What best describes coinsurance?

Coinsurance refers to the arrangement in a health insurance policy where the insured and the insurer share the costs of covered healthcare services. This sharing is typically expressed as a percentage, meaning that after the insured has met their deductible, they are responsible for a certain percentage of the costs, while the insurance company covers the remaining percentage. For example, if a policy has a coinsurance rate of 20%, the insured pays 20% of the medical costs, and the insurer pays 80%.

This concept is crucial for understanding how healthcare expenses are divided between patients and their insurance providers. It serves as an incentive for patients to be mindful of their healthcare expenditures since they are directly responsible for a portion of the costs. Coinsurance often comes into play after the insured meets their deductible, affecting out-of-pocket expenses for medical services.

The other options represent different terms in healthcare finance. A flat fee for routine visits relates to copayments, which are fixed amounts paid for specific services. A total annual limit on insurance payments refers to policy limits, which cap the maximum amount an insurer will pay over a period. A fixed sum paid per day of hospitalization pertains to per diem payments rather than coinsurance. Each term plays a distinct role in health insurance, contributing to a