Question

Walter Burton was a self-employed window washer earning approximately $700 per week. One day, while cleaning windows on the eighth floor of the Commercial Bank Building, he tripped and fell from the scaffolding to the pavement below. He sustained severe multiple injuries but miraculously survived the accident. He was immediately rushed to the local hospital for surgery. He remained there for 60 days of treatment, after which he was allowed to go home for further recuperation. During his hospital stay, he incurred the following expenses: surgeon, $2,500; physician, $1,000; hospital bill for room and board, $250 per day; nursing services, $1,200; anesthetics, $600; wheelchair rental, $100; ambulance, $150; and drugs, $350. Walter has a major medical policy that has a $3,000 deductible clause, an 80 percent co-insurance clause, internal limits of $180 per day on hospital room and board, and $1,500 as a maximum surgical fee. The policy provides no disability income benefits.

Explain the policy provisions as they relate to deductibles, co-insurance, and internal limits.

How much should Walter recover from the insurance company? How much must he pay out of his own pocket?

Would any other policies have offered Walter additional protection? What about his inability to work while recovering from his injury?

Based on the information presented, how would you assess Walter’s health care insurance coverage? Explain.

Answer 1

Particulars	Amount	Insurance Eligibility(Internal Limits)
Surgeon Fee	2500	1500
Physician fee	1000	1000
Hospital (250*60)	15000	10800(180*60)
Nurse services	1200	1200
Anesthetic	600	600
wheel Chair	100	100
Ambulance	150	150
Drugs	350	350
Total	20900	15700

Total deductible he pays is 3000.

Total amount left when insurance begins:17900 (20900-3000). So 3000 has to be paid to the insurance as the deductible.

So he has to pay 20% of 17900 =3580.(out of his own pocket )

Remaining 80% is paid by the insurance.(Co-insurance is paid by the company So 80%)

So total amount he need to receive from the insurance is 14320 (0.8*17900).(Amount to be recovered from the insurance)

If he considers any insurance lessening the deductible with similar benefits then the insurance would have covered a higher amount.

Had he chosen disability income insurance it would have provided wage replacement benefit that cover on an average 60% of employee earnings when he could not work because of the disability.