What is coinsurance?
A. Coinsurance is the percentage of covered expense you are responsible for after you meet your deductible. For example, you can choose 20% coinsurance of $5,000 (which equals $1,000). That means you’ll pay 20% and we pay 80% of the first $5,000 (which equals $4,000) of covered expenses. After that, we pay 100% of covered charges for the remainder of the year, up to the policy maximum.
Coinsurance is the portion of medical costs that are shared by both the Insured (the patient) and the Insurer. For example, if you have an 80% to $5,000 coinsurance: ~ The Insurer is responsible for 80% of the next $5,000 in covered medical expenses. ~ The Insured is responsible for 20% of that same $5,000 in covered medical expenses. * In the above mentioned policy with $1,000 deductible and 80% coinsurance to $5,000: If a covered event occurred that had a total cost of $10,000, the insured would be responsible for the first $1,000 (deductible). Of the next $5,000 in covered expenses, the insured would pay another $1,000 (coinsurance). After deductibles and coinsurance are satisfied, Insurance Companies pay 100% of all other covered expenses. For this example the Insured would pay $2,000 and the Insurer would pay $8,000.
Coinsurance is a type of insurance in which the insurer and the insured split risks with each other. In addition to lowering the cost of insurance for the insured, coinsurance also benefits other people who are insured with the same company, by ensuring that the insurance company will be able to pay all claims. Before purchasing coinsurance, you should make sure that you fully understand the terms, as coinsurance can get confusing, and you may find yourself in an awkward situation. Basically, when you sign up for a coinsurance policy, you insure something at less than its face value. Insurers may do this because they know that a structure or possession can be replaced for less than face value, or because they are willing to pay some out-of-pocket expenses to keep their insurance rates down. If a claim is made on the policy, the insurer pays their share of the coinsurance while the insured is expected to pay any remaining balance. For example, if you insure a structure which is worth $1
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