Cost sharing
Cost Sharing
Cost sharing (pronounced: /kɒst ʃeərɪŋ/) is a healthcare financing strategy where the cost of healthcare services is borne not only by the insurance provider but also by the insured individual. The term is derived from the English words "cost" and "sharing", indicating a mutual bearing of expenses.
Cost sharing can take several forms, including deductibles, co-payments, and coinsurance. These mechanisms are designed to share the financial risk between the insurance company and the policyholder, and to discourage overuse of healthcare services.
Deductibles
A deductible (pronounced: /dɪˈdʌktɪbəl/) is a specific amount that an insured individual must pay out-of-pocket before the insurance company begins to cover healthcare costs. The deductible amount is often set on an annual basis.
Co-payments
A co-payment (pronounced: /koʊˈpeɪmənt/), or co-pay, is a fixed amount that an insured individual pays for a specific service or prescription medication. The remaining balance is covered by the insurance company.
Coinsurance
Coinsurance (pronounced: /koʊɪnˈʃʊərəns/) is a percentage of the total cost of a healthcare service that an insured individual is responsible for paying. The insurance company pays the remaining percentage.
Related Terms
- Out-of-pocket maximum: The most an insured individual will have to pay for covered services in a policy period. After reaching this amount, the insurance company will pay 100% of the costs.
- Premium: The amount that must be paid for your health insurance or plan, usually monthly, quarterly, or yearly.
- Health Savings Account (HSA): A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.
See Also
External links
- Medical encyclopedia article on Cost sharing
- Wikipedia's article - Cost sharing
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