Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

Question 2 (25 marks) Cathy likes hiking with friends during week-ends. A month ago, she was accidentally injured when she was climbing up a mountain

image text in transcribed
image text in transcribed
Question 2 (25 marks) Cathy likes hiking with friends during week-ends. A month ago, she was accidentally injured when she was climbing up a mountain in the Sharp Peak Hiking Trail. She needed to stay in the hospital for an operation. The following expenses were incurred for her medical treatment: 13 days of hospitalisation at $880 per day $36,000 surgeon's fee $42,000 operating theatre $4,700 in post-hospitalisation outpatients visits (9 times) 22 days of home nursing service totalling $20,800 AND $16,500 physiotherapy treatment Below is the coverage provided by Cathy's health insurance plan, a Certified Plan under the Voluntary Health Insurance Scheme (VHIS). Coverage Room and board Room and board (intensive care unit) Home nursing fee Physiotherapy fee Pre- and post-hospitalisation outpatient visits Surgeon's fee Operating theatre Hospital cash Maximum benefit amount (HKS) $800 per day (up to 120 days) $2,000 per day (up to 30 days) $760 per day (up to 31 days) $10,000 Maximum number of visits: 10 visits Co-payment per visit: S100 $35,000 $45,000 $600 per day (up to 60 days) Cathy bought a term life insurance policy 7 years ago and paid the premium on monthly basis. She paid the premiums on time since her policy was in force. Three days ago, Cathy found that her life insurance premium has been overdue for 3 weeks because she did not check the mail box since hospitalization. She worries missing the premium payment would result in the termination of the life insurance policy. (a) Calculate the total dollar amount borne by Cathy for this injury. Each item of benefits and its costs should be shown clearly in your working. (10 marks) (b) An insurance agent offers Cathy another health insurance plan that reimburses actual medical expenses only. It includes a $900 deductible on the total amount of medical expenses incurred, a 15% coinsurance, and an out-of-pocket limit of $20,000. How much dollar amount borne by Cathy for the medical treatment of this injury if she enrolls in this health insurance plan? Show all working, (5 marks) (c) Cathy was told that premiums paid for the Certified Plans under the VHIS are tax-deductible. Briefly explain to Cathy the scope, eligibility and claim requirement of the tax-deduction. (5 Marks) (d) Advise Cathy (1) whether her life insurance policy would be terminated due to the delay of premium payment for 3 weeks, and (ii) the appropriate action she should take. Your answer should make reference to a provision in a typical life insurance policy

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Accounting

Authors: Fred Phillips, Robert Libby, Patricia Libby

5th edition

978-0078025914

Students also viewed these Accounting questions