Health Insurance Mastery Practice Exam

What does the coinsurance provision in major medical policies require from the insured?

1. To pay a flat fee for all services

2. To pay a percentage of medical expenses

3. To pay the full amount of the deductible

4. To cover all non-covered services

The correct answer is: To pay a percentage of medical expenses

The coinsurance provision in major medical policies requires the insured to pay a percentage of medical expenses. This means that after the insured has met their deductible, they are responsible for a certain percentage of the overall costs of covered healthcare services, while the insurance company pays the remaining percentage. This shared financial responsibility helps to encourage cost-consciousness on the part of the insured and limits the insurance company’s total payout for a claim. For example, if a policy has an 80/20 coinsurance arrangement, the insurer will cover 80% of the costs after the deductible is met, and the insured will be responsible for the remaining 20%. This method of cost-sharing is designed to help control healthcare costs and prevent overutilization of medical services. In contrast, paying a flat fee for all services does not consider the unique structure of major medical insurance policies where expenses vary by treatment. Additionally, covering the full amount of the deductible falls prior to the application of coinsurance, as the deductible must be paid first before the coinsurance percentages are applied. Lastly, covering all non-covered services is not part of the coinsurance model, as non-covered services are typically entirely the responsibility of the insured without co-sharing involved.