How would you calculate a claim payment under coinsurance?

• A. Subtract the deductible from eligible charges, apply the coinsurance percentage to the remaining amount, and pay up to any policy limits.
• B. Apply coinsurance to the deductible amount only.
• C. Pay the full eligible charges without considering coinsurance.
• D. Coinsurance is not used with health insurance.

Answer: (A)

Coinsurance is a cost-sharing arrangement where you first meet the deductible, and then you share the remaining charges with the insurer. To calculate the claim payment, subtract the deductible from the eligible charges to get the amount subject to cost sharing. Apply the coinsurance percentage to that remaining amount to determine the insurer’s payment; you would cover the deductible plus your coinsurance share. The total payment is still limited by the policy’s limits, and many plans also cap your out-of-pocket costs. This approach correctly models how coinsurance functions: deductible first, then coinsurance on the rest, up to policy limits.