After paying the deductible, the insurance company shares the expenses with the insured; the shared cost is called coinsurance. With a coinsurance, the plan pays a percentage up to a specified threshold, if applicable for that plan. Once the threshold is met, the insurance company would pay 100% up to the chosen policy maximum.


Assume that you have purchased an insurance policy with a $50,000 policy maximum, $250 deductible and 80/20 coinsurance up to $5,000 and incur medical expenses of $20,000.

You will first pay the $250 deductible.

For the next $5,000, the insurance company will pay 80% or $4,000, and you will pay 20% or $1,000.

After that, the insurance company will pay 100% up to $20,000.

In this example, your out of pocket maximum is the $250 deductible, plus 20% of $5,000 or $1,000 for a total of $1,250.

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