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Health insurance & HSAs
In health insurance, coinsurance is the percentage of a covered bill the enrollee pays after meeting the deductible, such as 20%, with the plan paying the rest until the out-of-pocket maximum is reached. In property insurance the same word refers to a different clause that penalizes carrying too little coverage.
Because the word means two different things, agencies that write both health and property lines should define it each time they use it. A homeowner told about a coinsurance penalty is not thinking about a doctor's bill, and a benefits client rarely knows the property meaning exists.
On the property side, the clause is closely tied to insurance-to-value: carry less than the required percentage of replacement cost and a partial claim is reduced proportionally. On the health side, coinsurance is one of the variables that moves a plan's expected cost between the deductible and the out-of-pocket maximum.
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