Question

A health insurance policy has $500 deductible and 80-20 coinsurance provision which applies up to $5,000 losses above the deductible. How much would the insurer pay for a $12,500.

Answer 1

The health insurer would pay $5,600 for a $12,500 bill, based on the $500 deductible and 80-20 coinsurance provision.

Step-by-step explanation:

To calculate how much the insurer would pay for a $12,500 bill, we need to consider the deductible and coinsurance provision. The deductible is the amount that the policyholder must pay out-of-pocket before the insurance company pays the rest. In this case, the deductible is $500. The coinsurance provision applies up to $5,000 of losses above the deductible, with an 80-20 split. This means that the insurer pays 80% of the costs and the policyholder pays 20%.

For a $12,500 bill, here's how we calculate it:

1. First, subtract the deductible from the total bill: $12,500 - $500 = $12,000.
2. We then subtract the $5,000 covered by the coinsurance provision: $12,000 - $5,000 = $7,000.
3. The insurer pays 80% of the remaining $7,000: $7,000 x 0.8 = $5,600.

Therefore, the insurer would pay $5,600 for a $12,500 bill, while the policyholder would be responsible for the remaining amount.