Question

Let's say your health insurance plan has the following features:  

• Deductible: $500 • Coinsurance: 80/20 (you pay the 20%; insurance company pays 80%) • Out-of-Pocket Maximum: $5,000  

Now, let's say that you go to the hospital and incur $7,500 worth of medical expenses. How much do you have to pay out of pocket?  

1. What would be your out-of-pocket cost for $20,000 of annual medical expenses?

2. What would be your out-of-pocket cost for $40,000 of annual medical expenses?

Answer 1

first part;

medical expenses	7,500
less; deductible	(500)
net expense	7,000
amount of net expense to be met by policy holder ($7000*20%)	1,400
Total of out of pocket (500 deductible + 1400 met by policy holder)	1,900

second part;

medical expense	20,000
less; deductible	(500)
net expense	19,500
amount of net expense to be met by policy holder ($19,500*20%)	3,900
total out of pocket payment ($3900+500)	$4,400

third part;

medical expense	40,000
less; deductible	(500)
net expense	39,500
amount of net expense to be met by policy holder ($39,500*20%=>$7900) but subjected to a maximum of $5000	5000
total out of pocket payment (500+5000)	$5,500