Question

Lucy, an ER surgeon, buys a disability policy with a base benefit of $6,000 and as SIS offset benefit of $1,200. Diane becomes disabled and eventually receives $1,000 in Social Security disability benefits. How much will she receive from the insurance company after Social Security benefits begin?

A) $4,800
B) $6,000
C) $6,200
D) $7,200

Answer 1

Lucy will receive a total of $5,800 from her insurance policy after combining the base benefit and the reduction due to the Social Security disability benefits that she is receiving. The correct answer is B).

Step-by-step explanation:

The student's question is about calculating the disability insurance benefit amount for Lucy, an ER surgeon who becomes disabled. Lucy's insurance policy offers a base benefit of $6,000 and a Social Security Income (SSI) offset benefit of $1,200. If Lucy receives $1,000 in Social Security disability benefits, the amount paid by the insurance company is reduced by the SSI offset benefit. Thus, the insurer would pay Lucy her base benefit minus the allocated offset amount corresponding to her Social Security disability benefit.

To calculate this, you subtract the $1,000 Social Security benefit from the $1,200 SSI offset benefit, resulting in a $200 remainder of the SSI offset. You then subtract this $200 from the base benefit of $6,000, which gives you a total of $5,800 that the insurance company will pay. Therefore, the correct answer is B) $6,000 - $200 = $5,800