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employee covered house plans are most likely to be? High deductible health plans with the savings options? HMO? PPO? traditional indemnity plans?

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Patrina Schowalter
Patrina SchowalterLv2
28 Sep 2019

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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. 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 percent and the insurance company will cover 80 percent of covered charges. The annual deductible is $500.

b. The HMO is provided to employees free of charge. The co-payment for doctor’s office visits and major medical charges is $10. Prescription copayments are $5. The HMO pays 100 percent after Ronald’s co-payment. There is no annual deductible.

c. The POS requires that the employee pay $24.44 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. He can also choose to use a health care provider out of the service and pay 20 percent of all charges after he pays a $500 deductible. The POS will pay for 80 percent of those covered visits. There is no annual deductible. 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 four times during the year at a cost of $125 for each visit. He also spent $65 and $89 on prescriptions during the year. (For the purposes of the POS computation, assume that Ron visited a physician outside of the network plan. Assume he had his prescriptions filled at a network-approved pharmacy.)

1.What total costs will Ronald pay if he enrolls in the HMO plan?

2. What annual medical costs will Ronald pay using the sample medical expenses provided if he were to enroll in the Blue Cross/Blue Shield plan?

Ken and Maureen Blake have two children, with ages of 6 years and 5 months. Their younger child, Don, was born with a congenital heart defect that will require several major surgeries in the next few years to correct fully. Ken is employed as a salesperson for a major pharmaceutical firm, and Maureen is a stay-at-home mother. Ken’s employer offers employees a choice between two health benefit plans:
• An indemnity plan that allows the Blakes to choose health services from a wide range of doctors and hospitals. The plan pays 80 percent of all medical costs, and the Blakes are responsible for the other 20 percent. There’s a deductible of $500 per person. Ken’s employer will pay 100 percent of the cost of this plan for Ken, but the Blakes will be responsible for paying $380 a month to cover Maureen and the children under this plan.
• A group HMO. If the Blakes choose this plan, the company still pays 100 percent of the plan’s cost for Ken, but insurance for Maureen and the children will cost $295 a month. They’ll also have to make a $20 co-payment for any doctor’s office visits and prescription drugs. They will be restricted to using the HMO’s doctors and hospital for medical services. Which plan would you recommend that the Blakes choose? Why? What other health coverage options should the Blakes consider?

Margo, age 35, was severely injured in an auto accident. She is covered under her employer's preferred provider organization (PPO) plan. The plan has a $1000 calendar-year deductible, a 80/20 coinsurance, and an annual out-of-pocket limit of $3,000. As aresult of the accident, Margo incurred the following medical expenses:

Cost of ambulance to the hospital $500

Hospital bill for a three-day stay $24,000

Surgery for a broken leg $ 5,000

Prescription drugs outside the hospital $300

Physical therapy for the broken leg $1200

In addition, Margo could not work for one month and lost $4000 in earnings.

a. Based on the above, how much will Margo collect for her injury if she receives medical care from health care providers who are part of the PPO network? (Assume that all charges shown are the allowable or approved charges by the insurer and all providers are in the PPO network.)

b. Assume that Margo's broken leg does not heal properly, and she needs another surgical operation. Margo would like a different surgeon with an outstanding professional reputation to perform the operation. The surgeon is not a member of the PPO network. Will Margo's plan pay for the surgery? Explain your answer.

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