What is the benefit of coinsurance in a Comprehensive Major Medical Policy?

Coinsurance is a provision in a Comprehensive Major Medical Policy that plays a significant role in cost-sharing for covered medical services. When a policy includes coinsurance, it means that after the deductible has been met, the insurer and the insured will share the costs of covered services in a specified ratio. For example, the insurer may pay 80% of the costs, while the insured is responsible for the remaining 20%.

This arrangement benefits policyholders by keeping insurance premiums lower, as it encourages patients to be more mindful of their healthcare utilization. Since the insured is responsible for a portion of the costs, it can also reduce unnecessary medical services, making the healthcare system more sustainable.

The concept of coinsurance contrasts sharply with the idea of complete coverage with no out-of-pocket costs, which would lead to higher premiums and potentially overutilization of healthcare resources. Similarly, while deductibles must be satisfied before the coinsurance applies, they do not eliminate each other; instead, they work together within the policy framework. Lastly, coinsurance typically applies to a wide range of services, not limited to hospital stays, ensuring that policyholders share costs across various types of medical care.