Final answer:
A co-payment is a fixed out-of-pocket cost for insured individuals before the insurer covers a visit or service. Co-payments, along with deductibles and coinsurance, reduce moral hazard in insurance. Co-payments are prevalent in health insurance.
Explanation:
Co-payment is the fixed amount that an insured individual must pay out of pocket before the health insurer covers a specific visit or service. It is a predetermined fee set by the insurance company.
Deductibles, co-payments, and coinsurance are all cost-sharing methods used in insurance policies to reduce moral hazard by requiring the insured party to bear some of the costs before receiving full benefits.
In health insurance, a co-payment is a common form of out-of-pocket expense for insured individuals when they access healthcare services.
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