Georgia Navigator Practice Exam

What does the term "premium" refer to in health insurance?

1. The total cost of healthcare services

2. The amount paid by an insurer to providers

3. The monthly fee for purchasing insurance

4. The deductible amount before claims are paid

The correct answer is: The monthly fee for purchasing insurance

The term "premium" in health insurance specifically refers to the monthly fee that an individual pays to purchase and maintain their insurance coverage. This cost is paid regardless of whether or not medical services are used, and it serves as the fundamental financial commitment required to ensure access to health benefits through an insurance plan. Understanding what constitutes a premium is essential for consumers, as it directly impacts their budgeting for healthcare costs. The premium is separate from other expenses associated with health insurance, such as deductibles and out-of-pocket costs, which can lead to confusion about the total cost of being insured. In contrast, options discussing the total cost of services, payments to providers, or the deductible amount focus on different aspects of the healthcare financial structure and are not synonymous with the definition of a premium.