Health Insurance Mastery Practice Exam

What is the primary function of a cost-sharing feature in health insurance?

1. To decrease premiums

2. To limit the insured's financial liability

3. To motivate insureds to seek preventive care

4. To ensure that the insurance company maintains profitability

The correct answer is: To limit the insured's financial liability

The primary function of a cost-sharing feature in health insurance is to limit the insured's financial liability. Cost-sharing elements, such as copayments, deductibles, and coinsurance, are designed to share the financial burden between the insurer and the insured. This approach helps to prevent the insured from facing overwhelming costs while encouraging them to use health services judiciously, as they still have a financial stake in their health care decisions. Essentially, cost-sharing aims to balance risk and responsibility, allowing the insured to engage in necessary care while also being mindful of their expenses. Other choices, while they may touch on aspects of health insurance, do not align as closely with the fundamental purpose of cost-sharing. For instance, decreasing premiums focuses more on the overall affordability of insurance rather than individual financial responsibilities. Motivating insureds to seek preventive care is an important aspect of health insurance, but it does not capture the primary function of cost-sharing. Lastly, while insurance companies do aim to maintain profitability, this is not the core intent of cost-sharing features, which are more about managing risk and costs for the insured.