Covered California Certified Enroller Practice Exam

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What is defined as cost sharing?

  1. Monthly premiums paid to insurance companies

  2. Out-of-pocket costs for covered services

  3. Income-based assistance programs

  4. Tax deductions for healthcare expenses

The correct answer is: Out-of-pocket costs for covered services

Cost sharing refers to the portion of healthcare expenses that the insured person is responsible for paying out of their own pocket when they access covered services. This can include various out-of-pocket costs such as copayments, coinsurance, and deductibles. These costs are typically separate from premiums, which are the regular payments made to insurance companies for coverage, and they represent the financial responsibility that individuals have when utilizing their insurance benefits. Options related to monthly premiums, income-based assistance programs, and tax deductions do not fit the definition of cost sharing. Monthly premiums are fixed fees for maintaining insurance coverage, and they do not vary based on the amount of services used. Income-based assistance programs typically refer to subsidies or financial aids that help individuals afford insurance or healthcare services, rather than costs incurred directly by the insured during service use. Tax deductions for healthcare expenses are financial incentives that may reduce taxable income, but do not directly relate to the day-to-day costs incurred when accessing healthcare services. Thus, identifying out-of-pocket costs for covered services as cost sharing accurately encapsulates the concept within the context of health insurance.