In health insurance, what is meant by “cost-sharing”?

Cost-sharing in health insurance refers specifically to the financial arrangements that involve both the insured party and the insurer sharing the costs of healthcare services. This typically manifests through various mechanisms such as deductibles, copayments, and coinsurance.

When an insured individual receives medical care, they may first pay a deductible – a set amount that must be paid out-of-pocket before the insurance begins to cover costs. Once the deductible is met, cost-sharing continues through copayments, which are fixed fees for specific services, and coinsurance, which is a percentage of the costs that the insured is responsible for paying.

This shared responsibility encourages individuals to be more mindful of healthcare expenses and promotes the use of necessary medical services, as they have a stake in the costs involved.