California Property & Casualty Broker-AgentHealth InsuranceMedium
An individual is covered by a health insurance policy with a $1,000 deductible and 80/20 coinsurance. After meeting their deductible, they incur $5,000 in covered medical expenses. How much will the insurance company pay for these expenses?
- A$800
- B$4,000
- C$3,200
- D$5,000
Show answer & explanationAnswer & explanation
Correct answer: B. $4,000
The client has already met their $1,000 deductible. The remaining $5,000 in expenses are subject to coinsurance. With 80/20 coinsurance, the insurance company pays 80% of the $5,000. Calculation: $5,000 * 0.80 = $4,000.
Why the other options are wrong
- A. This would be 20% of $4,000, which is incorrect.
- C. This would be 80% of $4,000, which is incorrect as the full $5,000 is subject to coinsurance after the deductible.
- D. The insurer would only pay 100% if the out-of-pocket maximum had been reached, which is not stated.
Coinsurance Calculation
The percentage of covered medical expenses an insured must pay after meeting their deductible, shared with the insurer.
- Applied after the deductible is satisfied.
- Typically expressed as a ratio (e.g., 80/20).
- Insurer pays the larger percentage, insured pays the smaller.
Memory trick: Deductible first, then coinsurance splits the rest.