What does coinsurance represent in healthcare costs?

Coinsurance is a key concept in healthcare cost-sharing. It represents the percentage of the costs that a beneficiary is responsible for after meeting any applicable deductible. For example, if a health insurance plan has a coinsurance rate of 20%, the insurer pays 80% of the covered services, and the beneficiary pays the remaining 20%. This arrangement encourages beneficiaries to share the cost of care with their insurance provider, which can help manage overall healthcare expenses.

In this context, the other options are distinctly different concepts. A fixed dollar amount paid for each service refers to copayments, not coinsurance. The total cost of covered services describes the complete expense incurred, without reflecting any division of responsibility between the insurer and the beneficiary. Lastly, a penalty fee for late payment of premiums is unrelated to the shared cost structure of coinsurance and pertains to payment obligations rather than the sharing of healthcare service costs.