Question

"David Chen was seriously injured in a snowboarding accidewnt that broke both his legs and an arm. His medical expenses included 8 days of hospitalization at $1,100 a day, $6,700 surgical fees, $7,300 in physician fees (incliuding tme in the hospital and six follow-up visits) $650 prescription meds. and $2,500 for physical therapy. If David has an indemnity plan that pays 80% of his charges with a $500 deductible, and has a $5000 stop-loss provision, how much will he have to pay oiut-of-pocket? Round to nearest dollar.

I have this question, the total I got is ($25,950 minus 500)X20%=5090.00 but answer sheet says it is wrong! Don't know if I need to consider "stop-loss) if so how?

Answer 1

Total Medical Expense = (1100 x 8) + 6700 +7300 + 650 + 2500

Total Medical Expense = 25,950

Amount to be paid by insurance company = (25950-500)x80% = 20,360

Balance to be paid by David = 25950 - 20360 = 5,590

However there is stop-loss provision.

Stop-loss provision in a health insurance policy along with a deductible states that the insured need not pay any percentage of the medical expenses once their out-of-pocket expenses have reached the specific amount or limit as indicated in the policy.

Therefore David need not pay more than 5000 out of eligible expense

Eligible expense = 25950 - Deductible = 25950 - 500 = 25450

David to pay max 5000 out of this.

Therefore amount to be paid by insurance company = 25450 - 5000 = 20450

Amount ot be paid by David = 5,500

Give a thumbs up if satisfied