What is the name for a cost-sharing agreement where the insured pays a percentage of expenses after the deductible is met?

The term for a cost-sharing agreement where the insured pays a percentage of expenses after the deductible is met is known as coinsurance. In this arrangement, once the deductible has been satisfied, the insured and the insurer share the remaining costs at a predetermined rate. This method is commonly applied in health insurance and some property insurance policies.

Coinsurance functions as a mechanism to encourage the insured to be mindful of their medical expenses, as they will be responsible for a portion of the costs. For example, if a policy includes an 80/20 coinsurance agreement, once the deductible is reached, the insurance company will cover 80% of the eligible expenses, while the insured will pay the remaining 20%. This ensures that both parties have a stake in the cost management.

By contrast, copayments represent a fixed fee that an insured individual pays for specific services, premiums are the regular payments made to maintain insurance coverage, and out-of-pocket costs refer to the total expenses that the insured pays for services not covered by their insurance policy, which can include deductibles, copayments, and coinsurance amounts.