Life & Health Insurance Exam (National Portion)Policy Provisions, Options, and RidersMedium
A policyholder has a health insurance policy with a Deductible of $1,000 and an 80/20 Coinsurance clause. If the policyholder incurs $5,000 in covered medical expenses, how much will the policyholder be responsible for paying after the deductible is met?
- A$2,000
- B$1,000
- C$1,800
- D$800
Show answer & explanationAnswer & explanation
Correct answer: D. $800
First, the $1,000 deductible is paid. This leaves $4,000 in remaining expenses ($5,000 - $1,000). With an 80/20 coinsurance, the policyholder pays 20% of the remaining $4,000, which is $800.
Why the other options are wrong
- A. This would be 20% of the total $5,000, incorrectly applying coinsurance before the deductible.
- B. This is only the deductible amount, not the coinsurance portion.
- C. This would be the deductible plus the coinsurance ($1,000 + $800), but the question asks what the policyholder pays *after* the deductible is met.
Coinsurance Calculation
A provision in health insurance that stipulates the percentage of covered medical expenses the insured must pay after the deductible has been met, shared with the insurer.
- Applies after the deductible is satisfied.
- Expressed as a ratio (e.g., 80/20, 70/30).
- Insured pays the second number in the ratio (e.g., 20%).
- Can be subject to an out-of-pocket maximum.
Memory trick: Deductible FIRST, then COINSURANCE, then STOP-LOSS.