What is 'coinsurance'?

Coinsurance refers to the percentage of costs that the insured is responsible for paying after they have met their deductible. It is a vital aspect of many health insurance plans, as it dictates how the costs of covered services are shared between the insurer and the insured once the deductible has been satisfied. For example, if a health insurance plan has a coinsurance rate of 20%, after the deductible is paid, the insurer will cover 80% of the costs, while the insured pays 20%. This arrangement helps to encourage insured individuals to be mindful of their healthcare spending because they have a financial stake in the costs of their medical services.