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?
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Correct answer: B. $1,350
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|
|Coinsurance to stop-loss limit||$1,000 (20% of $5,000)||$4,000 (80% of $5,000)|
|Above stop-loss limit||$0||$4,650|
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).