Chuck's health insurance requires payment of an annual deductible of $500 per person or $1,000 per family. After meeting the deductible, he must pay 20% of covered charges until he reaches $4,200 out of pocket, after which the insurer will pay 100% of the costs. Chuck has had no other claims during the year. Zoey, his daughter, fell from a playground swing set and requires emergency surgery. The hospital stay costs $20,000. How much will he end up paying out of pocket?

Question

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Chuck will pay the $1,000 family deductible first. After that, he pays 20% of the remaining $19,000 ($20,000 - $1,000), which is $3,800. His total out-of-pocket cost is $1,000 + $3,800 = $4,800, but since his maximum out-of-pocket is $4,200, he will only pay $4,200.

Chuck's Health Insurance Requires Payment of an Annual Deductible of $500