Which statement correctly distinguishes coinsurance from a copayment?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Coinsurance is cost-sharing expressed as a percentage, for example the insurer pays 80 percent and the insured pays 20 percent of covered charges after the deductible. A copayment is a fixed dollar amount charged for a specific service, such as $30 for an office visit or $10 for a generic prescription. Both are forms of cost-sharing, but one varies with the size of the bill and the other is a flat fee set in the contract. Each counts toward the plan's annual out-of-pocket maximum, so the insured's total exposure is capped once both are added up for the year.
Why the other options are wrong
- B) This reverses the two concepts: coinsurance is the percentage share that varies with the size of the charge, while the copayment is the fixed dollar amount collected for a specific service.
- C) Cost-sharing is incurred along the way, before the out-of-pocket maximum is reached; the maximum caps the insured's annual total but does not trigger either type of payment.
- D) Neither coinsurance nor copayments are tied to particular classes of service; each applies to covered benefits as the plan provides, and the same plan commonly uses both.
Memory hook
Coinsurance = my 20 percent. Copay = my 30 bucks. Percentage vs flat fee: one grows with the bill.