Question

Besides possibly paying the premiums for a medical insurance plan, the insured is almost always responsible for making other, out-of-pocket payments. This practice helps keep overall costs down for both insureds and the insurance companies and ensures that insureds are informed about the costs of health care. For each of the following scenarios, select which type of other cost or provision is illustrated. Cheyenne has had an illness and an accident during the year. Her combined out-of-pocket expense for both incidents was $1,000. The insurance company will now start to pay some of her medical expenses. What does the $1,000 represent?

Answer 1

DEDUCTIBLE.

Step-by-step explanation:

Deductible is the amount paid out of pocket in an insurance claim before the insurance coverage kicks in and the insurance company starts paying.

When there is a deductible, one has to pay the amount for the deductible before a claim gets paid. Once the deductible is paid, the insurance company will pay up the rest of the claim value.

A health insurance deductible in Cheyenne's case is the amount she has to pay out of pocket for healthcare services covered under her insurance plan before her plan begins to pay benefits for eligible expenses.

Therefore, the $1000 Cheyenne paid out of pocket for both her incidents represents DEDUCTIBLE.