What is the difference between a copayment and coinsurance?

A copayment and coinsurance represent two different methods of cost-sharing in health insurance that help manage the cost of medical care for policyholders. The correct answer accurately defines these terms: a copayment is a fixed amount that an insured individual pays for a specific service at the time of receiving that service, for example, paying $20 for a doctor's visit. This amount is predetermined by the insurance plan and does not vary based on the overall cost of the service.

Coinsurance, on the other hand, is defined as a percentage of the total cost of the healthcare service that the insured person is responsible for paying after any applicable deductible is met. For instance, if an insured individual has 20% coinsurance on a $1,000 procedure after meeting their deductible, they would pay $200 (20% of $1,000) out of pocket.

This distinction is crucial for understanding how different cost-sharing mechanisms work within health insurance plans. The options that suggest copayment and coinsurance are identical, or that one is always fixed while the other is a percentage, do not acknowledge their fundamental differences in structure and application in health insurance.