UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGNCollege of Business D E P A R T M E N T O F F I N A N C E Finance 230 Assignment 6Fall, 2007 Due: October 5, 2007Use the coverages described in the 2007-2008 U of I Student Health Insurance Plan for Undergraduates todetermine how much your student health policy will pay in the following situations, and assume the following:1. The average semi-private room rate charged by each hospital is $500.2. All treatments are medically necessary.3. Unless otherwise indicated, all charges are considered to be the Usual and Customary fees.4. Each situation is the only claim you have ever had while insured under this Insurance Plan.5. All treatment is provided by plan provider hospitals or facilities and licensed providers6. Unless otherwise indicated, each loss occurred during the academic year.1. Running into the classroom late one Friday, you trip and fall. You land on the edge of a desk, mouth first and you chip a tooth. You visit a dentist later that day and he fixes the chipped tooth. You also have the dentist fix a cavity that has been hurting for a while. The dentist charges you $200 for fixing the chipped tooth and $100 to repair the cavity.A) $0 B) $40 C) $80D) $160 E) None of the aboveThe cavity is not covered because the policy only covers for injury to sound, natural teeth and the removal of partially bony or completely bony impacted wisdom teeth and TMJ. No routine dental care is provided. The chipped tooth is covered. The $150 deductible applies first and then80% of the remaining $50 is $40.2. After trying to take the first Fin 230 exam without studying, you feel extremely depressed. You go to a clinic to talk to a psychiatrist. You have a total of ten visits to this psychiatrist over the semester before you recover. You are charged $60 per visit. Your policy will pay:A. 0 B. $225 C. $300D. $350 E. None of the abovePg 9. The policy will pay 50% of charges up to a maximum of $35 per day. In this case, the policy would pay 50% of $60 per day or $30 per day. There are 10 days and $30 per day would be a total of $300.3. You are playing intramural baseball when you are struck in the head by a baseball. You fall into a coma and are hospitalized for 200 days. Your physician visits you once each day. You are billed $100for each visit by your physician, $500 per day for hospital room and board, $25,000 for x-rays, $10,000 for drugs, $40,000 in laboratory tests and $30,000 for medical supplies.A) $0 B) $200,000 C) $218,900D) $222,900 E) None of the aboveThe limit for intramural sports is $75,000.CostRoom and Board 500 x 200 days 100,000X-rays 25,000 25,000Medical Supplies 30,000Laboratory Test 40,000Medicine (drugs) 10,000Total 205,000Deductible ($100) - 100Total204,900Insurance Pays80% of First 10,000 8,000Excess over 10,000 subject to max of $75,000 total 67,000Physician Visit ($0 b/c exceed max payment 100 x 200 days + 075,0004. One night you are stricken with a 104 degree temperature so you decide to go to the emergency room.The doctor performs some laboratory tests and prescribes you some medicine. A week later you still don’t feel any better so you make an appointment with another doctor who performs even more laboratory tests and prescribes new medicine. You are charged $200 for the emergency room visit, $100 for the visit to the doctor’s office, $100 for each set of medicine and $200 for each set of laboratory tests.A) $400 B) $440 C) $520D $560 E) None of the above5. You have been having trouble sleeping, so you visit a doctor who runs some tests and diagnoses you as having sleep apnea. The doctor tells you to wear a mask that is hooked up to a Continuous PositiveAirway Pressure (CPAP) machine at night to cure this problem. You are billed $100 for the doctor’s visit, $200 for the laboratory tests and $500 for CPAP machinery.A) $0 B) $120 C) $480D) $520 E) None of the aboveER Visit Doctor’s VisitDoctor’s Visit 0 100ER treatment 200 0Medicine (Not Covered) 0 0Laboratory Tests 200 200Total 400 300Outpatient Deductible ($150) -150 0ER Deductible ($50) -50 0Total 200 300Insurance pays 80% of first $10,000 in medical cost:200 * 0.8 = 160 300 * 0.8 = 240 160 + 240 = 400Sleep Apnea is a sleeping disorder, and sleeping disorders are excluded. Pg 15, #25.6. You hurt your back slouching too much in class (one more reason to stay awake in class). You visit a doctor who runs an MRI on you and then prescribes some pain medication. The doctor charges you $200 for the doctor’s visit, $2,000 for the MRI, and $150 for medicine.A) 0 B) $1,240 C) $1,360D) $1,640 E) None of the aboveMRI (lower of 80% of Usual and Customary or max of $1200)1,200Medicine (Excluded) 0Doctor’s Visit 200Deductible ($150) - 150Total 50Insurance PaysMRI 1,20080% of First 10,000 (80% x 50) + 401,2407. You failed to achieve your goals set in the Goal Setting Assignment of Fin 230, and out of frustration,you kick the brick wall next to you as hard as you can. You break your ankle. You are hospitalized for 5 days to have surgery to repair the damage. You are billed $500 per day for hospital room and board, $8,000 for x-rays, $10,000 for the surgeon, $6,000 for the assistant surgeon and $4,000 for the anesthesia (which is administered by a licensed Physician who remained in constant attendance during your operation).A) 0 B) $22,720 C) $24,400D) $28,400 E) None of the aboveCostRoom and Board 500 x 5 days 2,500X-rays 8,000 8,000Total 10,500Deductible ($100) - 100Total10,400Insurance Pays80% of First 10,000 8,000Excess over 10,000 400Surgeon 10,000 x 0.80 = 8,000Assistant 6,000 x 0.80 = 4,800Anesthesia 4,000 x 0.80 = 3,20024,4008. You are hospitalized for 30 days to treat a substance abuse condition. You are billed $600 per day for room and board and $5,500 for medication while you are in the hospital.A) $0 B) $18,400 C) $20,000D) $21,400 E) None of the abovePg 7 states that “Maximum Daily Room and Board Allowance shall not exceed the average semi-private room rate charged by the Hospital n which confined.” Since the average semi-private room rate is stated in the assumptions to be $500, the health policy would only