Question

Benefits that are made in the form of cash payments are known as______________.

1) Indemnities
2) Deductibles
3) Medical co-pays
4) Cash advances

Answer 1

Deductibles, copayments, and coinsurance are all forms of cost sharing in insurance policies. They discourage moral hazard by requiring the policyholder to bear some of the costs before collecting insurance benefits.

Step-by-step explanation:

Deductibles, copayments, and coinsurance are all forms of cost sharing in insurance policies. Out of these, deductibles are the maximum amount that the policyholder must pay out-of-pocket before the insurance company pays the rest of the bill. Copayments are a flat fee that an insurance policy-holder must pay before receiving services. Lastly, coinsurance requires the policyholder to pay a certain percentage of costs.

All of these forms of cost sharing discourage moral hazard, because people know that they will have to pay something out of their own pocket when they make an insurance claim. This encourages individuals to be more careful about their healthcare utilization, as they have some financial responsibility.