(Appendices) Megan, age 28, is insured under an individual major medical policy. The plan has a calendar-year deductible of $1,500, a 25 percent coinsurance provision, and an annual out-of-pocket limit of $4,000. Megan recently had arthroscopic surgery on her knee, which she injured while playing softball. The surgery was performed in an outpatient surgical center. Megan incurred the following charges:

– Outpatient X-rays and diagnostic tests: $800

– Covered charges in the surgical center: $10,000

– Surgeon’s fee: $3,000

– Outpatient prescription drugs (generic): $200

– Physical therapy: $1,500 In addition, Megan could not work for two weeks and lost $2,000 in earned income.

a. Based on the above information, how much of the loss will be paid by the insurance company? Explain your answer.

b. Why is coinsurance used in a major medical policy?

c. Identify several exclusions in a typical major medical policy. LO12