David Chang was seriously injured in a snowboarding accident thatbroke both his

Question

David Chang was seriously injured in a snowboarding accident thatbroke both his legs and an arm. His medical expenses included 5days of hospitalization at $900 a day, $6,200 in surgical fees,$4,300 in physicians fees (including time in the hospital and eightfollow-up), $520 in prescription medications, and $2,100 forphysical therapy treatments. All of these charges fall withincustomary and reasonable payment amounts.

A. If David has an indemnity plan with a $500deductible that pays 80 percent of his charges and has a $5,000stop-loss provision, how much will he have to pay out ofpocket?

B. What would David's out-of-pocket expenses be ifhe belonged to an HMO with a $20 co-pay for office visits?

C. Monthly premiums are $155 for the indemnityplan and $250 for the HMO. If he has no other medical expenses thisyear, which plan provides more cost-efficient coverage for David?What other factors should he consider in deciding between the twoplans?

Explanation / Answer

b. 8 X 20 = 160 out of pocket.

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