What does the term "cost-sharing" refer to in health insurance?

The term "cost-sharing" in health insurance refers specifically to the way a policyholder and the insurer share the costs of healthcare services. This mechanism includes payments that the insured makes directly when receiving medical care, such as deductibles, copayments, and coinsurance.

Deductibles are the amount a policyholder must pay out-of-pocket before the insurance company begins to cover expenses. Copayments are fixed amounts that the insured pays for specific services at the time they receive care. Coinsurance involves sharing the costs of a covered service with the policyholder paying a percentage of the costs after the deductible has been met.

This arrangement serves to engage the insured person in their healthcare expenditures and helps to control overall spending by making them more aware of the costs associated with the care they receive. Thus, cost-sharing plays a crucial role in the structure of health insurance plans by encouraging responsible use of healthcare services.