Question

Ronald Roth started his new job as controller with Aerosystems today. Carole, the employee benefits clerk, gave Ronald a packet that contains information on the company’s health insurance options. Aerosystems offers its employees the choice between a private insurance company plan (Blue Cross/Blue Shield), an HMO, and a PPO. Ronald needs to review the packet and make a decision on which health care program fits his needs. The following is an overview of that information. a) The monthly premium cost to Ronald for the Blue Cross/Blue Shield plan will be $57.73. For all doctor office visits, prescriptions, and major medical charges, Ronald will be responsible for 20 percent and the insurance company will cover 80 percent of covered charges. The annual deductible is $800. b) The HMO is provided to employees free of charge. The copayment for doctors’ office visits and major medical charges is $20. Prescription copayments are $10. The HMO pays 100 percent after Ronald’s copayment. There is no annual deductible. c) The POS requires that the employee pay $39.91 per month to supplement the cost of the program with the company’s payment. If Ron uses health care providers within the plan, he pays the copayments as described above for the HMO with no annual deductible. He can also choose to use a healthcare provider out of the network and pay 20 percent of all charges after he pays a $800 deductible. The POS will pay for 80 percent of those covered visits. Ronald decided to review his medical bills from the previous year to see what costs he had incurred and to help him evaluate his choices. He visited his general physician five times during the year at a cost of $160 for each visit. He also spent $80 and $104 on two prescriptions during the year. What total costs will Ronald pay if he enrolls in the HMO plan?

Personal Annual Cost $______________

Answer 1

previous year medical bill
Phisician's visit	160*5	$800
prescription 1		$80
prescription 2		$104
total		984
Blue cross
annual premium	$57.73 * 12	$692.76
Deductible		$800
previous year medical bills		$984
20% of above $800	(984-800)*20%	$36.8
total cost		2513.56
HMO
physician visit	20 * 5	100
prescription 1		$10
prescription 2		$10
total		$120
POS	case1
Annual Premium	$39.91 * 12	$478.92
copayment on physician's visit	$20 * 5	$100
presciption 1		$10
prescription 2		$10
total cost		$618.92
case 2 (outside the network plan)
Annual Premium	$39.91 * 12	478.92
Deductible		$800
last year medical bills		$984
20% of above $800		$36.8
total cost		$2299.72

Ronald will pay using the sample medical expenses provided if he were to enroll

Personal Annual  cost = Annual premiums + Deductible + Co - insurance cost

= (Monthly premium * 12) + Deductible + (Coinsurance expenses * Coinsurance percent)

= ($57.73* 12) + $800 + ($984 - $800)*20% = $1,529.52

Personal Annual costs is $1,529.52

total cost for Ronald if he enrolls in the HMO plan--

doctor's visits $20* 5 = $100

Prescription $10 * 2 = $20

total = $120