What does coinsurance refer to in health insurance?

Coinsurance in health insurance refers to the percentage of medical costs that the insured is responsible for after meeting their deductible. This arrangement means that both the insurer and the insured share the cost of healthcare services. For example, if a policy has a coinsurance rate of 20%, once the policyholder has paid their deductible, they will pay 20% of the covered medical expenses while the insurance company pays the remaining 80%.

This system encourages insured individuals to be more engaged in their healthcare decisions as they have a financial stake in the costs incurred. It is particularly relevant in understanding how much you will need to budget for healthcare expenses, as it directly affects your out-of-pocket costs for services received.

The other choices describe other concepts in health insurance, such as copayments or total policy coverage, but they do not accurately represent the mechanism of coinsurance.