Certified Application Counselor Practice Test

What is coinsurance in health insurance?

1. Consumer's total cost of a healthcare service

2. Consumer's share of the cost calculated as a percentage

3. Fixed amount paid for each medical service

4. Maximum amount an insurance will cover for a service

The correct answer is: Consumer's share of the cost calculated as a percentage

Coinsurance is defined as the consumer's share of the cost of a healthcare service, calculated as a percentage. This means that once an insured individual has met their deductible, they are responsible for a specified percentage of the costs of health care services they receive. For example, if a health plan has an 80/20 coinsurance clause, the insurer will cover 80% of the costs, and the insured will be responsible for the remaining 20%. This concept is crucial in insurance policies as it determines how costs are shared between the insurer and the insured, impacting out-of-pocket expenses. It encourages consumers to be more cost-conscious, as they share more directly in the cost of services. Understanding how coinsurance works is essential for consumers to make informed decisions about their healthcare expenses and understand their overall financial responsibilities related to their health insurance policy.