1. SECTION
11-1
Health Insurance Premiums pp

2. Section Objective
Compute:
health insurance premiums

3. 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.

4. 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.

5. Formula 1
Employee’s Percent = 100% × Employer’s Percent

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

7. Insuring Your Life p. 372
What’s the purpose of an insurance premium?

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

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

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

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

12. Practice 1
Paul Esnerado has a family PPO group medical insurance plan. The total cost is $13,900.
His employer pays 85 percent of the total cost.
He also has the optional annual dental, which costs $950, and the optional vision care, which costs $315.

13. Practice 1 (cont.)
His employer pays 50 percent of dental and vision costs.
How much is deducted each week from his paycheck for medical, dental, and vision insurance combined?

14. Practice 1 Answer
$52.26

15. Practice 2
Tim Landau is a self-employed custom furniture maker. He pays 100 percent of his family HMO annual premium of $10,200. He also has a dental plan that costs $700, and an annual vision plan that costs $260. The premiums are paid quarterly.
How much does he pay quarterly for insurance?

16. Practice 2 Answer
$2,790

17. END OF SECTION
11-1
Health Insurance Premiums