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Related to Coinsurance: Coinsurance effect


In insurance, a structure in which the policyholder and the insurer split the responsibility for paying for covered items. Coinsurance is most common with health and real estate insurance. For example, if a policyholder has surgery that is covered under the plan, coinsurance might require the policyholder to pay 20% and the insurer to pay the remaining 80%. This helps the insurer control costs by avoiding flippant claims, but also provides most of the coverage needed for the policyholder.


When your healthcare insurance has a coinsurance provision, you and your insurer divide the responsibility for paying doctor and hospital bills by splitting the costs on a percentage basis.

With an 80/20 coinsurance split, for example, your insurer would pay 80%, or $80 of a covered $100 medical bill, and you would pay 20%, or $20.

Some policies set a cap on your out-of-pocket expenses, so that the insurance company covers 95% to 100% of the cost once you have paid the specified amount.

Coinsurance may also apply when you buy insurance on your home or other real estate. In that case, insurers may require you to insure at least a minimum percentage of your property's value -- usually about 80% -- and may reduce what they will cover if you file a claim but have failed to meet the coinsurance requirement.

Coinsurance also describes a situation in which two insurers split the risk of providing coverage, often in cases when the dollar amount of the potential claims is larger than a single insurer is willing to handle. This type of coinsurance is also called reinsurance.


A method of dividing financial responsibility for a loss between the owner and the insurance company.Coinsurance clauses exist within insurance contracts as a type of penalty for an owner who decides to gamble about the size of any potential loss and insure property for less than the full value in order to keep premiums low.They usually provide that an owner may not collect full policy limits for a loss unless the property has been insured to at least 80 percent of its value.
References in periodicals archive ?
PBGH also collected cost information from each health plan and employer, including the employee and employer health insurance premium contributions and whether out-of-pocket copayments, deductibles, and/or coinsurance were required or not.
In the presence of background risk, full-insurance coverage on average requires that the coinsurance rate equals 1, which, by coincidence, coincides with the definition of full insurance coverage in complete markets.
Finally, waiver of coinsurance can raise the same type of claims as other discount arrangements, particularly by Medicaid or any other insurer which might have a basis to assert that it is entitled to a laboratory's best price.
If the likelihood ratio is constant, then the second best low-risk policy has full coverage above a deductible, whereas if the likelihood ratio is increasing, the second best policy has coinsurance above some amount (possibly zero).
Similarly we can now see what may turn Agreed Value from a positive suspension of a possible coinsurance penalty into a possible disaster, substituting an even harsher penalty.
They also looked at whether the impact of copayments or coinsurance varied by income, education, Medicaid eligibility, or race.
Situation 4: The facts are the same as in Situation 1, except that the health FSA and HRA are post-deductible arrangements that only pay or reimburse medical expenses (including the individual's 20% coinsurance responsibility for expenses above the deductible) alter the minimum annual deductible of the HDHP is satisfied.
Spotting a coinsurance deficiency is a simple matter of comparing the amount of loss to the limits, and that can reduce the insurer's liability for the loss.
In addition, if your policy has a coinsurance clause, you may not comply with its requirements.
A better option is a copayment, coinsurance or deductible.
Waivers of coinsurance under Medicare Part B by a federally qualified health care center.
One reason for this is that the logic for the imposition of the coinsurance provision is rarely explained.