Reference no: EM133045943

Max, age 28, is insured under an individual medical expense policy part of a preferred provider organization (PPO) network. The policy has a calendar-year deductible of $1000, 75/25 percent coinsurance, and an annual out-of-pocket limit of $2000. Max recently had outpatient arthroscopic surgery on his knee, which he injured in a skiing accident. The surgery was performed in an outpatient surgical center. Max incurred the following expenses. (Assume that Max's insurer approves the charges shown and that all providers are in the PPO network.)

• Outpatient X-rays and diagnostic tests $800
• Covered charges in the surgical center $12,000
• Surgeon's Fees $3000
• Outpatient prescription drugs $400
• Physical therapy expenses

In addition, Max could not work for two weeks and lost $2000 in earnings.

1. Based on the given information, how much of the expenses will be paid by the insurance company?
2. How much of the expenses will Max have to pay?
3. Assume that a surgeon who is not in the PPO network performed the surgery. Will Max's policy cover the fee? Explain your answer