PSI Ohio Insurance Practice Exam

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Study for the Ohio Insurance Test. Prepare with flashcards and multiple choice questions, each question accompanied by hints and explanations. Excel in your exam!

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What does coinsurance refer to in an insurance context?

The insurer pays all expenses
The insured shares expenses over the deductible
Both parties pay in fixed amounts
The insurer covers all expenses without limit

The correct answer is: The insured shares expenses over the deductible

Coinsurance in an insurance context refers to the arrangement where the insured shares expenses with the insurer after the deductible has been met. This means that once the insured has paid their deductible amount, both the insured and the insurance company contribute to the cost of covered expenses, typically expressed as a percentage. For example, in a typical coinsurance arrangement, the insurer might cover 80% of the costs after the deductible, while the insured would pay the remaining 20%. This system encourages the insured to share in the costs and promotes more responsible use of healthcare services, as it can lead to a more equitable distribution of expenses between the provider and the consumer. The other choices either imply that the insurer covers all expenses without participation from the insured, which does not reflect the shared nature of coinsurance, or suggest fixed payment amounts, which is characteristic of copayment arrangements rather than coinsurance. The concept of coinsurance specifically emphasizes the shared financial responsibility after initial deductible expenses.