Health Insurance Mastery Practice Exam

Which term refers to the amount paid by the insured before insurance benefits kick in?

1. Copayment

2. Deductible

3. Coinsurance

4. Premium

The correct answer is: Deductible

The term that refers to the amount paid by the insured before insurance benefits begin is known as the deductible. A deductible is a specific dollar amount that policyholders must pay out-of-pocket for covered healthcare services before the insurance company starts to pay its share. This mechanism is designed to share costs between the insurer and the insured and to encourage policyholders to use healthcare services judiciously. Typically, after the deductible is met, the insurance will cover most or all of the remaining costs, though there may still be further cost-sharing through copayments or coinsurance, which are additional payments made for each visit or service. This structure helps to keep premiums lower while ensuring that insured individuals still have some financial responsibility for their health care. In contrast, copayments are fixed amounts paid for specific services at the time of care, coinsurance represents percentages of costs that the insured must pay after the deductible has been met, and premiums are the periodic payments made to keep the insurance policy active. Understanding these terms is crucial for navigating health insurance plans effectively.