Question

Suppose that Nathan’s employer provides a health insurance policy that pays 80 percent of expenses over...

Suppose that Nathan’s employer provides a health insurance policy that pays 80 percent of expenses over the first $100. (a) What term is used to refer to the $100 threshold? (b) What term is used to refer to the 20 percent payment beyond the $100 threshold? (c) If Nathan incurs $1,000 in expenses, how much must Nathan pay out-of-pocket?

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Answer #1

(a) What term is used to refer to the $100 threshold?

  • It is called deductibles

(b) What term is used to refer to the 20 percent payment beyond the $100 threshold?

  • It is called co-insurance.

(c) If Nathan incurs $1,000 in expenses, how much must Nathan pay out-of-pocket?

  • First 100 dollar shall not be paid by employers.
  • Out of next 900, only 80 % shall be paid by employer insurance.
  • Hence, 80% of 900 = $ 720 is paid by insurance company.
  • By Nathan = 100 +180 (900 -720)

  = $280

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