An insured who is covered by a major medical policy with an 80/20 Coinsurance clause and a $500 deductible is hospitalized after a hiking accident. If the covered medical expenses total $1,500, the insured will pay a MAXIMUM of:

Rationale

The insured will pay a MAXIMUM of $700.

After meeting the $500 deductible, the insured is responsible for 20% of the remaining expenses, up to the policy's out-of-pocket maximum. With medical expenses totaling $1,500, the insured will cover the deductible plus 20% of the remaining $1,000.

A ($0) YOUR ANSWER

This choice is incorrect because the insured must pay the $500 deductible before the coinsurance clause applies.

B ($200) YOUR ANSWER

This choice is incorrect because it only considers the 20% coinsurance amount without factoring in the $500 deductible that must be paid first.

D ($1,000) YOUR ANSWER

This choice is incorrect because it miscalculates the coinsurance amount after the deductible. The insured pays $500 deductible plus 20% of the remaining $1,000 in expenses, totaling $700.

Conclusion

In this scenario, the insured's out-of-pocket costs are determined by the $500 deductible and the 20% coinsurance clause. After meeting the deductible, the insured is responsible for 20% of the remaining covered expenses until reaching the policy's out-of-pocket maximum. In this case, with medical expenses totaling $1,500, the insured will pay a maximum of $700, consisting of the $500 deductible and 20% of the remaining $1,000.

An insured who is covered by a major medical policy with an 80/20 Coinsurance clause and a $500 deductible is hospitalized after a hiking accident. If the covered medical expenses total $1,500, the insured will pay a MAXIMUM of:

The insured will pay a MAXIMUM of $700.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test