What does 'coinsurance' mean in an insurance context?

In the context of insurance, coinsurance refers to the percentage of costs that policyholders are responsible for after they have met their deductible. This means that once the insured individual has paid their deductible, they will share the remaining costs of a covered service with the insurer. For instance, if a policy has an 80/20 coinsurance clause, the insurer would cover 80% of the allowed costs, while the policyholder would be responsible for the remaining 20%.

This concept is essential as it encourages policyholders to be mindful of their healthcare expenses, knowing that they will still incur some costs after their deductible is satisfied. Coinsurance helps spread risk between the insurer and the insured while potentially reducing insurance premiums compared to plans that only involve copayments or a flat coverage rate.