Latesha Moore has a choice at work between a traditional health insurance plan that pays 80 percent of the cost of doctor visits after a​ $250 deductible and an HMO that charges a ​$8 ​co-payment per visit plus a ​$23 monthly premium deduction from her paycheck. Latesha anticipates seeing a doctor once a month for her high blood pressure. The cost of each office visit is ​$100. She normally sees the doctor an average of three times a year for other health concerns. Comment on the difference in costs between the two​ health-care plans and the advantages and disadvantages of each.
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Part 1
Latesha would pay an annual​ out-of-pocket cost with the traditional plan of ​$

enter your response here.  ​(Round to the nearest​ dollar.)
Part 2
Latesha would pay an annual​ out-of-pocket cost with the HMO plan of ​$

enter your response here.  ​(Round to the nearest​ dollar.)

Let’s break this down step by step to determine the **annual out-of-pocket costs for both plans** and compare their advantages and disadvantages.

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### Part 1: Cost of Traditional Insurance Plan
- **Deductible**: \$250 (she pays this first before insurance starts covering).
- **Coverage**: After the deductible, the plan pays **80%** of each visit, and Latesha pays **20%**.
- **Doctor Visits**:  
  - **12 visits** for high blood pressure (once a month).  
  - **3 visits** for other concerns (annual total = 15 visits).  
- **Cost per visit**: \$100.

#### Step-by-Step Calculation
1. **Total annual cost of doctor visits**:  
   \[ 15 \times 100 = 1,500 \, \text{USD} \]

2. **Deductible**:  
   Latesha first pays **\$250** out of pocket. This applies to the first visits.

3. **Cost after deductible**:  
   After the deductible is met, she pays **20%** of the remaining costs.  
   Remaining cost after deductible:  
   \[ 1,500 - 250 = 1,250 \, \text{USD} \]

4. **20% of the remaining \$1,250**:  
   \[ 1,250 \times 0.20 = 250 \, \text{USD} \]

5. **Total out-of-pocket cost**:  
   \[ 250 \, (\text{deductible}) + 250 \, (\text{20% coinsurance}) = 500 \, \text{USD} \]

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### Part 2: Cost of HMO Plan
- **Co-payment per visit**: \$8.
- **Number of visits**: 15 (12 for high blood pressure + 3 for other concerns).
- **Monthly premium deduction**: \$23 per month.

#### Step-by-Step Calculation
1. **Total co-payment for doctor visits**:  
   \[ 15 \times 8 = 120 \, \text{USD} \]

2. **Annual premium deduction**:  
   \[ 23 \times 12 = 276 \, \text{USD} \]

3. **Total out-of-pocket cost**:  
   \[ 120 + 276 = 396 \, \text{USD} \]

---

### Summary: Comparison of the Two Plans
1. **Traditional Plan**:  
   Annual out-of-pocket cost = **\$500**

2. **HMO Plan**:  
   Annual out-of-pocket cost = **\$396**

---

### Advantages and Disadvantages of Each Plan
1. **Traditional Plan**:
   - **Advantage**: Better coverage for unexpected or more expensive medical costs, as the insurance covers 80% after the deductible.
   - **Disadvantage**: Higher initial costs (deductible) and uncertainty about total annual expenses.

2. **HMO Plan**:
   - **Advantage**: Predictable, low out-of-pocket costs with a fixed co-payment

Latesha Moore has a choice at work between a traditional health insurance plan that pays 80 percent of the cost of doctor visits after a $250 deductible and an HMO that charges a $8 co-payment per visit plus a $23 monthly premium deduction from her paycheck. Latesha anticipates seeing a doctor once a month for her high blood pressure. The cost of each office visit is $100. She normally sees the doctor an average of three times a year for other health concerns. Comment on the difference in costs between the two health-care plans and the advantages and disadvantages of each.

Calculate and compare the annual out-of-pocket costs of a traditional insurance plan and an HMO for a user with monthly doctor visits. This detailed solution covers the calculation of deductible, coinsurance, and premium deductions, providing insights into cost-effectiveness and plan advantages for high school students.

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