Question

Marco's medical expense policy states that it will pay a flat $75 per day for room and board for each day of hospitalization. The policy pays benefits on which basis?

A) Invoice
B) Reimbursement
C) Service
D) Indemnity

Answer 1

Marco's medical expense policy operates on an indemnity basis, providing a set daily amount during hospitalization irrespective of actual costs.

Step-by-step explanation:

Marco's medical expense policy, which pays a flat $75 per day for room and board for each day of hospitalization, pays benefits on an indemnity basis. This type of policy provides a predetermined amount of money directly to the insured person for each day of hospitalization, regardless of the actual expenses incurred. This stands in contrast to other types of policies such as reimbursement, where the insurance company would pay back the actual costs based on receipts provided by the insured.