How does coinsurance operate in health insurance?

Coinsurance is a key feature of health insurance that describes how costs are shared between the insurer and the insured after the deductible has been satisfied. Specifically, coinsurance is represented as a percentage split where once the insured has met their deductible, they are responsible for a portion of the remaining costs while the insurer covers the rest. For example, if a health plan has a 20% coinsurance, the insured must pay 20% of the eligible medical expenses, while the insurer pays 80%. This arrangement encourages both parties to be mindful of health care expenses, as both share in the financial responsibility.

In contrast, a fixed fee charged for each service does not involve a percentage-based distribution of costs and would be classified as a copayment rather than coinsurance. A one-time fee required for policy issuance pertains to the premium payment when purchasing the insurance policy and does not relate to ongoing medical expenses. Furthermore, coverage limited strictly to preventive services does not accurately characterize coinsurance, which applies to a broader range of medical services beyond just preventive care. Understanding these distinctions clarifies why the correct answer is centered on the percentage split of expenses following the deductible.