PSI Ohio Insurance Practice Exam

What does first dollar coverage mean?

1. The policy pays only after a deductible is met

2. The policy begins to pay as soon as covered medical expenses are incurred

3. The policy pays for expenses only after co-insurance is applied

4. The policy does not cover the first $1,000 of expenses

The correct answer is: The policy begins to pay as soon as covered medical expenses are incurred

First dollar coverage refers to an insurance policy provision that activates benefits immediately after a covered expense occurs, without requiring the insured to meet a deductible first. This means that as soon as the insured incurs covered medical expenses, the insurance provider begins to pay for those expenses, allowing for quicker access to coverage and relieving some of the financial burden from the policyholder. This immediate benefit can be particularly advantageous in scenarios such as health insurance or certain property and casualty insurance policies, where early expenses might be significant. It contrasts with other insurance arrangements where co-pays, deductibles, or co-insurance may delay payment or require the insured to pay a certain amount out-of-pocket before any benefits from the policy kick in. In this context, first dollar coverage emphasizes the policy's direct support when expenses arise, enhancing the insured's financial security right from the point of treatment or loss.