In health insurance, what does coinsurance mean?

Coinsurance is defined as the percentage of costs that the insured is responsible for paying for covered services after they have met their deductible. This concept is important because it outlines the shared financial responsibility between the insurer and the insured, ensuring that both parties contribute to the total costs of healthcare services.

For instance, after a policyholder pays their deductible, they might then be required to pay a certain percentage of each medical bill—say, 20%—while the insurance company covers the remaining 80%. This system incentivizes policyholders to use healthcare services more judiciously, as they remain financially engaged in their care. Understanding coinsurance helps individuals navigate their health insurance plans better, making informed decisions about their healthcare options.

The other options refer to different concepts within health insurance. A fixed amount paid by the insured for each visit pertains to copayments, while an annual limit on out-of-pocket expenses refers to an out-of-pocket maximum. The total cost of all medical services received annually simply summarizes an individual’s total healthcare spending and does not align with the definition of coinsurance.