PSI Ohio Insurance Practice Exam

What is the term for the dollar amount beyond which the insured does not pay medical expenses?

1. Deductible

2. Stop Loss Limit

3. Out-of-Pocket Maximum

4. Co-insurance Amount

The correct answer is: Stop Loss Limit

The term that refers to the dollar amount beyond which the insured does not pay any further medical expenses is the Stop Loss Limit. This limit is a critical component in medical insurance as it protects the insured by capping their total out-of-pocket expenses for a defined period, typically a year. Once the insured’s medical expenses reach this limit, the insurance company covers 100% of any additional eligible expenses. This protection is especially vital in scenarios involving catastrophic health events or significant medical needs, where costs can quickly escalate. In contrast, the deductible is the amount the insured must pay out of pocket before the insurance plan starts to pay. The out-of-pocket maximum, while related, specifically refers to the highest amount an individual would pay in total or cumulative expenses during a coverage period, including deductibles, co-payments, and co-insurance. Co-insurance, on the other hand, pertains to the shared costs between the insured and the insurer after the deductible has been met, typically expressed as a percentage. Together, these concepts shape a comprehensive understanding of how out-of-pocket expenses and insurance coverage work in medical insurance.