An individual has a major medical policy with a $5,000 deductible and an 80/20 coinsurance clause. If total covered medical expenses are $15,000, how much must the insured pay?

• A. $5,000
• B. $7,000
• C. $3,000
• D. $9,000

Answer: (B)

In a major medical policy, you first pay the deductible, and then coinsurance applies to the remaining eligible expenses. Here, total covered bills are 15,000. You must pay the deductible of 5,000 up front, so 10,000 of charges remain to be shared. With an 80/20 coinsurance, you cover 20% of that remaining 10,000, which is 2,000. Add your deductible: 5,000 + 2,000 = 7,000. The insurer would pay the remaining 8,000. This shows how deductible plus coinsurance combine to determine your out-of-pocket cost.