Coinsurance

Coinsurance is a way of sharing costs between the insurer and the insured person. It is usually expressed as a split, such as 80/20, meaning the insurer pays 80% of covered costs and the patient pays 20%.

For example, a patient with a 20% coinsurance requirement who has already met their deductible receives a hospital bill of 1,000. The patient pays 200 and the insurer pays 800.

Coinsurance usually applies after the deductible has been paid. It continues until the patient reaches the plan's out-of-pocket maximum, after which the insurer typically pays 100% of covered costs for the rest of the year.

Unlike a copayment, which is a fixed amount, coinsurance rises with the cost of care. This can make large medical bills expensive for patients, which is why the out-of-pocket maximum is an important protection.

In property insurance, the term coinsurance has a different meaning. It refers to a clause requiring the policyholder to insure the property for a minimum percentage of its value, often 80% or more. If they insure it for less, any claim payment may be reduced in proportion.