Part 5 Coinsurance Provisions

[Plant Food]

Anyone else notice this? From Personal Insurance, page 12.10:

Assume that Michelle has a comprehensive major medical plan with a $1 million lifetime limit, an 80 percent coinsurance percentage, and a $500 calendar-year deductible. She incurs covered medical expenses of $20,500 during the calendar year. How much will the insurer pay?


From Insurance to Value, page 1:

A health insurance policy has a $500 deductible and a 20% coinsurance clause. If the insured incurs $1,000 of covered medical expenses in the policy year, what amount does the insurer pay?


The answers are $16,000 and $400, respectively.

[Utanapishtim]

Yeah, I'd noticed that too. Health insurance generally seems to refer to the insurer's portion as the coinsurance %, whereas P&C insurance is the other way around.

I've generally solved it by assuming it means whichever way has the insurer responsible for the larger portion (:

[Plant Food]

So we'll get another dual answer MC question, like last year's #9 (they didn't say whether or not the deductible was included in the stop-loss.)

What would suck is a MC with only one of the answers. Then someone could do it correctly, not see their answer, and think the question's defective and/or spend time trying to figure out what they did wrong.

[Utanapishtim]

Actually, I suspect anyone asking a health question would use the first method. In Insurance to Value, Anderson only touches on it peripherally in her introduction, doesn't she? So she states it using the interpretation of coinsurance consistent with the other examples in her paper, even though it's really a different beast.

You do make a good point though, it might be strong enough to reject a MC question if you were to argue that interpretation.