SECTION 2-5 pp. 126-127 Group Health Insurance

Section Objective Calculate: Deduction for group insurance

Key Words to Know group insurance (p. 126) Insurance offered by many businesses to employees, paid in part by the business and in part by deductions from employees’ paychecks.

Formula 1 Employee’s = Annual × Employee’s Share Amount Percent

Formula 2 Deductions per Pay Period = Total Annual Amount Paid by Employees Number of Pay Periods per Year

Jack’s Jackpot p. 126 Describe at least two scenarios when a young, healthy person would need health insurance.

Example 1 Lawrence Butler has family medical coverage through the group medical plan his employer provides. The annual cost of the plan is $4,500. The company pays 80 percent. How much does Butler pay annually?

Example 1 Answer: Step 1 Find the percent paid by employee. 100% – Percent Company Pays 100% – 80% = 20%

Example 1 Answer: Step 2 Find the total amount paid by employee. Annual Amount × Employee’s Percent $4,500 × 20% = $900.00

Example 2 Nicholette McClure has family medical coverage through the group medical plan her employer provides. The annual cost of the plan is $5,000. The company pays 75 percent. How much is deducted from her biweekly paycheck for medical insurance?

Example 2 Answer: Step 1 Find the percent paid by employee. 100% – Percent Company Pays 100% – 75% = 25%

Example 2 Answer: Step 2 Find the total amount paid by employee. Annual Amount × Employee’s Percent $5,000 × 25% = $1,250

Example 2 Answer: Step 3 Find the deduction per pay period. Total Annual Amount Paid by Employee Number of Pay Periods per Year $1,250 ÷ 26 = $48.08

Practice 1 Annual cost of insurance: $4,160. Employer pays 80 percent. 52 pay periods. Find the deduction per pay period.

Practice 1 Answer $16

Practice 2 Ken Fujimoto’s employer pays 90 percent of his medical insurance and 60 percent of his dental insurance. Medical insurance costs $3,400 per year and dental insurance is $1,300. How much is deducted from Ken’s semimonthly pay for medical insurance? How much for dental insurance?

Practice 2 Answer Medical: $14.17 Dental: $21.67

END OF SECTION 2-5 Group Health Insurance