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# Choosing an insurance plan

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Acme Health has three plans it offers to mid-size employers.

1.This basic one costs \$4,000 for the employee this year, plus \$2,500 for the spouse, and \$2,500 for any number of children. It also has a family deductible amount of \$2,000 before benefits (80% paid; 20% co-insurance) kick in.
2.The second plan costs \$5,000 for the employee and \$3,000 for a spouse and an additional amount of \$3,000 to any number of children. It has a \$1,000 family deductible and after that, insurance of 85%, 15% co-insurance.
3.The third plan costs \$7,000 for the employee and \$3,500 for the spouse and \$3,500 for children. It has a \$250 deductible for the total family each year. After that, insurance pays 95%, with 5% co-insurance.

As an employee of the company, which option would you take? Explain your answer.

Consider the probability of using the health services, the total expected cost of the co-payments, and the tax status of all of the expenses.

HINT: The premiums (\$9,000, \$11,000, or \$14,000) can be paid with pretax dollars, as an income tax avoidance method. In all three cases, the employer pays nothing.

https://brainmass.com/health-sciences/health-care-management/choosing-an-insurance-plan-587082

#### Solution Preview

Choosing a Health Plan

1.This basic one costs \$4,000 for the employee this year, plus \$2,500 for the spouse, and \$2,500 for any number of children. It also has a family deductible amount of \$2,000 before benefits (80% paid; 20% co-insurance) kick in.
2.The second plan costs \$5,000 for the employee and \$3,000 for a spouse and an additional amount of \$3,000 to any number of children. It has a \$1,000 family deductible and after that, insurance of 85%, 15% co-insurance.
3.The third plan costs \$7,000 for the employee and \$3,500 for the spouse and \$3,500 for children. It has a \$250 deductible for the total family each year. After that, insurance ...

#### Solution Summary

Choosing a health care plan can be very difficult. The first thing you should consider is the deductible; the money that you have to pay out of pocket before the insurance benefits kick in. As general rule, the higher the deductibles, the less premium you paid monthly. Choose a plan with the highest deductible will save you money in the long run.

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