Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A policy has a $1,000 annual deductible, 80/20 coinsurance, a $50 copay for office visits, and a $5,000 maximum out-of-pocket. Which statement correctly describes how these cost-sharing features work together?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In a typical major medical plan, the insured first satisfies the deductible (paying 100% of covered expenses up to that amount), then shares remaining covered costs at the coinsurance percentage (the insured's share being 20% under 80/20) until total out-of-pocket spending reaches the maximum out-of-pocket limit. Copays for services such as office visits apply separately. After the maximum, the insurer pays 100% of covered expenses for the rest of the year.
Why the other options are wrong
- B) A copay is a fixed charge for a specific service such as an office visit; the deductible applies to other covered expenses — they do not both apply fully to every visit.
- C) After the deductible, coinsurance still applies; 100% coverage begins only after the maximum out-of-pocket is reached.
- D) The maximum out-of-pocket is a cap on the insured's total cost-sharing for the year, not a threshold that must be paid before any coverage begins.
Memory hook
Spend up (deductible) → split the tab (coinsurance) → cap it (max OOP). Three thresholds, in that order.