Dan has a major medical expense policy with a $200 deductible and an 80/20 coinsurance provision. After incurring $100 in November and $400 in January, what will the insurer pay under the carryover provision?

In this scenario, we need to analyze how major medical expense policies work, particularly regarding deductibles and coinsurance, and understand how the carryover provision applies.

Dan’s policy has a $200 deductible, which means he needs to pay the first $200 of his medical expenses out of pocket before the insurance company starts to contribute. After meeting the deductible, the policy applies a coinsurance provision of 80/20. This means the insurer will cover 80% of eligible expenses beyond the deductible, while Dan will be responsible for the remaining 20%.

In November, Dan incurred $100 in medical expenses. Since this amount is below the $200 deductible, Dan pays the full $100. Therefore, none of the insurer’s payment or carryover provision would apply here since the deductible hasn’t been met.

In January, Dan incurs $400 in medical expenses. When applying the deductible to this amount, the first $200 still needs to be paid by Dan, which leaves him with $200 in eligible expenses for insurance to cover. With the $200 deductible met, the coinsurance kicks in. The insurer will cover 80% of the remaining $200, which calculates to $160 (0.80 x $200).

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