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Problem 1 1 - 7 Evaluating Health Insurance Options [ LO 1 1 - 4 ] Ronald started his new job as a controller with

Problem 11-7 Evaluating Health Insurance Options [LO11-4]
Ronald started his new job as a controller with Aerosystems today. Carole, the employee benefits clerk, gave Ronald a packet that
contained information on the company's health insurance options. Aerosystems offers its employees the choice between a private
insurance company plan (Blue Cross or Blue Shield), an HMO, and a PPO. Ronald needs to review the packet and make a decision on
which health care program best fits his needs. The following is an overview of that information.
a. The monthly premium cost for Ronald for the Blue Cross or Blue Shield plan will be $45.32. For all doctor's office visits,
prescriptions, and major medical charges, Ronald will be responsible for 20 percent and the insurance company will cover 80
percent of the covered charges. The annual deductible is $500.
b. The HMO is provided to employees free of charge. The copayment for doctors' office visits and major medical charges is $30.
Prescription copayments are $30. The HMO pays 100 percent after Ronald's copayment. There is no annual deductible.
c. The POS requires that the employees pay $33.48 per month to supplement the cost of the program with the company's payment. If
Ronald uses health care providers within the plan, he pays the copayments as described above for the HMO. He can also choose to
use a health care provider outside of the service and pay 20 percent of the covered charges after he pays a $500 deductible. The
POS will pay for 80 percent of those covered visits. There is no annual deductible for in-network expenses.
Ronald decided to review his medical bills from the previous year to see what costs he had incurred and to help him evaluate his
choices. He visited his general physician four times during the year at a cost of $157 for each visit. He also spent $72 and $90 on
prescriptions during the year. (For the purposes of the POS computation, assume that Ronald visited a physician outside of the
hetwork plan. Assume he had his prescriptions filled at a network-approved pharmacy.)
What annual medical costs will Ronald pay using the sample medical expenses provided if he were to enroll in the Blue Cross or Blue
Shield plan?
Note: Round your intermediate calculations and final answer to 2 decimal places.
Annual medical cost
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