Problem

How can deductibles, copayments, and coinsurance …

00:49

Problem 14 Medium Difficulty

Define deductibles, copayments, and coinsurance.

Answer

Deductible is the initial amount of money that policy holder needs to pay at time of loss, and after
deductible amount payment of insurance starts. Copayment is the small amount that customer
has to pay at time of loss, while the rest amount is covered by insurance company. Coinsurance
is the small percentage of loss amount that customer has to pay at time of loss, while the rest
amount is covered by insurance company.

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Principles of Microeconomics for AP® Courses

Chapter 16

Information, Risk, and Insurance

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Video Transcript

everyone today will be walking through Problem number 14 from Chapter 16 of the textbook, which asks us to define three different terms and microeconomics deductibles, co payment and co insurance. So let's read from this section and Chapter 6 16 which gives us those three definitions, and I'll explain briefly on what you should do after that. So it says another method to reduce moral hazard. Remember more Hauser's and you define before in this chapter. And essentially, it is when you engage with in risk your behavior when you have insurance than you would if you didn't have any insurance at all. So another method to reduce this moral hazard is to require the injured party to pay a share of the cops. For example, insurance policies often have deductibles, which is an amount that the insurance policy holder must pay out his or her own pocket before the insurance coverage starts paying. Do you have to pay? Basically, a flat amount on this flat amount is deductible, and it's once you must pay out of pocket before coverage for your insurance over a car over um, home over your home over your health. Carrie, before any of that start, for example, auto insurance might pay for all. Loss is greater than $500. Health insurance policies often have a co payment. Health insurance policies have a coat co payment, Um, which is where the policyholder must pay a small amount. So specifically for health insurance policies, the deductible essentially is called the cocaine. Just another word, for example. A person might have to pay $20 for each doctors. Is it on? The insurance company would cover the rest. Another method of cost sharing is co insurance. The co insurance is another method of cautionary, and it means that the insurance company covers a certain percentage of the cost. For example, insurance my paper 80% of the cost of repairing the home after five. But the whole murder would have to pay the other 20 the current co insurance visit. Another method of cross sharing, in which the insurance probably company covers a certain percentage of costs Now to review deductibles are the amount that the insurance policy holder must pay out of his own pocket before coverage from the insurance company begins. Uh, co payments are the deductibles for health care, health insurance policies essentially were again. The policy bears must pay a small amount out of pocket. And then co insurance is a method of cost sharing in which Thean sure, insp confident covers a certain percentage of the cops So they would have it if you guys enjoyed my video explanation of what deductibles, copayments coinsurance our police of the likely and next to it. I hope you all have a nice day. And thank you for watching.

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