Cost-sharing in insurance refers to what practice?

Cost-sharing in insurance is a practice where the insurance policy covers a portion of medical expenses, while the insured party (such as an employee) is responsible for a remaining share. This is typically implemented through mechanisms such as deductibles, copayments, or coinsurance, which require individuals to pay a certain percentage or fixed amount for their medical services even when insurance is in effect.

This approach serves multiple purposes: it reduces the overall costs for the insurance provider by limiting unnecessary use of medical services, and it encourages patients to make more mindful decisions regarding their healthcare. The concept of cost-sharing is fundamental to many health insurance models, ensuring that both the insurer and the insured share the financial responsibility in accessing healthcare services.