Which is a consequence of a deductible on the insured's costs?

Which is a consequence of a deductible on the insured's costs?

• A. It increases insured's share until deductible is met
• B. It increases insurer's share
• C. Deductible is paid by insurer
• D. Deductible reduces coinsurance

Answer: (A)

A deductible shifts the initial cost burden to the insured. The insured pays all covered charges up to the deductible amount, so their out-of-pocket costs rise until that deductible is met. After meeting the deductible, remaining expenses are paid according to the plan’s coinsurance or coverage rules. The deductible itself is not paid by the insurer, and it doesn’t reduce coinsurance; coinsurance applies only after the deductible has been satisfied. Example: with a $1,000 deductible and a $2,000 bill, you pay the first $1,000. The remaining $1,000 then is split according to coinsurance (for instance, 80/20), so the insurer might pay $800 and you pay $200. This illustrates why the insured’s share increases until the deductible is met.

A deductible shifts the initial cost burden to the insured. The insured pays all covered charges up to the deductible amount, so their out-of-pocket costs rise until that deductible is met. After meeting the deductible, remaining expenses are paid according to the plan’s coinsurance or coverage rules. The deductible itself is not paid by the insurer, and it doesn’t reduce coinsurance; coinsurance applies only after the deductible has been satisfied.

Example: with a $1,000 deductible and a $2,000 bill, you pay the first $1,000. The remaining $1,000 then is split according to coinsurance (for instance, 80/20), so the insurer might pay $800 and you pay $200. This illustrates why the insured’s share increases until the deductible is met.