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Essentially, what I'm looking for is a simulation of out-of-pocket cost as a function of a health insurance plan and an arbitrary sequence of medical events -- in other words, a computational model of how an insurance company processes claims. Does this exist?

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rcrogers
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1 Answers1

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Out of pocket medical costs is relatively easy to calculate. You should be able to use the following formula.

Annual Premiums + Policy Deductible + Policy Co-Insurance = Maximum Exposure

As far as how an insurance company processes claims.

(Full billing amount - % of network contracted rate) - remaining deductible/coinsurance = Insurance Company Responsibility.

So an example:

Mary goes to the doctor and has a procedure that the full cost is $500. She went to a network doctor and the insurance company has a 10% discounted rate with that particular provider. That brings the total bill to $450. Mary still owes $200 on her deductible and has a co-insurance of an additional $1000 at an 80/20 ratio.

  • $450 - $200 = $250 After deductible is paid.
  • 80% of $200 is $160. This is the insurance companies portion.
  • Mary had to pay $200 due to her deductible and $40 due to her co-insurance.
  • Mary's responsibility is $240.
David Taylor
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