If M has a Major Medical policy with a $200 flat deductible and an 80% coinsurance clause, and a $2,200 eligible expense is incurred, how much will the insurer pay for this claim?

• A. $1,600
• B. $1,200
• C. $2,000
• D. $400

Answer: (A)

Major Medical policies combine a deductible with coinsurance, so you first pay the deductible, then the insurer shares the rest according to the coinsurance percentage.

With an eligible expense of 2,200 and a 200 deductible, you subtract the deductible: 2,200 − 200 = 2,000 remaining to be shared. The insurer covers 80% of that remaining amount, which is 0.80 × 2,000 = 1,600. The insured would be responsible for the deductible plus the 20% coinsurance on the remaining 2,000 (200 + 400 = 600 in this scenario). Therefore, the insurer pays 1,600.