Question

The hospital has increased its rate to $3000 for knee replacement. The insurance company has increased the deductible to $1500. What is the new allowed rate paid by the insurance company? What does the insured pay? What does the insurance company pay on behalf of the insured?

Answer 1

Deductible is the amount of expense paid in advance by the insured for the effect of the policy is in use.

New allowed amount = Expense – Deductible = $3,000 - $1,500 = $1,500

New rate = (New allowed amount / Expense) × 100

                = ($1,500 / $3,000) × 100

                = 50% (Answer)

The insured should pay only the amount of deductible, $1,500 (Answer)

The insurance company should pay the rest of the amount, which is the new allowed amount (as calculated above), $1,500 (Answer)