Provisions of a health insurance policy which require the insured or otherwise covered individual to pay some portion of his covered medical expenses. Several forms of cost-sharing are employed, particularly deductibles, coinsurance and copayments. A deductible is a set amount which a person must pay before any payment of benefits occurs. A copayment is usually a fixed amount to be paid with each service. Coinsurance is payment of a set portion of the cost of each service. Cost-sharing does not refer to or include the amounts paid in premiums for the coverage. The amount of the premium is directly related to the benefits provided and hence reflects the amount of cost-sharing required. For a given set of benefits, premiums increase as cost-sharing requirements decrease. In addition to being used to reduce premiums, cost sharing is used to control utilization of covered services, for example, by requiring: a large copayment for a service which is likely to be overused.
Out-of-pocket payment by patients for part of the cost of benefits of an insurance plan. The term is not properly applied to sharing in the cost of the insurance premium; it applies only to deductibles, coinsurance, and copayments.
An approach to health insurance in which the insured party pays for some of the services received, and the insurance sponsor, usually an employer, pays the rest. Methods of sharing costs between the insured and the sponsor include copayments, deductibles, and annual out-of-pocket expenses.