Certified Application Counselor Practice Test

What does a deductible represent in health insurance?

1. The amount paid for every visit

2. The total annual limit on out-of-pocket costs

3. The amount owed before insurance pays

4. The percentage of costs covered by insurance

The correct answer is: The amount owed before insurance pays

A deductible in health insurance represents the amount that an individual must pay out-of-pocket for covered healthcare services before their insurance plan starts to pay for those services. This means that until you meet your deductible, you are responsible for paying the full cost of your medical care. After the deductible has been met, the insurance will typically begin to cover a portion of the costs, which is usually outlined in the terms of the policy, including co-pays and coinsurance. Understanding the concept of a deductible is crucial because it significantly impacts how much a policyholder needs to spend before insurance benefits are triggered, and it plays a key role in the overall cost of health insurance. The other options represent different concepts in health insurance: the first refers to co-payments made for each doctor's visit, the second describes out-of-pocket maximums that limit total annual expenses, and the last concerns the share of costs that insurance pays versus what the insured pays. These are all relevant in the context of health insurance but do not accurately define what a deductible specifically is.