Question

Becky's comprehensive major medical health insurance plan at work has a deductible of $740. The policy pays 65 percent of any amount above the deductible. While on a hiking trip, Becky contracted a rare bacterial disease. Her medical costs for treatment, including medicines, tests, and a five-day hospital stay, totaled $9,253. 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 $4,800. 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 b. Would a $4,800 stop-loss provision on her current policy have reduced Becky's cost for this illness? (Click to select)

Answer 1

a)
Becky's co-insurance cost = (Claim amount - Deductible) * (1 - 0.65)
= ($9,253 - $740) * 0.35
= $8,513 * 0.35
= $2,979.55

Becky's co-insurance cost = $2,979.55
Deductible = $740
Total personal cost = Becky's co-insurance cost + Deductible = $2,979.55 + $740 = $3,719.55

b)
No.
Since the personal cost was less than $4,800 the stop-loss provision would not have reduced Becky’s cost.