Questions 6, 7 and 8 are based on the following
Ronald Roth started his new job as Controller with
Aerosystems today. Carol, the employee benefits clerk, has given 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
Blue Cross/Blue Shield plan: The monthly premium cost to Ronald will be
$42.32. For all doctor office visits,
prescriptions, and major medical charges, Ronald will be responsible for 20%
and the insurance company will cover 80% of covered charges. The annual deductible is $500.
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B) The HMO is provided to employees free of charge. The co-payments for doctor’s office visits
and major medical charges are $10.
Prescription co-payments are $5.
The HMO pays 100% after Ronald’s co-payment. No annual deductible.
The POS requires that the employee pay $24.44 per
month to supplement cost of the program with the company’s payment. If Ronald uses health care providers within
the plan, he pays the co-payments as described above for the HMO. He can choose to use a healthcare provider
out of the service and pay 20% of all charges, after he pays a $500
deductible. The POS will pay 80% of
those covered visits. No annual
Ronald decided to review his medical bills from the
previous year to see what costs he incurred and
to help him evaluate his choices.
He visited his general physician four times during the year at a cost of
$125 for each visit. He also spent $65
and $89 on prescriptions during the year.
Using these costs as an example, what would Ronald pay for each of the
plans described above? (For the purposes
of the PPO computation, assume that Ronald visited a physician outside of the
network plan. Assume he had his
prescriptions filled at a network-approved pharmacy.)