Financial Planning Exercise 4 Out-of-pocket health care insurance costs.

Samuel Nguyen was seriously injured in a skiing accident that broke both his legs and an arm. His medical expenses included 6 days of hospitalization at $1,000 a day, $5,700 in surgical fees, $7,500 in physician's fees (including time in the hospital and six follow-up office visits), $620 in prescription medications, and $1,600 for physical therapy treatments. All of these charges fall within customary and reasonable payment amounts.

a. If Samuel had a health insurance plan that pays 90 percent of his charges with a $250 deductible and a $5,000 stop-loss provision, how much would he have to pay out of pocket? Round to the nearest dollar.

$ ___________

b. What would Samuels out-of-pocket expenses be if he belonged to an HMO with a $20 co-pay for office visits? Round to the nearest dollar.

$ ___________

c. Monthly premiums are $240 for the standard plan and $280 for the HMO. If he had no other medical expenses this year, which plan would have provided more cost-effective coverage for Samuel?

Choices: HMO or Indemnity Plan