What is the main purpose of coinsurance in health insurance?

Coinsurance plays a critical role in health insurance by defining the cost-sharing mechanism that takes place after an insured individual has fulfilled their deductible obligations. This arrangement ensures that both the insurer and the insured share the financial responsibility for healthcare expenses, particularly after the insured has paid out-of-pocket up to the agreed-upon deductible amount.

Once the deductible is met, coinsurance kicks in, requiring the insured to pay a specified percentage of the remaining medical costs, with the insurer covering the rest. This not only helps manage financial risk for the insurance company but also encourages insured individuals to stay mindful of their healthcare spending, as they are still responsible for a portion of the costs.

The other options do not accurately represent the function of coinsurance. For instance, coinsurance does not cover the total cost of healthcare services or eliminate out-of-pocket expenses—rather, it specifically structures the shared cost approach that maintains some level of cost responsibility for the insured. Additionally, while health insurance can offer tax benefits under certain circumstances, that is not related to the main purpose of coinsurance.