Question

Sarah’s comprehensive major medical health insurance plan at work has a deductible of $750. The policy pays 85 percent of any amount above the deductible. While on a hiking trip, she contracted a rare bacterial disease. Her medical costs for treatment, including medicines, tests, and a six-day hospital stay, totaled $8,893. A friend told her that she would have paid less if she had a policy with a stop-loss feature that capped her out-of-pocket expenses at $3,000. The policy with the stop-loss feature has the same deductible and coinsurance requirement as Sarah's current policy.

Determine which policy would have cost Sarah less and by how much. (Round your intermediate calculations and final answer to 2 decimal places.)

• Current policy

• Stop-loss feature

• No difference in Sarah's cost for this claim.

difference amount=

Answer 1

Current policy-

Coinsurance expenses = Expenses incurred - deductible

Coinsurance expenses = $8893 - $750 = $8143

Cost to Sarah in the current policy = Deductible + (100% - 85%) * Coinsurance expenses

Cost to Sarah in the current policy = $750 + (0.15 * $8143) = $1971.45

Even if Sarah would have used the policy with stop-loss feature, her expenses would have been the same since it is less than $3000.

The stop loss feature would save money for Sarah if she has future claims in the year.