CMFAS HI Common Policy Provisions question: covered hospital bill of S$12,000

CMFAS HICommon Policy Provisions

A Medical Expense Insurance policy has a per-annum deductible of S$2,000 (as yet unused) and a 10% co-insurance. The insured incurs a covered hospital bill of S$12,000, which is within all applicable limits. How much will the insurer pay?

A S$9,000
B S$10,000
C S$8,800
D S$12,000

Show the answer and explanation

Answer: A. S$9,000

First deduct the deductible: S$12,000 − S$2,000 = S$10,000 claimable. Then apply the 10% co-insurance to the claimable amount: 10% × S$10,000 = S$1,000. The insurer pays S$10,000 − S$1,000 = S$9,000 (the insured bears S$2,000 + S$1,000 = S$3,000).

Common mistake

Co-insurance is applied to the amount in excess of the deductible (S$10,000), not to the full bill — applying 10% to S$12,000 wrongly gives S$8,800.

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