What best describes the intent of a coinsurance clause in a Major Medical policy?

• A. Reduces premiums
• B. Guarantees full coverage
• C. Eliminates deductibles
• D. Discourages overutilization

Answer: (D)

Coinsurance is a cost-sharing feature that starts after you meet the policy deductible. You pay a percentage of covered medical expenses and the insurer pays the rest. This arrangement keeps you invested in the cost of care and encourages you to consider the necessity and cost of services rather than using care indiscriminately. For example, with a $1,000 deductible and 80/20 coinsurance, on a $2,500 bill you would pay the deductible first, then 20% of the remaining $1,500 (which is $300), while the insurer covers $1,200. The main purpose is to discourage overutilization by sharing costs.

Coinsurance doesn’t set premiums or guarantee full coverage, and it doesn’t eliminate deductibles.