Learning Goals: Introduction to Personal Finance Unit 7 Project Understand the concept of protection and how it relates to risk and risk management. Understand the role of insurance in protecting human, financial, and property assets. Understand the importance of basic estate planning documents. Don and Kasey Johnson are a married couple. They are both 30 years old and they have a 3-year-old girl. Don is a loan officer and earns $75,000 a year. Kasey works as a retail store manager and earns $45,000 a year. Don's life expectancy is 80 years and Kasey's 82. They plan on retiring when they are 65. There are three health insurance policies that they could choose from (see page 3-5). 1. Health Insurance: a. Help Don and Kasey to determine which of the three plans to choose. They want to know which plan would be best if they estimate their medical costs at approximately $2,500 per year and which plan to use if they estimate their medical costs closer to $25,000 per year. Help the Johnsons determine how much of their risk they should transfer and how much they should retain (for example a higher deductible means they are retaining more risk). Low Medical Expenses (~$2,500/year) High Medial Expenses (~$25,000/year) Estimated Blue Medical FirstCare EirstCare Choice Bronze Gold FirstCare Bronze FirstCare Gold Blue Choice Gold Cost: Gold Out of Pocket 12,700 12,700 31,500 12,700 12,700 10,500 Expenses: Annual 2,519.64 3255.12 4004.28 2519.64 3255.12 4,004,28 Premium: Total Cost: 15,219.64 15,955.12 35,504.28 Which plan should they choose? And Why? b. Now suppose you are choosing the insurance for yourself. Based on your own situation, what is your annual medical cost and which insurance are you going to choose based on your family, history, lifestyle, etc.? Why? 2. Life Insurance: a. What type of life insurances the Johnsons get? Term Life Insurance Cash-Value Whole Life Insurance None b. Explain your reasoning with evidence from the course materials: 3. Disability Insurance: a. What type of disability insurance should the Johnsons get? Disability Insurance Coverage for Don: Disability Insurance Coverage for Kasey: b. Explain your reasoning with evidence from the course materials: Short Term Short Term Long Term Long Term None None 4. Long-Term Care Insurance: a. Should the Johnsons get long-term care insurance? b. Explain your reasoning with evidence from the course materials: Yes No FirstCare FirstCare Health Plans Bronze Firstcare Health Plans HEALTH PLANS HMO Deductible Coinsurance Out of Pocket Maximum More Details Find a Provider Monthly Cost $209.97 $4,500 Premium: $209.97 Subsidy: $0.00 30% $6,350 Deductibles and Cost Sharing In Network Out of Network Deductible (Individual) $4,500 $0 Deductible (Family) Coinsurance Out of Pocket Maximum (Individual) Out of Pocket Maximum (Family) Services Primary Care Visit Specialist Visit In Patient Hospital Services Emergency Room Services Mental/Behavioral Health Imaging (CT/PET Scans, MRIs) Rehabilitative Speech Therapy Rehabilitative Occupational & $10,000 $0 30% $0 $6,350 $0 $12,700 $0 In Network Out of Network $60 $0 $70 Copay after deductible $0 30% Coinsurance after deductible $0 $300 Copay after deductible $300 copay $70 copay $0 30% coinsurance $0 $70 copay $0 $70 copay $0 Physical Therapy Preventative Care $0 $0 Laboratory Outpatient and $0 $0 Professional Services X-ray and Diagnostic Imaging Prescription Drugs Generic Rx 30% coinsurance $20 Copay after deductible $0 In Network Out of Network Preferred Brand Rx $50 Copay after deductible New Preferred Brand Rx $70 Copay after deductible Specialty Drugs 30% Coinsurance after deductible FirstCare FirstCare Health Plans Gold HEALTH PLANS Firstcare Health Plans HMO Deductible Coinsurance Out of Pocket Maximum More Details Find a Provider Monthly Cost $271.26 0% Premium: $271.26 Subsidy: $0.00 20% $6,350 Deductibles and Cost Sharing In Network Out of Network Deductible (Individual) $0 $0 Deductible (Family) Coinsurance Out of Pocket Maximum (Individual) $0 $0 20% $0 $6,350 $0 Out of Pocket Maximum (Family) $12,700 $0 Services In Network Out of Network Primary Care Visit $30 $0 Specialist Visit $50 $0 In Patient Hospital Services 20% $0 Emergency Room Services $250 $250 copay Mental/Behavioral Health $50 copay $0 Imaging (CT/PET Scans, MRIs) 20% coinsurance $0 Rehabilitative Speech Therapy $50 copay $0 Rehabilitative Occupational & Physical Therapy $50 copay $0 Preventative Care $0 $0 Laboratory Outpatient and Professional Services $0 $0 X-ray and Diagnostic Imaging $0 $0 Prescription Drugs In Network Out of Network Generic Rx $20 Preferred Brand Rx $50 New Preferred Brand Rx $70 Specialty Drugs 20% BlueCross Blue Choice Gold PPO 002 BlueShield. Blue Cross Blue Shield of Texas PPO Deductible Coinsurance Out of Pocket Maximum More Details Find a Provider Monthly Cost $333.69 $1,500 Premium: $333.69 Subsidy: $0.00 20% $3,500 Deductible (Family) Coinsurance Out of Pocket Maximum (Individual) Deductibles and Cost Sharing In Network Out of Network Deductible (Individual) $1,500 $3,000 $4,500 $9,000 20% 40% $3,500 $7,000 $10,500 $21,000 In Network Out of Network $10 40% coinsurance $60 40% coinsurance $200 Copay per Stay and 20% Coinsurance 40% coinsurance Out of Pocket Maximum (Family) Services Primary Care Visit Specialist Visit In Patient Hospital Services Emergency Room Services Mental/Behavioral Health $400 Copay and 20% Coinsurance a 20% coinsurance after $400 copay/visit + $10 copay 40% coinsurance Imaging (CT/PET Scans, MRIs) 20% coinsurance 40% coinsurance Rehabilitative Speech Therapy 20% coinsurance 40% coinsurance Rehabilitative Occupational & 20% coinsurance 40% coinsurance Physical Therapy Preventative Care $0 40% coinsurance Laboratory Outpatient and 20% coinsurance 40% coinsurance Professional Services X-ray and Diagnostic Imaging 20% coinsurance 40% coinsurance Prescription Drugs Generic Rx Preferred Brand Rx In Network No Charge $35 Out of Network Non Preferred Brand Rx $75 Specialty Drugs $150