Question

Stephanie was injured in a car accident and was rushed to the emergency room. She received stitches for a facial wound and treatment for a broken finger. Under Stephanie’s PPO plan, emergency room care at a network hospital is 80 percent covered after the member has met a $350 annual deductible. Assume that Stephanie went to a hospital within her PPO network. Her total emergency room bill was $820. This is Stephanie's first medical expense of the year.

Required:
(a) What amount did Stephanie have to pay?
(b) What amount did the PPO cover? (Do not round intermediate calculations.)

Answer 1

a) Stephanie have to pay $444

b) Stephanie PPO covered $376

Step-by-step explanation:

(a) Copay expenses = Total expenses − Annual Deductible

= $820 - $350 = $470

Cost = Annual Deductible + [(1 − Insurance percentage) × Copay expenses]

= $350 + [(1 - 0.80) × $470] = $444

Stephanie have to pay $444

(b) Insurance payment = Insurance percent × Copay expenses = 0.80 × $470 = $376

Stephanie PPO covered for 80% of her copay expenses = $376

Therefore, Stephanie PPO covered $376