what is coinsurance

Co-insurance is a co-sharing agreement between the insured and the insurer under an insurance policy which provides that the insured will pay a set percentage of the covered costs after the deductible has been paid. In health insurance, a co-insurance provision is similar to a co-pay provision, except co-pays require the insured to pay a set dollar amount at the time the service is rendered. There may also be co-insurance provisions on property insurance policies, but the concept is most commonly referenced with regard to health insurance.

One of the most common co-insurance breakdowns is the 80/20 split. Under the terms of an 80/20 coinsurance plan, the insured is responsible for 20% of her medical costs, while the insurance company takes care of the remaining 80%. However, these terms only apply after the insured has met her deductible for the year. In addition, most health insurance policies include an out-of-pocket maximum that limits the total amount the insured must pay for care in a given year.