Life & Health Insurance Exam (National Portion)Health InsuranceEasy
A client is covered by a health insurance policy where the insurer pays 90% of covered medical expenses after the deductible, and the client pays the remaining 10%. This cost-sharing feature is known as:
- APremium
- BCopayment
- CDeductible
- DCoinsurance
Show answer & explanationAnswer & explanation
Correct answer: D. Coinsurance
Coinsurance is the percentage of medical expenses that the insured must pay after the deductible has been met. It represents a sharing of costs between the insurer and the insured.
Why the other options are wrong
- A. A premium is the regular payment made to the insurer to maintain coverage.
- B. A copayment is a fixed dollar amount the insured pays for specific services.
- C. A deductible is the initial amount the insured pays before the insurer starts paying.
Coinsurance
A cost-sharing provision in health insurance policies that requires the insured to pay a specified percentage of the medical expenses after the deductible has been met.
- Expressed as a percentage (e.g., 80/20, 90/10).
- Applies after the deductible is satisfied.
- Designed to reduce moral hazard by having the insured share in the cost.
Memory trick: Cost sharing: Deductible first, then Coinsurance, maybe a Copay.