If J's Major Medical policy has a $2,000 deductible and an 80/20 coinsurance clause, what would J pay for a $10,000 hospitalization bill?

• A. 2,000
• B. 2,600
• C. 3,600
• D. 8,000

Answer: (C)

The key idea is how deductible and coinsurance work together. You first pay the deductible amount from the bill, and then coinsurance applies to the remaining charges, with you and the insurer sharing costs according to the given percentage.

For a $10,000 hospitalization bill: you pay the $2,000 deductible first, leaving $8,000 eligible for coinsurance. The coinsurance is 80/20, so you pay 20% of the remaining $8,000, which is $1,600. Add the deductible: $2,000 + $1,600 = $3,600. The insurer would pay 80% of the $8,000, or $6,400.