S. Norm and Sophia Panifil are married and have purchased a comprehensive major
ID: 2549193 • Letter: S
Question
S. Norm and Sophia Panifil are married and have purchased a comprehensive major medical policy which covers them and their two sons, Albert and Bartholomew.. The policy has a $500 calendar year family deductible, a $2,500 stop-loss provision, and an 80/20 coinsurance clause. The following losses occur: On January 1, 2016 Sophia was treated for an infection at a cost of $200, on July 1,2016 Albert was treated for an injury suffered while watersking at a cost of $10,000, on December 5, 2016 Norm underwent eye surgery at a cost of $5,000, and on January 5, 2017 Bartholomew was treated for a broken leg at a cost of $2,000 How will each of these losses be divided between the insurer and the insured? (Show all keystrokes, calculations, etc.)Explanation / Answer
Calculation of total expenses to be paid by the insurer -
There is 80/20 coinsurance clause provision, which means that 80% shall be covered by the insurance company and 20% shall be paid by the insured.
Also, there is 500 calendar year family deductible which means that the insured which pay this amount before the insurance company starts paying.
Janiuary 1, 2016- First claim is made for treatment of Sophia for infection at a cost of $200. 80% of the cost i.e. 160 (200*80%) is deductible and the insurance company will pay nothing.
The deductible balance is $500- $160 = $340
July 2016- Claim is made for treatment of Albert for an injury at a cost of $ 10,000. At this date the family has a deductible balance of $340.
Therefore the total amount paid by the insurer is $ 2500 + $6400 = $8900
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