A contractor's employee is injured and requires $75,000 in medical treatment. The contractor's workers' compensation policy has a $500 deductible. How much will the insurance pay?
Correct Answer
A) $75,000
Workers' compensation insurance pays 100% of medical costs regardless of deductibles, which typically apply only to wage replacement benefits.
Why This Is the Correct Answer
Workers' compensation insurance pays 100% of covered medical expenses — the deductible structure in workers' comp policies applies to wage replacement (indemnity) benefits, not medical treatment. Therefore, the full $75,000 in medical costs is covered by the insurer.
Why the Other Options Are Wrong
Option B: $74,500
$74,500 incorrectly subtracts the $500 deductible from the medical benefit. This would be the calculation for a standard health insurance policy, but workers' comp medical benefits are paid in full without a medical deductible applied by the employee.
Option C: $72,500
$72,500 subtracts $2,500, which does not correspond to any stated deductible or standard calculation. This is a distractor designed to catch candidates who misremember the deductible amount.
Option D: $74,000
$74,000 subtracts $1,000 — again, no basis in the facts given. This distracts candidates who confuse the deductible amount or apply it incorrectly.
Memory Technique
Workers' comp MEDICAL = 100% paid, no deductible subtracted. Think of it as 'full medical coverage' — the injured worker never pays out-of-pocket for medical treatment.
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