financial literacy

Choosing a health insurance plan. Silas and Camila Sims have two children, with ages of 6 years and 5 months. Their younger child, Julian, was born with a congenital heart defect that will require several major surgeries in the next few years to correct fully. Silas is employed as a salesperson for a major pharmaceutical firm, and Camila does not work outside the home. Silas' employer offers employees a choice between two health benefit plans: - A plan that allows the Sims family to choose health services from a wide range of doctors and hospitals. The plan pays 80 percent of all medical costs, and the Sims family is responsible for the other 20 percent. There's a deductible of $500 per person. Silas' employer will pay 100 percent of the cost of this plan for Silas, but the Sims family will be responsible for paying $380 a month to cover Camila and the children under this plan. - A group HMO. If the Sims family choose this plan, the company still pays 100 percent of the plan's cost for Silas, but insurance for Camila 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 the Sims family choose? Why? What other health coverage options should the Sims family consider? Out-of-pocket plan costs. Oscar Wang was seriously injured in a snowboarding accident that broke both his legs and an arm. His medical expenses included five days of hospitalization at $900 a day, $6,200 in surgical fees, $4,300 in physician's fees (including time in the hospital and eight followup office visits). $520 in prescription medications, and $2,100 for physical therapy treatments. All of these charges fall within customary and reasonable payment amounts. 1. If Oscar had an indemnity plan that pays 80 percent of his charges with a $500 deductible and a $5,000 stop-loss provision, how much would he have to pay out of pocket? 2. What would Oscar's out-of-pocket expenses be if he belonged to an HMO with a $20 co-pay for office visits? 3. Monthly premiums are $155 for the indemnity plan and $250 for the HMO. If he had no other medical expenses this year. which plan would have provided more cost-effective coverage for Oscar? What other factors should be considered when deciding between the two plans