Elise's health insurance policy has a deductible of $500, a $20 copayment on doctor visits, and coinsurance of 10% on all expenses other than those for which there are copayments. She visited the doctor four times last year (doctor's fee is $40 per visit) and underwent a surgery that cost $3,000. If instead she had had a policy with a $1,000 deductible, a $10 copayment on doctor visits, and no coinsurance, which of the following is TRUE regarding her expenses (excluding the cost of the insurance) ? (A) With the higher deductible, she would have saved between $70 and $249 relative to what she paid with her actual policy. (B) With the higher deductible, she would have saved more than $250 relative to what she paid with her actual policy. (C) With the higher deductible, she would have spent at least $300 more than she paid with her actual policy. (D) With the higher deductible, she would have spent between $50 and $250 more than she paid with her actual policy.

Question

Nancy Stephens

Business

12 January, 15:05

Elise's health insurance policy has a deductible of $500, a $20 copayment on doctor visits, and coinsurance of 10% on all expenses other than those for which there are copayments. She visited the doctor four times last year (doctor's fee is $40 per visit) and underwent a surgery that cost $3,000. If instead she had had a policy with a $1,000 deductible, a $10 copayment on doctor visits, and no coinsurance, which of the following is TRUE regarding her expenses (excluding the cost of the insurance) ? (A) With the higher deductible, she would have saved between $70 and $249 relative to what she paid with her actual policy. (B) With the higher deductible, she would have saved more than $250 relative to what she paid with her actual policy. (C) With the higher deductible, she would have spent at least $300 more than she paid with her actual policy. (D) With the higher deductible, she would have spent between $50 and $250 more than she paid with her actual policy.

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Answers (1)

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Micheal Lindsey · Answer 1

The correct option is (c).

With the higher deductible, she would have spent at least $300 more than she paid with her actual policy

Explanation:

For her actual policy total expenses;

Deductible = $500

Copayment doctor visit = $20

Coinsurance of 10% = 10/100 * 500=$50

Doctor visit = $40 * 4 = $160

Surgery = $3000

Total expenses = $3730

With the higher deductible expenses;

Deductible = $1000

Copayment doctor visit = $10

Doctor visit = $40*4 = $160

Surgery = $3000

Total expenses = $4170

Difference in expenses = $4170-$3730 = $440

Therefore option (c) is the right option.

With the higher deductible, she would have spent at least $300 more than she paid with her actual policy