in the financial responsibility of their medical expenses.

In contrast, options concerning premiums, fixed copayments, or out-of-pocket maximums reflect different concepts within health insurance. The total annual premium refers to the cost of the policy paid by the insured, while a fixed amount paid before coverage begins indicates a copayment or deductible rather than coinsurance. The out-of-pocket maximum relates to the total amount an insured pays for healthcare in a policy year, after which the insurer covers all costs, but this is also distinct from the ongoing sharing of costs that coinsurance represents.