Mark, age 25, is insured under an individual major medical policy with a lifetime limit of $2 million. The plan has a calendar-year deductible of $500, 80-20 percent coinsurance, and an annual stop-loss limit of $2000. Mark recently had outpatient arthroscopic surgery on his knee, which he injured in a skiing accident. The surgery was performed in an outpatient surgical center. Mark incurred the following medical expenses.
Outpatient X-rays and diagnostic tests $700
Covered charges in the surgical center 9,800
Surgeon’s fee 3,000
Outpatient prescription drugs 300
Physical therapy expenses 700
In addition, Mark could not work for two weeks and lost $2000 in earnings.
1)Based on the above information, how much of the loss will be paid by the insurance company?
2) If Mark’s policy did not contain a stop-loss limit, how much will the insurance company pay? Show your calculations.