.png?width=440&name=bryant_logo_lockup_edc_color%20(002).png){kind=logo}
This question was discussed in detail during the December 2020 episode of the BIF Bites podcast!
Todd has an unlimited major medical policy with a $350 deductible and 80/20 coinsurance to a $5,000 stop-loss. Todd has a claim of $10,000. How much must he pay out-of-pocket?
- $1,000
- $1,350
- $4,000
- $4,650
Scroll for answer...
Correct answer: B. $1,350
Instructor insight:
The total claim is $10,000. This brings the policy over the stop-loss limit. The payments from the Insured and Insurer can be determined as follows:
| Todd Pays | Insurer Pays | |
| Deductible | $350 | 0 |
| Coinsurance to stop-loss limit | $1,000 (20% of $5,000) | $4,000 (80% of $5,000) |
| Above stop-loss limit | $0 | $4,650 |
| Total | $1,350 | $8,650 |
To double check the calculation add the amount paid by Todd ($1,350) to the amount paid by the Insurance Company ($8,650), then subtract the total claim ($10,000). If the amount equals $0, the calculation is correct.
$1,350 + $8,650 - $10,000 = 0
CFP® Exam tip:
The CFP® Exam often tests concepts and definitions at the level of application by presenting a real-life scenario. Health Insurance coverage provisions are commonly tested in this manner. Specifically, CFP® Board may present a scenario in which the Health Insurance policy benefits will be accessed and ask the candidate to calculate the amounts paid by the insured and/or insurer. To do so with precision you must first have a clear understanding of the core policy provisions and definitions (i.e., deductible, coinsurance provision, stop-loss, and maximum-out-of-pocket).
