Question

ecky's comprehensive major medical health insurance plan at work has a deductible of 760. The policy pays 80 percent of any amount above the deductible. While on a hiking rip, Becky contracted a rare bacterial disease. Her medical costs for treatment, including medicines, tests, and a five-day hospital stay, totaled $8,913. A friend told her that she would have paid less if she had a policy with a stop-loss feature that capped her out-of- pocket expenses at $3,100. a. Calculate the total amount Becky would pay under the current policy. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Becky's co-insurance cost Deductible Total personal cost Would a $3,100 stop-loss provision on her current policy have reduced Becky's cost for this illness? Yes O No Score answer < Prev 3 of 10 !!! Score juswer >

Answer 1

Question a: Calculate the total amount Becky would pay under the current policy.

Answer:

Deductible is the amount to be paid by the insured as specified in the health insurance policy, before the insurance company starts paying for the medical expenses.

Co-insurance is the amount to be paid by the insured, which is usually denominated in percentage of the total expense incurred in the medical treatment less the deductible amount already paid by the insured.

It is specified that the insurance pays 80% of the expense above the deductible. That means Becky's co-insurance cost is 20%.

Hence, Becky's co-insurance cost = 20% of (Total expenses - Deductible) = 20% of ($8913-$760) = $1630.60

Deductible as mentioned above = $760.00

Therefore Becky's personal Cost = $1630.60+$760.00 = $2390.60

Question b: Would a $3100.00 stop-loss provision on her current policy have reduced Becky's cost for this illness?

Answer: No

A stop-loss provision in a health insurance policy provides a maximum limit upto which the insured is mandated to pay towards the deductible and co-insurance components. If the insured has already paid upto that specified maximum limit, rest 100% of the medical expenses during the remaining insured period will be paid by the insurance company.

In the subject question, a $3100.00 stop-loss provision would not have reduced Becky's cost. This is because Becky has paid just $2390.60 toward deductible and co-insurance which is still short by ($3100.00-$2390.60)=$709.40. Hence Becky's cost would still be $2390.60.