Question

The Baulding family has a basic health insurance plan that pays 80 percent of​ out-of-hospital expenses after a deductible of​ $250 per person. If three family members have doctor and prescription drug expenses of $ 441​, $ 1,630, and $ 204 ​respectively, how much will the Baulding family and the insurance company each​ pay? How could they benefit from a flexible spending account established through Mr.​ Baulding's employer? What are the advantages and disadvantages of establishing such an​ account? The baulding family will pay $___

Answer 1

Prescription	Amount	Amount paid by insurance plan
1	441	80%*(441-250) = 152.8
2	1630	80%*(1630-250) = 1104
3	204	Since this amount is less than 250, insurance plan pays nothing

Insurance company will pay = 152.8+1104 = 1256.8

Baulding family will pay = (441+1630+204)-1256.8 = 1018.2

A flexible spending account offers the Bauldings the advantage of paying for health care expenses not covered by insurance(such as unreimbursed medical or dental expenses includingco-pays todoctors, deductibles, and qualified childcare) withpre-tax dollars. Disadvantages include the"use it or loseit" feature of theplan; any contributions to the flexible spending account not used by the end of the year are lost.