Final answer:
Primary insurance coverage is the health insurance plan responsible for paying a claim first, before other policies. It might be provided through employment or purchased directly by an individual. This coverage deals with initial claims and is characterized by cost-sharing measures like deductibles, copayments, and coinsurance.
Step-by-step explanation:
The definition of primary insurance coverage refers to the insurance plan responsible for paying a claim first. This is typically the main health plan coverage an individual would have through their employer (employment-based insurance) or one they might purchase directly (direct-purchase insurance).
The 'first payer' principle implies that in situations where an individual happens to have multiple insurance policies, the primary insurance coverage is the one that kicks in before any other policies. If healthcare costs exceed what the primary insurance covers, a secondary insurance may then take over to cover the remainder, if available.
Key aspects of health insurance often include deductibles, copayments, or coinsurance. These are out-of-pocket costs that the insured must pay before the insurance company covers the rest. Such features are designed to share the cost between the insurer and the insured, and to reduce moral hazard—the tendency of insurance to encourage riskier behavior because the costs are shared or borne by another party.