Co-Insurance is calculated based on which factor?

Co-insurance is a critical concept in health insurance that refers to the percentage of covered healthcare expenses that the insured is responsible for after the deductible has been met. It represents the shared responsibility between the insurance provider and the policyholder regarding medical costs.

When a policy includes co-insurance, the insurer pays a certain percentage of the total allowed medical costs, while the insured pays the remaining percentage. For example, if a co-insurance rate is set at 20%, once the deductible is paid, the insurance company pays 80% of the medical expenses, and the individual is responsible for the remaining 20%.

By basing co-insurance on a percentage of the charges, it allows for flexibility depending on the cost of services used; higher costs result in higher payments for the insured, and therefore, it is designed to keep both the insurance provider and the insured equally invested in managing healthcare expenses.

The other choices, while representing different payment structures, do not pertain to the concept of co-insurance. A fixed dollar amount pertains to copayments, a flat fee per service can refer to specific services covered under different plans, and an annual deductible is the total amount that an individual pays out-of-pocket before insurance begins to pay.