Texas General Lines — Life, Accident, Health and HMOHealth InsuranceEasy
A client is concerned about the rising cost of healthcare and wants a health insurance plan that will limit their annual out-of-pocket expenses for covered medical services. Which policy feature addresses this concern?
- AOut-of-Pocket Maximum
- BDeductible
- CCoinsurance
- DCopayment
Show answer & explanationAnswer & explanation
Correct answer: A. Out-of-Pocket Maximum
The out-of-pocket maximum is the most an insured will have to pay for covered services in a policy year. Once this limit is reached, the insurance company pays 100% of additional covered costs.
Why the other options are wrong
- B. A deductible is the initial amount the insured pays before the insurer starts to pay.
- C. Coinsurance is a percentage of costs the insured pays after the deductible, but it doesn't cap total expenses.
- D. A copayment is a fixed fee paid for a service, but doesn't cap overall annual expenses.
Out-of-Pocket Maximum
The most an insured will have to pay for covered services in a policy year. Once reached, the insurer pays 100% of subsequent covered costs.
- Caps the insured's total annual financial responsibility
- Includes deductibles, copayments, and coinsurance payments
- Protects against catastrophic medical bills
Memory trick: The 'Max'imum is your 'Safe'ty 'Net' against big bills.