What does a co-insurance clause in health insurance entail?

A co-insurance clause in health insurance refers to the shared financial responsibility between the insured and the insurer for covered healthcare expenses after the deductible has been met. When policyholders have a co-insurance clause, they agree to pay a certain percentage of the costs for services, while the insurer pays the remaining percentage. This means that even after the deductible—an amount that the insured must pay before coverage kicks in—has been satisfied, the costs of further medical services are not borne entirely by the insurer.

For instance, if a health insurance plan includes an 80/20 co-insurance split, this means that after the deductible is paid, the insurance company will pay 80% of the covered charges, and the insured is responsible for the remaining 20%. This structure not only helps manage costs for the insurer but also encourages insured individuals to be more mindful of their healthcare expenses, as they will have an out-of-pocket cost associated with each visit or treatment.

Understanding this concept is essential for navigating health insurance plans, as it impacts the overall cost-sharing between the insurer and the insured, making it a critical element in determining healthcare affordability.