Ronald Roth started his new job as controller with Aerosystems today. Carole. the employee benefits clerk. gave Ronald a
packet that contains information on the company’s health insurance options. Aerosystems offers its employees the choice
between a private insurance company plan [Blue Cross] Blue Shield), an HMO. and a PPO. Ronald needs to review the
packet and make a decision on which health care program fits his needs. The following is an overview of that information.
a. Blue Cross/ Blue Shield plan: The monthly premium cost to Ronald will be 54232 For all doctor office visits.
prescriptions, and major medical charges, Ronald will be responsible for 20 percent and the insurance company will cover
80 percent of covered charges. The annual deductible is 5500.

b. The HMO is provided to employees free of charge. The copayment for doctors‘ office visits and major medical charges is
$10. Prescription copayments are $5. The HMO pays 100 percent after Ronald’s copayment. No annual deductible.

c. The P05 requires that the employee pay $24.44 per month to supplement the cost of the program with the company's
payment. If Ron uses health care providers within the plan, he pays the copayments as described above forthe HMO. He
can also choose to use a health care provider out of the service and pay 20 percent of all charges after he pays a $500
deductible. The ROS will pay for 80 percent of those covered visits. No annual deductible.

Ronald decided to review his medical bills from the previous year to see what costs he had incurred and to help him
evaluate his choices. He visited his general physician four times during the year at a cost of $125 for each visit. He also
spent $65 and $89 on prescriptions during the year. Using these costs as an example, what would Ron pay for each of the
plans described above? (For the purposes of the POS computation, assume that Ron visited a physician outside of the
network plan. Assume he had his prescriptions filled at a network—approved pharmacy.

What annual medical costs will Ronald pay using the sample medical expenses provided if he were to enroll in the Blue
Cross/ Blue Shield plan?