548 Chapter 13 Insurance and Risk Management
- A company has 266 employees, all of whom are covered by the company’s health insurance plan. The company’s rates
based on full experience rating would $285 single and $690 family; the community rates are $205 single and $625
family. Calculate the company’s health insurance rates. - While you are having lunch with your old friend, the president of Smallco Industries (from Exercise 17), she complains
to you that her company is paying insurance rates that are higher than her employees’ claim experience really justifi es.
She is thinking about self-insuring. Is this a good idea?
C. Health Insurance As an Employment Benefi t
Base your answers to Exercises 20 to 23 on a monthly single rate of $255.95 and a family rate of $755.92.
- Calculate the (a) single and (b) family employee monthly health insurance costs if the employer contributes 60% of the
cost. - Calculate the (a) single and (b) family employee monthly health insurance cost if the employer contributes $200 toward
single and $500 toward family coverage. - Calculate the (a) single and (b) family employee monthly health insurance cost if the employer contributes the full cost
of a single contract plus half the difference between single and family costs. - Calculate the (a) single and (b) family monthly employee monthly health insurance cost if the employer contributes
90% of the cost of a single contract plus 75% of the difference between single and family costs.
D. Flexible Spending Accounts
In Exercises 24 to 25, assume that participating in an FSA does not change either person’s tax bracket.
- Lorraine anticipates having $750 in reimbursable medical and $3,000 in reimbursable child care expenses. If she is in
the 28% federal and 4.5% state income tax brackets, how much could she save by using a fl exible spending account for
these expenses? - Drew anticipates $475 in reimbursable medical and $2,500 in reimbursable child care expenses. If he is in the
25% federal and 7% state income tax brackets, how much could he save by using a fl exible spending account for
these costs?
E. Grab Bag
Keely Powertrain Corp. offers its employees a choice of two different health care plans. The company has just been given the
rates for these two plans for next year. They are given in the table below.
Tr aditional Indemnity Plan Point of Service PlanSingle $337.50 $219.45
Family $955.43 $632.36Use this table in answering Exercises 26 to 30.