Nick and Sheila Preston are married and have purchased a comprehensive major medical policy which covers them and their two sons, Wally and Brent. The policy has a: $500 calendar year family deductible,
a $2,500 stop-loss provision, and an
80% co-insurance clause.
The following losses occur:
A. On January 1, 2013, Sheila was treated for an infection at a cost of $200,
B. On July 1, 2013, Wally was treated for an injury suffered while waterskiing at a cost of $10,000
C. On December 5, 2013, Nick underwent eye surgery at a cost of $1,500, and
D. On January 5, 2014, Brent was treated for a broken leg at a cost of $2,000.
How much will the insurer pay for each of these losses?

a. $0

b. $7,760

c. $1,440

d. $1,200

Explanation:

a. The family have a $500 a year deductible so the $200 will go out from there.

The insurer will therefore pay $0.

b. The remaining Deductible of $300 ( 500 - 300) will be applied to this.

There is also the 80% Coinsurance clause which means the insurer will pay for 80% of the losses. In total the Insurance company will pay,

= (10,000 - $300) * 80%

= 9,700 * 80%

= $7,760

c. The Deductible has been used up so the Insurance company pays 80% of the loss.

= 80% * 1,500

= $1,200

However, the Stop-loss provision of $2,500 kicks in. This is the maximum amount that the family is to pay for any losses during the year.

So far on January 1 2013 and July 1 2013 they have paid,

= 200 + (10,000 - 7,760)

= $2,440

The maximum left till the family pays the maximum is,

= 2,500 - 2,440

= $60

The family will therefore pay only $60 meaning that the insurer will cover,

= 1,500 - 60

= $1,440

d. This is a new year so the Deductible resets back to $500.

Insurer will therefore pay,

= (2,000 - 500) * 80%

= 1,500 * 80%

= $1,200

i think the answer is a. science center.

you have to put the parentheses like this:

in fact, you have to perform the operation inside parentheses first, and then proceed in order: