Latesha moore has a choice at work between a traditional health insurance plan that pays 80 percent of the cost of doctor visits after a $250 deductible and an hmo that charges a $10 co-payment per visit plus a $20 monthly premium deduction from her paycheck. latesha anticipates seeing a doctor once a month for her high blood pressure. the cost of each office visit is $50. she normally sees the doctor an average of three times a year for other health concerns. comment on the difference in costs between the two health care plans and the advantages and disadvantages of each.

Consider the following calculation and analysis

Explanation:

We will analyse from cost perspective, the alternative with lower cost should be selected.

Total no. of doctor visit = 12 monthly visit + 3 times special visit = 15

Cost = 50 * 15 = $750

Under Traditional health checkup plan

Cost of plan = $ 250 + (20% of doctor visiting charges) = 250 + 20% of 750 = $400

Under HMO

Premium = 20 * 12 months = $240

Co payment = 10 * 15 = 150

Total = $ 390

There is a saving of $10 in HMO, so she should opt for this option. Moreover, the benefit of HMO would be the payments are monthly in small installments ,rather than a big outflow as in the case of traditonal plan.

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