Personal Financial Management Case

Case 2

According to Brad’s health care coverage policy he has a $3000 deductible. This means he would have to pay $3000 of his own money before his insurance would kick in. Since he sustained a major injury and had several medical expenses he has reached his deductible at which point the co-insurance would start to cover the majority of the expenses. However, with co-insurance Brad is still responsible for a portion of the expenses. The co-insurance is 80/20, which would mean his insurance company would pay 80 percent of his expenses, but he is still responsible for 20 percent.

Health insurances typically has co-insurance, so the insured doesn’t take advantage of the medical coverage and carelessly rack up medical bills. Brad’s internal limits are $180 per day on hospital room and board which means when he was charged $250 per day his insurance will only cover $180 per day and Brad will be responsible for the rest. The same applies for the surgical amount that goes over the internal amount.

The total cost of his medical expenses comes to $20,700. With the internal limits taken into account, Brad’s deductible, and the co-insurance taken into consideration the insurance company will cover $6000 of the total bill. Brad is responsible for $9700 of the total bill.

Unfortunately, the biggest flaw in Brad’s health insurance coverage was the fact that his insurance didn’t include a stop-loss prevention limit. If his insurance would have offered that benefit it there is a good possibility he wouldn’t have had to pay nearly $10,000 out of his own pocket. He also doesn’t have any disability insurance to provide income while he is in recovery, so he can continue to pay bills. If he would have had some long-term insurance he could have reduced the costs of the hospital stay, because he could have recovered in a long-term care facility.

I think Brad learned the hard way that he did not have adequate insurance coverage. I’m assuming he had a medical plan that...