Final answer:
Money spent during various stages of coverage—deductible, initial coverage, and coverage gap—counts towards out-of-pocket costs, pushing the member towards the next coverage stage in health insurance. Deductibles require policyholders to pay upfront before coverage, while copayments and coinsurance represent subsequent cost-sharing responsibilities.
Step-by-step explanation:
The money spent (excluding premiums) during the deductible, initial coverage, and coverage gap stages count toward out-of-pocket costs, which determine when a member moves from one drug coverage stage to the next. In health insurance, a deductible is the amount the policyholders must pay out of their own pocket before their insurance coverage starts to pay for any services.
Once the deductible is met, the insurance typically starts to cover a significant portion of subsequent costs, either by a copayment, which is a flat fee for a service, or coinsurance, which is a percentage of the service cost. These forms of cost-sharing are important in health insurance plans, such as fee-for-service models and health maintenance organization (HMO) plans, because they mitigate moral hazard by ensuring that policyholders have a financial stake in their healthcare consumption.
Cost-sharing mechanisms ensure that policyholders are less likely to overuse medical services because they bear part of the costs. Therefore, activities like meeting your deductible contribute towards the out-of-pocket maximum, after which the insurance covers 100% of approved expenses.