Question

Problem 11-7 Evaluating Health Insurance Options (L011. 4)

Ronald started his new job as controller with Aerosystems today, Carole, the employee benefits clerk, gave Ronaldo 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), on HMO, and a PPO, Ronald needs to review the pocket and make a decision onwhich health care program fits his needs. The following is an overview of that information

Answer 1

Based on the plan that Ronald chooses, the annual medical costs that he will pay using the sample medical expenses is $1,109.08.

What is Ronald's annual medical cost?

This can be found as:

= Annual premium + Deductible + Total coinsurance cost

Annual premium is:

= 43.34 x 12 months

= $520.08

Total coinsurance cost:

= (((Physician visits x Cost per visit) + Cost of prescription) - Deductible) x Coinsurance percentage)

= (((5 x 110) + (66 + 90) - 156) x 25%)

= $39

Annual medical cost:

= 520.08 + 550 + 39

= $1,109.08

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