When a policy claim involves a deductible and a coinsurance provision, how is the claimant's portion determined?

In insurance, particularly in health insurance policies, the deductible and coinsurance work together to determine the out-of-pocket costs for the claimant. The deductible is the amount the insured must pay upfront before the insurance company begins to contribute to claims. This means that the insured is responsible for paying this amount first, and it must be satisfied before any coinsurance provision comes into play.

Once the deductible has been met, the coinsurance provision then dictates how the remaining costs are shared between the insured and the insurer. For example, if a policy has a coinsurance requirement of 20%, after the deductible is paid, the insurer will cover 80% of the costs while the insured covers the remaining 20%.

Determining the claimant’s portion starts with applying the deductible first. Therefore, the correct approach is to subtract the deductible from the total costs incurred. After this deduction, the coinsurance provision is applied to the remaining balance to ascertain how much the insurer will pay and how much the claimant will owe.

This sequence of applying the deductible first followed by the coinsurance is critical for understanding how benefits are distributed and how to calculate the claimant's financial responsibility accurately.