Illinois Health Insurance Practice Exam

What is the term for policyholder participation, in which the insurance company pays a percentage and the insured pays the rest?

1. Coinsurance

2. Deductible

3. Maternity leave

4. Outpatient care

The correct answer is: Coinsurance

The term for policyholder participation, where the insurance company pays a percentage of the expenses and the insured is responsible for the remaining portion, is indeed coinsurance. This mechanism is designed to share the costs of healthcare services between the insurer and the insured, encouraging cost-effective behavior from both parties. For instance, if a policy has a coinsurance provision of 80/20, the insurance company would cover 80% of the medical bill, while the insured would pay 20%. In the context of health insurance, other terms such as deductible refer to the initial amount the insured must pay out-of-pocket before the insurance begins to cover costs, and they are not representative of the sharing structure defined in the question. Maternity leave denotes time off from work for childbirth, which does not relate to the cost-sharing mechanism of health insurance, and outpatient care describes medical services received without being admitted to a hospital, lacking a direct connection to the concept of cost-sharing outlined.