Insurance cost sharing refers to the sharing of healthcare costs between the insured individual and their insurance provider. Under most health insurance plans, the policyholder is responsible for paying certain out-of-pocket costs in addition to their monthly premiums.
The three most common types of cost sharing are deductibles, copayments, and coinsurance.
A deductible is a set amount that the policyholder must pay before their insurance coverage kicks in. For example, if you have a $1,000 deductible, you will have to pay the first $1,000 of healthcare expenses out of your own pocket before your insurance coverage begins.
A copayment is a fixed amount that the policyholder pays each time they receive medical services. For example, if you have a $20 copayment for a doctor’s visit, you will pay $20 at the time of the visit and your insurance will cover the rest of the cost.
Coinsurance is a percentage of the cost of healthcare services that the policyholder is responsible for paying. For example, if your coinsurance is 20%, you will pay 20% of the cost of healthcare services, and your insurance will cover the remaining 80%.
Cost sharing is intended to encourage policyholders to be more cost-conscious when seeking medical services and to help keep overall healthcare costs down. While cost sharing can help reduce premiums for policyholders, it can also result in higher out-of-pocket costs for individuals who require a significant amount of medical care.