Horatio has to pay $50 out of each paycheck to his insurance company. He had a medical procedure that he had to pay out $1000 for. The next time he had the procedure, his insurance company covered its entire cost.

A premium is the regular amount someone pays to keep insurance coverage, so the $50 taken from each paycheck is his premium. A deductible is the amount he must pay for covered medical care before insurance begins paying; the $1,000 he paid for the first procedure fits that description. Once he had met the deductible, the insurer covered the next procedure’s full cost.

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