Learning Goals: 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 is 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). Estimated Medical Cost: Out of Pocket Expenses: Annual Premium: Introduction to Personal Finance Unit 7 Project Total Cost: Which plan should they choose? And Why? Low Medical Expenses (~$2,500/year) FirstCare Gold Blue Choice Gold FirstCare Bronze High Medial Expenses (~$25,000/year) FirstCare FirstCare Bronze Gold Blue Choice Gold 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: What type of life insurances the Johnsons get? Term Life Insurance Cash-Value b. Explain your reasoning with evidence from the course materials: a. 3. Disability Insurance: Whole Life Insurance a. What type of disability insurance should the Johnsons get? Disability Insurance Coverage for Don: Short Term Disability Insurance Coverage for Kasey: Short Term b. Explain your reasoning with evidence from the course materials: 4. Long-Term Care Insurance: Long Term Long Term a. Should the Johnsons get long-term care insurance? b. Explain your reasoning with evidence from the course materials: Yes None None None No FirstCare Firstcare Health Plans HEALTH PLANS HMO Deductible Coinsurance FirstCare Health Plans Bronze Out of Pocket Maximum More Details Find a Provider Deductibles and Cost Sharing Deductible (Individual) 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 & Physical Therapy Preventative Care Laboratory Outpatient and Professional Services X-ray and Diagnostic Imaging Prescription Drugs Generic Rx Preferred Brand Rx Non Preferred Brand Rx Specialty Drugs $70 copay $0 In Network $0 $4,500 $10,000 30% $6,350 $12,700 In Network $60 $70 Copay after deductible 30% Coinsurance after deductible $300 Copay after deductible $70 copay 30% coinsurance $70 copay $4,500 30% coinsurance $6,350 30% In Network $20 Copay after deductible $50 Copay after deductible $70 Copay after deductible 30% Coinsurance after deductible $0 Out of Network $0 $0 $0 $0 $0 Out of Network $0 $0 $0 $300 copay $0 $0 $0 $0 Monthly Cost $209.97 $0 Premium: $209.97 Subsidy: $0.00 $0 Out of Network FirstCare FirstCare Health Plans Gold Firstcare Health Plans HMO HEALTH PLANS Deductible Coinsurance Out of Pocket Maximum More Details Find a Provider Deductibles and Cost Sharing Deductible (Individual) 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 & Physical Therapy Preventative Care Laboratory Outpatient and Professional Services X-ray and Diagnostic Imaging Prescription Drugs Generic Rx Preferred Brand Rx Non Preferred Brand Rx Specialty Drugs In Network $0 $0 20% $6,350 $12,700 In Network $30 $50 20% $250 $50 copay 20% coinsurance $50 copay $50 copay $0 $0 0% 20% $6,350 $0 In Network $20 $50 $70 20% $0 Out of Network $0 $0 $0 $0 $0 Out of Network $0 $0 $0 $250 copay $0 $0 $0 $0 Monthly Cost $271.26 $0 Premium: $271.26 Subsidy: $0.00 $0 Out of Network Blue Choice Gold PPO 002 BlueCross. BlueShield. Blue Cross Blue Shield of Texas PPO Deductible Coinsurance Out of Pocket Maximum More Details Find a Provider Deductibles and Cost Sharing Deductible (Individual) 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 & Physical Therapy Preventative Care Laboratory Outpatient and Professional Services X-ray and Diagnostic Imaging Prescription Drugs Generic Rx Preferred Brand Rx Non Preferred Brand Rx Specialty Drugs In Network $1,500 $4,500 20% $3,500 $10,500 In Network $10 $60 $200 Copay per Stay and 20% Coinsurance $400 Copay and 20% Coinsurance a $10 copay 20% coinsurance 20% coinsurance $0 20% coinsurance 20% coinsurance 20% coinsurance In Network No Charge $35 $75 $150 $1,500 20% $3,500 Monthly Cost $333.69 Premium: $333.69 Subsidy: $0.00 Out of Network $3,000 $9,000 40% $7,000 $21,000 Out of Network 40% coinsurance 40% coinsurance 40% coinsurance 20% coinsurance after $400 copay/visit 40% coinsurance 40% coinsurance 40% coinsurance 40% coinsurance 40% coinsurance 40% coinsurance 40% coinsurance Out of Network