Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Health InsuranceHard
A Florida resident is covered by an individual health insurance policy with a $1,000 deductible and 80/20 coinsurance. After meeting their deductible, they incur $5,000 in eligible medical expenses. What is the total out-of-pocket cost for the insured, assuming no out-of-pocket maximum has been met?
- A$1,800
- B$2,000
- C$1,000
- D$5,000
Show answer & explanationAnswer & explanation
Correct answer: B. $2,000
First, the insured pays the $1,000 deductible. After that, for the remaining $5,000 in expenses, the 80/20 coinsurance applies. The insured pays 20% of $5,000, which is $1,000. Total out-of-pocket is $1,000 (deductible) + $1,000 (coinsurance) = $2,000.
Why the other options are wrong
- A. Incorrect. This would be the deductible plus 16% of the expenses, not 20%. Or 80% of the expenses.
- C. Incorrect. This only accounts for the deductible, not the coinsurance.
- D. Incorrect. This would imply 100% out-of-pocket, which is not the case with coinsurance.
Health Insurance Coinsurance Calculation
Coinsurance is the percentage of eligible medical expenses an insured person pays after their deductible has been met, with the insurer paying the remaining percentage.
- Applies after the deductible is satisfied.
- Expressed as a ratio (e.g., 80/20, 70/30).
- Insured pays the second number in the ratio.
- Continues until an out-of-pocket maximum is reached.
Memory trick: Deductible first, then coinsurance, until the max is met.