Final answer:
A deductible in insurance is the amount a policyholder pays before insurance covers the remaining costs, which is primarily designed to reduce moral hazard. It differs from other forms of cost sharing like copayments and coinsurance.
Step-by-step explanation:
The option that best defines a deductible in insurance is b. The money a person pays before his or her insurance covers expenses.
A deductible is an agreed-upon amount that the policyholder must pay out-of-pocket before the insurance company starts to cover expenses. This means if you have a deductible of $1,000, you will need to pay for the first $1,000 of covered services yourself during the policy period (typically one year) before your insurer begins to pay.
The purpose of a deductible is to mitigate the risk of moral hazard by having the insured share in the risk of their healthcare costs, encouraging more responsible use of medical resources. Deductibles vary in amount and are an important part of the cost-sharing aspect of insurance policies. While copayments and coinsurance are also forms of cost-sharing, they are paid differently—a copayment is a specific charge that you pay at the time of service, whereas coinsurance is a percentage of the costs that you pay after the deductible is met.