What is the primary purpose of a coinsurance clause in a Major Medical policy?

The primary purpose of a coinsurance clause in a Major Medical policy is to discourage overutilization of insurance coverage. Coinsurance requires policyholders to share a portion of the costs of their medical care after the deductible has been met. Typically, this means that the insurer will cover a certain percentage of the costs, while the insured is responsible for the remaining percentage. This financial responsibility encourages insured individuals to be more mindful of the services they use, as they are incentivized to consider the cost of care, therefore helping to control unnecessary or excessive utilization of healthcare services.

In contrast to this, increasing premium costs, limiting coverage amounts, and guaranteeing full payment for all services are not the primary functions of a coinsurance clause. Premium costs are influenced by various factors, including risk assessment and coverage levels, but are not a direct result of having a coinsurance clause. Similarly, while a coinsurance setup may indirectly affect overall coverage amounts through cost sharing, its fundamental goal is not to impose limits but rather to balance cost sharing between the insurer and the insured. Lastly, a coinsurance clause does not guarantee full payment for services rendered, as insured individuals must pay their designated share of costs, which directly opposes the concept of full payment.