Question

John Chang was seriously injured in a snowboarding accident that broke both his legs and an...

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.

Homework Answers

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
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