Larry Has a Health Insurance Policy That Includes a Deductible

question 84

Multiple Choice

Larry has a health insurance policy that includes a deductible of $1,000 and a coinsurance of 20%. If his total bill is $7,000, how much will his insurance pay?

• A) $800
• B) $1,000
• C) $2,200
• D) $4,800
• E) $6,000

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Definitions:

Annual Interest

The interest amount accumulated over one year on borrowed funds or investments.

Effective-Interest Method

A way of calculating the amortized cost of a bond and the amount of interest expense over its life, reflecting the constant rate of interest over the period.

Bond Discount Amortization

The process of gradually writing off the discount on a bond over the life of the bond, reflecting the increase in its value as it nears maturity.

Carrying Value

The net amount at which an asset is valued on the balance sheet, taking into account depreciation, amortization, and impairment costs.