You have a $5,000 medical bill and health insurance with a $500 deductible. You also have a 80/20 co-insurance, meaning the insurance pays 80% and the insured pays 20%. What is your total out-of-pocket expense for the original $5,000 bill?
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Answer: To calculate your total out-of-pocket expense for the original $5,000 medical bill, you need to consider your $500 deductible and the 80/20 co-insurance.
Step 1: Deductible First, you pay the deductible. The deductible is the amount you pay before your health insurance starts to cover its share. In your case, the deductible is $500.
Step 2: Remaining Balance After Deductible Subtract the deductible from the total bill to find out how much will be subjected to the co-insurance. $5,000 (original bill) - $500 (deductible) = $4,500
Step 3: Co-Insurance Split Now, with the remaining $4,500, your insurance will pay 80% and you will pay 20%. To calculate your share:
20% of $4,500 = 0.20 x $4,500 = $900
Step 4: Total Out-of-Pocket Expense Finally, to get your total out-of-pocket expense, you need to add back your deductible to the amount you're paying after the deductible has been met.
Total out-of-pocket = Deductible + Your 20% co-insurance Total out-of-pocket = $500 + $900 = $1,400
Thus, your total out-of-pocket expense for the $5,000 bill would be $1,400.