Plain version: a medical expense policy splits a bill in layers. First the insured pays alone (deductible). Then the insured and the insurer share (coinsurance or copayments). Once the insured's share reaches a ceiling (stop-loss), the insurer pays everything.
The four terms:
Deductible: the covered expenses the insured pays before the plan starts sharing costs. With a calendar-year deductible, every covered expense during the year counts toward it.
Coinsurance: percentage cost sharing, normally after the deductible. With 80/20, the insurer pays 80% and the insured pays 20%. The insurer pays nothing within the deductible.
Copayment: a flat dollar amount for a service, such as $30 per office visit. It stays the same whatever the provider charges.
Stop-loss provision: the most the insured pays for covered expenses in a period. After that, the insurer pays 100%.
Worked example: a $500 deductible, 80/20 coinsurance and a $3,000 stop-loss that includes the deductible.
Covered expenses of $5,500: the insured pays $500 + 20% of $5,000 ($1,000) = $1,500. The insurer pays $4,000.
Covered expenses of $40,000: without the cap, the insured would owe $500 + 20% of $39,500 ($7,900) = $8,400. The stop-loss limits that to $3,000, so the insurer pays $37,000.
Memory hook: deductible = you go first; coinsurance = a percent; copayment = flat dollars; stop-loss = the ceiling. If the exam gives a percentage, it is coinsurance; if it gives a fixed fee per visit, it is a copayment.