SECTION 11-1 Health Insurance Premiums pp. 372-374

Key Words to Know health insurance (p. 372) Protection against the costs of medical expenses. preferred provider organization (PPO) (p. 372) A group of selected health care providers who offer comprehensive services at preset reimbursement levels.

Key Words to Know health maintenance organization (HMO) (p. 372) A group program that provides health care at its own center with its own doctors for a fixed fee per month.

Formula 1 Employee’s Percent = 100% - Employer’s Percent

Formula 2 Employee’s Contribution = Total Premium × Employee’s Percent

Example 1 Wyatt Earp has a family membership in a group medical insurance program. The annual premium is $6,180. Earp’s employer pays 80 percent of the total cost. His contribution is deducted monthly from his paycheck. What is Earp’s annual contribution? What is his monthly deduction?

Example 1 Answer: Step 1 Find the employee’s percent. 100% – 80% = 20%

Example 1 Answer: Step 2 Find the employee’s annual contribution. Total Premium × Employee’s Percent $6,180.00 × 20% = $1,236.00

Example 1 Answer: Step 3 Find the employee’s monthly deduction. Employee’s Contribution ÷ 12 $1,236.00 ÷ 12 = $103.00

373:1-21