Tennessee Insurance Practice Exam

Which of the following statements is true regarding co-insurance in health policies?

1. It involves a fixed dollar amount paid per visit

2. It is the percentage of costs shared between the provider and the insured

3. It refers to the total amount an individual must pay for premiums

4. It is only applicable to surgical procedures

The correct answer is: It is the percentage of costs shared between the provider and the insured

Co-insurance in health policies refers to the percentage of costs that are shared between the insurance provider and the insured individual after the deductible has been met. This arrangement typically stipulates that the insured will pay a certain percentage of the subsequent medical costs, while the insurance company covers the remaining percentage. For instance, if the co-insurance rate is set at 20%, the insured is responsible for 20% of the medical expenses, while the insurer covers 80%. This system encourages individuals to share in the costs of their medical care, thereby promoting more responsible healthcare consumption. The other choices do not accurately represent the concept of co-insurance. A fixed dollar amount paid per visit describes a copayment rather than co-insurance. The total amount an individual must pay for premiums relates to the cost of insurance coverage, not the cost-sharing aspect of co-insurance. Lastly, co-insurance applies to a broad range of healthcare services and is not limited to surgical procedures.