Health Insurance Mastery Practice Exam

What does the term 'deductible' refer to in a health insurance policy?

1. The total amount the policy pays for the insured

2. The amount the insured pays before benefits are paid

3. The percentage of costs the insured pays after claims

4. The maximum out-of-pocket expense per year

The correct answer is: The amount the insured pays before benefits are paid

In health insurance, the term 'deductible' specifically refers to the amount that an insured individual must pay out of pocket for healthcare services before their insurance coverage kicks in and starts to pay for benefits. This means that until the insured has paid the total deductible amount specified in their policy, they will be responsible for paying the full cost of their medical expenses. This concept is crucial for understanding how health insurance plans share costs between the insurer and the insured. It serves as a cost-sharing mechanism and encourages insured individuals to manage their healthcare utilization. Once the deductible is met, the insurance will begin to cover a portion of the costs for covered services, usually subject to copayments and coinsurance.