What does cost sharing in health insurance refer to?

Cost sharing in health insurance refers specifically to the out-of-pocket costs that enrollees, or policyholders, are required to pay when they receive health care services. This includes expenses such as deductibles, copayments, and coinsurance, which are amounts that individuals must contribute in addition to their insurance premiums. The concept of cost sharing is essential in the health insurance system because it helps to distribute the financial burden of health care between the insurance provider and the insured individuals. By requiring enrollees to pay a portion of their health care costs, cost sharing can also discourage unnecessary medical spending and promote more judicious use of health care services. Understanding this mechanism is crucial for navigating health insurance and managing personal health care expenses effectively.