Certified Application Counselor Practice Test

Which of the following statements is true regarding coinsurance?

1. It is a fixed dollar amount paid for every visit

2. It is always equal to 50% of the healthcare costs

3. It represents a percentage of the allowed amount

4. It is not applicable to outpatient services

The correct answer is: It represents a percentage of the allowed amount

Coinsurance is a cost-sharing mechanism in health insurance where the insured pays a certain percentage of the healthcare expenses instead of a fixed amount. This means that after the deductible is met, the insurer and the insured share the costs of covered medical services according to a predetermined ratio. The correct answer is based on the principle that coinsurance typically applies to a percentage of the allowed amount, which is the maximum amount that an insurer will pay for a specified service. When a policy has coinsurance, if a medical service costs $100 and the plan states a 20% coinsurance, the insured would pay $20 while the insurance company pays the remaining $80. This creates a dynamic where the consumer's cost-sharing aligns with the percentage stipulated in their insurance policy, affecting budgeting and understanding of healthcare expenses. The notion that coinsurance is always equal to 50% of the costs, as suggested by another option, is not accurate because coinsurance rates can vary significantly depending on the specific insurance plan. Likewise, it is not confined to any specific dollar amount per visit or limited to outpatient services; it applies as a general principle of risk sharing in both inpatient and outpatient healthcare scenarios. Thus, understanding that coinsurance represents a percentage of the allowed amount helps