Life & Health Insurance Exam (National Portion)Health InsuranceEasy
A client is covered by a health insurance policy that pays a percentage of the covered medical expenses, after a deductible has been met, up to a certain limit. Which of the following policy provisions is being described?
- AStop-loss limit
- BCoinsurance
- CDeductible
- DCopayment
Show answer & explanationAnswer & explanation
Correct answer: B. Coinsurance
Coinsurance is the percentage of medical expenses that the insured must pay after the deductible has been satisfied. It is a cost-sharing feature of many health insurance plans.
Why the other options are wrong
- A. A stop-loss limit is the maximum out-of-pocket amount the insured will pay in a policy year, after which the insurer pays 100%.
- C. A deductible is the initial amount the insured must pay before the insurer pays anything.
- D. A copayment is a fixed dollar amount paid at the time of service, not a percentage after a deductible.
Coinsurance
The percentage of medical expenses that the insured must pay after the deductible has been satisfied, up to the out-of-pocket maximum.
- A cost-sharing feature of health insurance.
- Paid after the deductible is met.
- Expressed as a percentage (e.g., 80/20 plan).
Memory trick: Co-pay, Co-insurance, Deductible, Oh my!