Question

Barry has a medical plan with a $1,200 deductible, 20% coinsurance, and a $5,000 coinsurance cap. his allowable medical expenses during the past year are $18,000. how much of this amount will he have to pay out of pocket?

a. $3,360
b. $4,560
c. $3,600
d. $5,000

Answer 1

After paying a $1,200 deductible, Barry pays 20% in coinsurance on the remaining $16,800, which amounts to $3,360. However, since the question asked for the total out-of-pocket costs, the correct cumulative amount is $4,560, summing the deductible and coinsurance.

Step-by-step explanation:

Barry will have to pay $3,600 out of his pocket for his medical expenses.

Let's break down the costs step-by-step:

1. First, Barry pays the deductible of $1,200.
2. After the deductible, there is $16,800 left ($18,000 - $1,200).
3. Barry's plan has coinsurance of 20%, so he pays 20% of $16,800, which is $3,360.
4. However, there is a coinsurance cap of $5,000. Since $3,360 (20% of the remaining costs) is less than $5,000, Barry would pay $3,360.
5. Therefore, Barry’s total out-of-pocket expenses would be $1,200 (deductible) + $3,360 (coinsurance), which equals $4,560. Hence, the correct answer is b. $4,560.