You are an employee that is single with no children and are trying to decide between three health plans your employer offers. The traditional fee-for-service plan (FFS), an HMO, and a PPO plan. Calculate how much will each plan cost for the following events that take place throughout the year. Assume for the PPO your provider is in-network, and for the HMO you visit a covered facility. Assume you have a marginal income tax rate of 15% based on your income. You will need to take this into consideration to determine your actual costs (since you will pay less taxes by taking advantage of the program). FFS Plan has a $750/year deductible and 80/20 coinsurance HMO Plan has a $60 per month premium and $15 copay per visit PPO Plan has a $40 per month premium, a $400 deductible, and $20 copay per visit You have two doctor visits during the year. - The first visit is for flu-like symptoms. The cost under the FFS Plan is $400 - The second is for a broken arm from exercising. It costs $1200 Things to Remember 1. Health insurance premiums are made tax free, however, they will reduce your taxable income so you can keep the money you would normally pay in income tax. You should factor in the tax savings when making your calculations. 2. Copays, deductibles, and coinsurance are NOT tax free (unless you have a flexible savings account). There is no sales tax either. Going to calculate the following: 1) cost of each visit being billed 2) have you paid your entire deductible? If not, you will pay 100% of the cost until the deductible is met. Once the deductible is met, then either the coinsurance will start or you will only be responsible for copays. 3) calculate the 15% tax savings (rebate) you will get for your premiums under the HMO and PPO plan. This will decrease your actual cost under those plans (but not increase the cost of the FFS plan.)