South Carolina Life and Health Practice Exam

In health insurance, a deductible refers to the specific amount that the policyholder is obligated to pay out of pocket for covered expenses before the insurance company starts to pay benefits. This means that Jennifer must cover this predefined sum herself each year before her health policy begins to contribute to her healthcare costs.

When a health insurance policy includes a deductible, the insured should be aware that all qualifying medical expenses incurred will not be reimbursed until the deductible amount is met. This concept is foundational in understanding how many health insurance plans work, as it directly affects the insured's out-of-pocket costs.

Coinsurance, on the other hand, involves the sharing of costs between the insured and the insurance provider after the deductible has been met, while a premium is the regular payment made to maintain coverage. A copayment is a fixed amount that a policyholder pays for a specific service at the time of receiving care, which varies by type of service and does not apply to all types of expenses like a deductible does.