Question

John Chang was seriously injured in a snowboarding accident that broke both his legs and an arm. His medical expenses included 7 days of hospitalization at $700 a day, $8,300 in surgical fees, $4,200 in physician's fees (including time in the hospital and seven follow-up office visits), $630 in prescription medications, and $2,500 for physical therapy treatments. All of these charges fall within customary and reasonable payment amounts.

1. If John had an indemnity plan that pays 90 percent of his charges with a $500 deductible and a $5,000 stop-loss provision, how much would he have to pay out-of-pocket? Round to the nearest dollar.
   
2. What would John's out-of-pocket expenses be if he belonged to an HMO with a $15 co-pay for office visits? Round to the nearest dollar.

Answer 1

Solution (a)
	Hospitalization	4900
	Surgical fee	8300
	Physician fee	4200
	Prescription medication	630
	Physical therapy treatment	2500
	Total	20530
	Deductible to be paid by John	500
	Remaining Amount	20030
	Paid by Insurance (90%)	18027
	Paid by John (10%)	2003
	Total amount paid by John	2503
Solution (b)
	Hospitalization	4900
	Surgical fee	8300
	Physician fee (15*7)	105
	Prescription medication	630
	Physical therapy treatment	2500
	Total	16435
	Deductible to be paid by John	500
	Remaining Amount	15935
	Paid by Insurance (90%)	14341.5
	Paid by John (10%)	1593.5
	Total amount paid by John	2093.5