Chapter 9 Financial Planning Exercise 2 Out-of-pocket plan costs

John Chang was seriously injured in a snowboarding accident that broke both his legs and an arm. His medical expenses included 6 days of hospitalization at $800 a day, $7,900 in surgical fees, $6,200 in physician's fees (including time in the hospital and six follow-up office visits), $340 in prescription medications, and $2,100 for physical therapy treatments. All of these charges fall within customary and reasonable payment amounts.

If John had an indemnity plan that pays 90 percent of his charges with a $250 deductible and a $5,000 stop-loss provision, how much would he have to pay out-of-pocket? Round to the nearest dollar. $

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. $

Monthly premiums are $255 for the indemnity plan and $135 for the HMO. If he had no other medical expenses this year, which plan would have provided more cost-effective coverage for John?