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Insurance Term - Co-insurance

The amount that a policyholder is required to pay for medical care in a fee-for-service plan after he/she has met the deductible expenses. The co-insurance rate is usually expressed as a percentage. For example, if the health insurance company pays 80 percent of the claim, the policyholder pays 20 percent of the incurred total hospitalization expenses. It is an insurance provision that requires the insured individual to pay a fixed percentage of losses covered under the policy. In other words, it is a form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any. Once the deductible amount and co-insurance are paid by the policyholder, the insurer (or insurance company) is responsible for the rest of the reimbursement for covered benefits up to allowed charges. The individual could also be responsible for payment of any charges in excess of what the insurer determines to be ‘usual, customary and reasonable’. Co-insurance rates may differ if services are received from an approved provider (i.e., a provider with whom the insurer has a contract or an agreement, specifying payment levels and other contract requirements) or if received by healthcare service providers not on the approved/empanelled list. In addition to overall co-insurance rates, rates may also differ for different types of services. Co-insurance can also be defined as cost-sharing arrangement between an insured person and the health insurance company in which the insured person is required to pay a percentage of the cost for the healthcare services received during the course of hospitalization. Co-insurance typically applies after satisfaction of a deductible.

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