Dan has a major medical expense policy with a $200 deductible and an 80/20 coinsurance provision. After incurring $100 in November and $400 in January, what will the insurer pay under the carryover provision?

Dan has a major medical expense policy with a $200 deductible and an 80/20 coinsurance provision. After incurring $100 in November and $400 in January, what will the insurer pay under the carryover provision?

• A. $200
• B. $240
• C. $300
• D. $400

Answer: (B)

In this scenario, we need to analyze how major medical expense policies work, particularly regarding deductibles and coinsurance, and understand how the carryover provision applies. Dan’s policy has a $200 deductible, which means he needs to pay the first $200 of his medical expenses out of pocket before the insurance company starts to contribute. After meeting the deductible, the policy applies a coinsurance provision of 80/20. This means the insurer will cover 80% of eligible expenses beyond the deductible, while Dan will be responsible for the remaining 20%. In November, Dan incurred $100 in medical expenses. Since this amount is below the $200 deductible, Dan pays the full $100. Therefore, none of the insurer’s payment or carryover provision would apply here since the deductible hasn’t been met. In January, Dan incurs $400 in medical expenses. When applying the deductible to this amount, the first $200 still needs to be paid by Dan, which leaves him with $200 in eligible expenses for insurance to cover. With the $200 deductible met, the coinsurance kicks in. The insurer will cover 80% of the remaining $200, which calculates to $160 (0.80 x $200). Additionally, it

In this scenario, we need to analyze how major medical expense policies work, particularly regarding deductibles and coinsurance, and understand how the carryover provision applies.

Dan’s policy has a $200 deductible, which means he needs to pay the first $200 of his medical expenses out of pocket before the insurance company starts to contribute. After meeting the deductible, the policy applies a coinsurance provision of 80/20. This means the insurer will cover 80% of eligible expenses beyond the deductible, while Dan will be responsible for the remaining 20%.

In November, Dan incurred $100 in medical expenses. Since this amount is below the $200 deductible, Dan pays the full $100. Therefore, none of the insurer’s payment or carryover provision would apply here since the deductible hasn’t been met.

In January, Dan incurs $400 in medical expenses. When applying the deductible to this amount, the first $200 still needs to be paid by Dan, which leaves him with $200 in eligible expenses for insurance to cover. With the $200 deductible met, the coinsurance kicks in. The insurer will cover 80% of the remaining $200, which calculates to $160 (0.80 x $200).

Additionally, it