Washington State Insurance Practice Exam

In health insurance, what does "co-payment" mean?

1. A percentage paid by the insurer for claims

2. A fixed amount the insured pays for a specific service at the time of receiving care

3. The total deductible amount for the policyholder

4. A reduced rate offered to frequent users of services

The correct answer is: A fixed amount the insured pays for a specific service at the time of receiving care

In health insurance, a co-payment refers to a fixed amount that the insured pays out-of-pocket for specific services at the time care is received. This payment is typically required when the insured visits a healthcare provider, fills a prescription, or receives specific treatment. Co-payments help to share the costs of healthcare between the insurance provider and the policyholder, encouraging responsible usage of medical services. For instance, an insurance plan may require a $20 co-payment for each doctor's visit or a $10 co-payment for each prescription, which means the insured pays that fixed fee directly at the time of the service, while the insurance covers the remaining costs. The other options represent concepts distinct from co-payments. For example, a percentage paid by the insurer relates to coinsurance, where costs are divided based on a percentage rather than a fixed fee. The total deductible amount pertains to the total amount the insured must pay out-of-pocket before their insurance starts covering expenses, and a reduced rate for frequent users is more aligned with promotional pricing rather than standard insurance terminology.