What does "co-insurance" refer to in health insurance policies?

Co-insurance in health insurance policies refers to a cost-sharing arrangement in which the insured is responsible for paying a certain percentage of the costs of covered healthcare services after the deductible has been met. This means that both the insurer and the insured share the burden of medical expenses. For example, if a policy has an 80/20 co-insurance arrangement, the insurance company pays 80% of the covered expenses, while the insured pays the remaining 20%. This system encourages consumers to be more engaged in their healthcare decisions since they share in the costs.

Understanding co-insurance is crucial because it directly impacts the out-of-pocket expenses that an insured individual may incur during healthcare services. It differs from a fixed dollar amount, known as a copayment, which is simply a set fee for a specific service. Co-insurance arrangements help moderate the costs of premiums while ensuring that individuals have a vested interest in the services they utilize.