What is the formula used to calculate amount paid by PIP in the scenario of a medical bill?

The formula that accurately represents the amount paid by Personal Injury Protection (PIP) in the case of a medical bill is calculated by taking the total medical bills, subtracting the deductible, and then multiplying the result by 80%.

This approach makes sense because PIP is designed to cover medical expenses related to injuries sustained in an accident, but it often requires the insured to cover a certain amount, known as the deductible, before PIP kicks in. By subtracting the deductible from the total bills, you are effectively determining the amount that is eligible for coverage under the PIP policy. Subsequently, multiplying by 80% reflects the percentage of the remaining eligible costs that the insurance will cover, aligning with typical state-mandated PIP benefits.

This calculation method is commonly used in many auto insurance policies to ensure fair and clear reimbursement of claims incurred due to medical expenses arising from vehicular accidents. Other options do not accurately reflect the typical structure of PIP benefits as they either miscalculate the percentage or do not appropriately account for the deductible in relation to the total medical bills.