9. Benefit of health insurance - A cautionary tale

In 2012 Jamaal became responsible for providing his own health insurance. He obtained suitable coverage and paid annual premiums for each year of coverage as shown in the following table. Compute Jamaals total premiums:

Jamaals Premiums
2012	$4,445
2013	4,724
2014	4,836
2015	5,079
Total	$______

Except for an occasional minor illness requiring a doctors attention, perhaps a drug prescription, and periodic, routine tests, Jamaal enjoyed good health during those years. There was never a reason to think that would change and by the end of 2014, he had considered dropping his health insurance coverage. After all, with premiums on the rise, Jamaal could think of many other uses for the thousands of dollars he spent each year, definitely much more than his medical bills since 2012. Jamaal decided to pay premiums for another year but planned to take another look at his health care plan at the end of 2015.

It Could Happen To You, It Could Happen To Me

In December, 2015, Jamaal accepted an invitation from friends to go snowboarding. Jamaal did everything right: took a lesson, rode on trails well within his skill level, and maintained awareness of people and objects near him. Even though he thought it was a bit dorky to wear wrist guards and a helmet, his friends insisted that he take standard and reasonable safety measures.

Jamaal was enjoying the day when, from out of nowhere (actually, the woods), came an out-of-control skier who ran into Jamaal. Jamaal was injured and taken to the nearest hospital by ambulance.

Jamaals injuries included a broken wrist and elbow as well as cuts and bruises. Of biggest concern was the uncertainty of his head injury. Jamaal spent a couple days in intensive care. Fortunately, he didnt have a broken skull, but did have a concussion. Surgery repaired the broken wrist and elbow.

Since Jamaal was in good health, he completely recovered. Jamaal returned to full function in about six months.

Soon after Jamaal returned home, the medical bills for the ambulance, emergency room, intensive care, medications, doctors, tests, and other services arrived. Jamaal also had to have physical therapy for his wrist and elbow. His total medical expenses were $40,000. It was time to find out if all those premiums paid since 2012 would pay off for this one, albeit dramatic, incident.

Overall, Jamaals insurance paid 85% of the total medical expenses, thus making him responsible for ______% of the expenses, or $_______. Jamaals insurance paid $_______. His out-of-pocket expenses for the accident were $_______ plus the 2015 insurance premiums of $_______ = $_______. If Jamaal had canceled his health insurance at the end of 2014, his out-of-pocket expense for the accident would have been $_______.

In this case, did Jamaal benefit from having health insurance? Yes/No

What are reasonable morals of the story? Check all that apply.

___It can be financially risky to go without health insurance. ___Think long and hard about the best trade-off of coverage and cost in a health care plan. ___Avoid engaging in physical activity. ___Your health can change in an instant. ___Dont get sick.

Some employers pay part or all of the health insurance premiums for employees who are enrolled in one of the companys sponsored plans. Assume that during the same period that Jamaal paid for his premiums in full that he had, instead, worked for a firm that paid 75% of his premiums for the same coverage. Instead of paying premiums of $_______ over the years, Jamaal would have paid $______ and saved $______.

In this case, Jamaals out-of-pocket expenses for his snowboarding accident would have been (more than, the same as, or less than) they were in the first scenario because (the more premium his employer pays the less coverage there is, the more premium his employer pays the more coverage there is, or his employer only contributes to premiums). .

Toward the end of 2015, Jamaal re-evaluated his need for health insurance and the premiums he paid over the years. Given the costs of his recent injury, Jamaal is reconsidering the idea of dropping his health care coverage. Jamaal still expects to remain healthy and considers the snowboarding accident an unusual event, rather than representative of a future pattern. He is willing to take more financial risk than he previously did when managing his health care costs. Jamaal will most likely (change to a high-deductible health insurance plan, drop all health care insurance, make no changes to his health insurance plan) because he will (not plan to ever go snowboarding again, save on premium costs but will still be protected against catastrophe).