Question

Leroux Health Insurance is considering changing the options in one of their health care plans (Plan A) based on customer feedback that prescriptions and regular visits to the doctor are too expensive for the insured individual. How can Leroux reduce the costs of regular health care without driving up the price of their health care plan?

Leroux Health Insurance
Plan A
Cost:

Monthly Premium:
$248.00
Annual Deductible:
$5,500.00
Co-pays:

Brand-name Prescriptions
$35.00
Generic Prescriptions
$15.00

Visits:

Primary Care Physician:
$40.00
Specialist:
$60.00
Urgent Care:
$125.00
Emergency Room:
$325.00
a.
Reduce the monthly premium but increase the co-pay amounts to compensate for the lower premium.
b.
Reduce the annual deductible, but increase the co-pay amounts so that the monthly premium can stay the same.
c.
Reduce the co-pay amounts but increase the annual deductible so that the monthly premium can stay the same.
d.
Reduce the co-pay amounts but increase the monthly premium to compensate for the lower deductible.

Answer 1

Answer: c.

Explanation: Lowering co-pays directly reduces out‑of‑pocket costs for prescriptions and regular visits. To offset the higher expected payouts without increasing the monthly premium, Leroux can raise the annual deductible so the insurer’s overall risk/costs remain balanced. This shifts more cost to the insured for larger or less‑frequent claims while keeping routine visit and prescription costs down and the premium unchanged.