In a major medical policy, what is the role of the deductible?

• A. Defines the maximum payment
• B. Is the amount the insured must pay before coinsurance applies
• C. Monthly premium
• D. Eliminates coinsurance

Answer: (B)

In a major medical policy, the deductible is the portion of covered medical expenses you must pay out of pocket before the plan starts sharing costs through coinsurance. It does not set a maximum payment, it is not the monthly premium, and it does not eliminate coinsurance. Once the deductible is met, you continue to share costs with the insurer according to the coinsurance provision (for example, you might pay 20% of remaining charges while the insurer covers 80%) until you reach the policy’s out-of-pocket limit. The monthly premium is a separate obligation and remains due regardless of deductible status. For example, with a $1,000 deductible and 20% coinsurance, a $5,000 bill would require you to pay the first $1,000, then 20% of the remaining $4,000 ($800) as coinsurance, with the insurer paying the rest up to the out-of-pocket maximum.