What is the term "coinsurance" referring to?

Coinsurance refers to a cost-sharing agreement typically found in health insurance policies, where the insured is responsible for paying a percentage of certain medical costs after any deductibles have been met. This arrangement means that both the insurer and the insured share the financial responsibility of medical expenses. For example, if a policy has a coinsurance clause of 20%, the insurer covers 80% of the medical costs, while the insured must pay the remaining 20%.

This concept incentivizes insured individuals to consider the costs of care since they have a direct financial stake in medical expenses. It is important in the context of health insurance as it affects how much policyholders will pay out-of-pocket when they receive medical services.

The other options describe elements of health insurance but do not accurately define coinsurance. For instance, preventive care may have different cost-sharing arrangements, but coinsurance specifically relates to the percentage split of costs, not a flat amount or specific benefit limits under a policy.