Barry has a medical insurance plan with a $250 deductible and a 20 percent employee co-payment above the deductible with an annual co-payment cap of $1,500. what is the total level of medical expenses he must reach each year before he can stop paying?

$7,750

Explanation:

Barry must first pay his deductible ($250) and then he has to pay a 20% copay on all expenses above the deductible, but the copay cap is $1,500, so the maximum copay that Barry needs to pay is $1,500. The $1,500 copay would represent a total medical expense of $7,500 (= $1,500 / 20%).

Si the total level of medical expenses that Barry must reach before he can stop paying = $250 + $7,500 = $7,750. At this amount Barry will have paid $250 (deductible) + $1,500 (copay) = $1,750

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