Final answer:
Beneficiaries are required to pay certain costs, such as copayments or coinsurance, for prescription costs after their yearly deductible is met, which must be collected at the point of service.
Step-by-step explanation:
Beneficiaries are responsible for certain healthcare costs after their yearly deductible has been met. This amount must be collected at the point of service (POS). Specifically, in the case of prescription costs, individuals who are part of a health insurance program may pay an annual premium and a deductible, following which the federal government typically covers 75 percent of their prescription drug costs up to a specified limit, such as $2,250. Once the deductible is met, the individual may be responsible for copayments or coinsurance, which are forms of cost sharing.
Cost sharing includes deductibles, copayments, or coinsurance, and serves to discourage moral hazard by ensuring that individuals pay a portion of their healthcare costs out-of-pocket, thus reducing overconsumption of medical care. This structure can lead to individuals consuming about one-third less in medical care, without a significant difference in health status compared to those with more comprehensive insurance coverage without out-of-pocket expenses.