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8.1 COMPARE TWO HEALTH CARE POLICIES - THE ONLY DIFFERENCE IS THE DEDUCTIBLE;
FINANCIAL MATH, SIMPLE MATHEMATICS, EXAMPLES FOR PERSONAL FINANCES
Here
is a real world example of two advertised policies which were the same except for the
deductible.
An
individual between the age of 55-59 can get health insurance as:
Policy
A: $178.90 a month with a $1000 deductible
Policy
B: $211.85 a month with a $500 deductible.
The
insured is required to make 20% co-payments after the deductible is satisfied.
Question:
How much is Policy B paying for the additional $500 coverage. Answer $395.40.
Since
the patient must come up with 20% of $500 as a co-payment or $100 the true cost for $500
coverage is $100 + $395.40 or $495.40 for $500 worth of coverage.
NOTE:
If the insured does not have $1000 worth of medical costs in a given year, then he or she
has lost that money. As we have pointed out, low deductibles are not worth the cost or the
trouble of all the paperwork. This is a stellar example. Put the money saved into a
savings account instead, or better yet into a bank certificate of deposit (CD).
FURTHER
NOTE: Some banks now allow people, especially seniors, to withdraw money from CDs before
maturity in case of a medical emergency.
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