Answer :
Final answer:
A deductible is an out-of-pocket amount paid by the insured before the insurer covers costs, reducing moral hazard and sharing expenses. Deductibles, copayments, and coinsurance are key features in insurance policies to distribute costs.
Explanation:
A deductible is the amount that the insured must pay out-of-pocket before the health insurer pays its share. It serves as a cost-sharing mechanism, reducing moral hazard in insurance.
For instance, a policyholder may have a [tex]$500 deductible, meaning they pay the first $[/tex]500 for covered services before the insurer starts covering costs.
Deductibles, copayments, and coinsurance are common features in insurance policies that help distribute costs between the insurer and the insured party.
Learn more about Health insurance and cost-sharing mechanisms here:
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