Modeling Data for the Health Insurance Plan Congratulations! You have been hired by your new employer

Modeling Data for the Health Insurance Plan

Congratulations! You have been hired by your new employer. You’ve been asked to come into the office to complete your onboarding activities on your first day of work. One of your many HR paperwork tasks as a new employee will be selecting your Health Insurance Plan.

Health Insurance Plans

You have three health plan choices: Saver/2600, PPO/1000, and PPO/1500.

To help employees make their selection, your employer provides the HR Benefits Guide document that includes information about the Health Insurance Plans. This document is the actual resource given to all employees. (Go ahead and look at the PDF, which is 100% REAL and was given to ALL WKU employees in 2016. It’s very similar to the insurance that Kentucky and many other state employees use).

If you are not familiar with heath care terminology, the following explanation of some key terms may be helpful.

Monthly Premiums

Your monthly premium is the amount you pay per month for your Health Plan. (The employer’s contribution is $575/month, and your monthly premium is what you pay each month above and beyond this contribution). This is usually deducted from your salary each month. You’ll see this on your paycheck stub.

Annual Deductible

Your annual deductible is the initial amount of covered medical expenses that you must pay before the Plan starts paying benefits. You pay 100% of all your covered medical expenses up to your annual deductible. For all remaining covered medical expenses, you pay the coinsurance amount.

• Single deductible – The amount that each covered person must pay during a calendar year before the plan begins paying benefits for that person.

• Family deductible – The maximum amount that two (2) or more family members covered under the plan must pay in a calendar year. Once this cumulative family deductible is reached, the deductible will be considered satisfied for all family members covered under the plan for the remainder of the calendar year.

Coinsurance

Your co-insurance is a percentage of the covered medical expenses that you are responsible for

paying after you meet your annual deductible. For example, if you have a policy with a 30%

coinsurance, you will pay 30% of your covered medical expenses beyond your deductible.

Out-of-Pocket Maximum

Your out-of-pocket maximum is the maximum dollar amount that you will have to pay for

covered medical expenses during the plan year. After you pay this amount through deductible and

coinsurance, your insurance plan pays 100% of remaining covered medical expenses. Monthly

premiums do not count toward out-of-pocket maximum.

• Single maximum – The maximum amount each covered person will pay during a

calendar year before the Plan begins paying 100% of the benefits for that person.

• Family maximum – The maximum amount that two (2) or more family members

covered under the plan will pay in a calendar year. Once this cumulative family deductible is

reached, the Plan pays 100% of all family members covered medical expenses for the

remainder of the calendar year.

To simplify things, below is a chart summary showing a side-by-side comparison of the

“Employee (EE) Only” Coverage options for all three plans.

Summary of Health Insurance Plan Financials for In-Network Coverage

Employee (EE) Only Coverage

Employee (EE)

Deductible

Coinsurance Maximum Monthly Saving Account

Only Plan Percentage Out-of-Pocket Premium (Credit)

Top Life Pledge

$2600 15% $4600 $25 $1300

Saver/2600

Top Life Pledge

$1000 15% $3500 $75 $500

PPO/1000

Top Life Pledge

$1500 30% $5000 $0 $500

PPO/1500

Top Life Pledge – many insurance programs will charge you less if you agree (“pledge”) not to smoke, that you’ll

exercise regularly, see your doctor, get a flu shot, etc.

What Now?

We have lots of data. The HR department has provided us with plenty of it. You’ve probably

been given similar books about insurance where you work. There is a lot to consume (and often the

HR staff will want you to make an election on the spot. Don’t do it! Now we want to model the data

and see if one option or another is better for us.

Assume that you are a single employee (EE). Don’t add assumptions to this situation that aren’t

already spelled out (e.g., “I have a favorite doctor and I want to see if she is part of the network

before I choose.”).

Create a data model that quantitatively assesses which of the different plans (Saver/2600,

PPO/1000, or PPO/1500) make the most sense financially for you.

Deliverable

Normally, you’d use the results of this data-modeling exercise to make a basic decision: Which

insurance plan should I select? However, in business one of the important things that we have to do

when we are modeling data and developing support for a decision is to COMMUNICATE that

process and our findings to the relevant stakeholders. Let’s assume that you were tasked with this

project by your boss and she wants you to analyze this for her and make a recommendation. In this

case, you’ll need to write a report for her. The report should include the following:

1. Title Page

2. Executive Summary Page

3. Introduction – Describe the Problem

4. Modeling Process – Describe how you modeled the data (use screen shots of the process to

highlight your work)

5. Results – What did your model show? Include your chart. Explain how to read it…don’t

assume that your manager understands this scenario well enough to interpret it on her own.

6. Conclusion – What decision are you recommending? Why? What are the benefits to your

recommendation vs the other options?

Length: 5-7 pages

Format: A single .DOCX file (paste the screen shots and graphics into the document)