What term describes an indemnity plan limitation that requires a small amount to be paid by the insured before benefits kick in?

The term that describes an indemnity plan limitation requiring the insured to pay a small amount before benefits are payable is known as a deductible. A deductible is the specified amount that an individual must pay out-of-pocket for healthcare services before the insurance company begins to cover costs. It acts as a cost-sharing mechanism that helps ensure that the insured is responsible for a portion of their healthcare expenses, promoting responsible use of medical services.

In contrast to the other terms: capitation usually refers to a payment arrangement for healthcare services, where a provider receives a set amount per patient regardless of how many services are provided. Coinsurance is a cost-sharing agreement where the insured pays a percentage of the costs for covered services after the deductible has been met. An out-of-pocket maximum is the most that an insured will have to pay for covered services in a plan year; once this limit is reached, the insurance company covers 100% of the remaining costs.

Understanding the role of a deductible is crucial for evaluating how health plans manage costs and encourage consumers to participate in their healthcare spending decisions.