 Personal finance practice problem using OneNote. Health insurance out of pocket max or stop loss cap calculation. Prepare to get financially fit by practicing personal finance. You're not required, but if you have access to OneNote would like to follow along when the icon on the left-hand side practice problems tab in the 9030 health insurance out of pocket max or stop loss cap tab. Also take a look at the immersive reader tool practice problems typically in the text area too with the same name, same number, but with transcripts. Transcripts that can be translated into multiple languages either listened to or read in them. Information's on the left-hand side. We're imagining we have a health insurance policy, a claim on the health insurance policy. We're trying to think about a calculation on how much we would be paying out of pocket after having considered the insurance contribution, the insurance company contribution. Noting the new item down below which is gonna be this out of pocket maximum or the max out of pocket. So let's look at our terms again. We've got the deductible which is a little bit different than you might think of as a deductible in other kinds of insurance such as property insurance where we would typically think we have to pay up to the deductible on the claim and then over the deductible we would think the insurance company might pay 100% up to some certain dollar amount. But in health insurance it may be the case that the deductible is something we would have to pay and then over above the deductible the insurance company doesn't quite pay 100% yet but pays some percentage. Therefore we pay a percentage over the deductible and then you might have another basically cap which would be that out of pocket maximum or cap that then over that point the insurance company might pay then the 100% which is a nice number to know because that might be the number that we want to kind of self-insure towards to see if we can have enough money and savings to cover an emergency for example if you had like a catastrophe for medical conditions. Okay, let's see how this calculation might work. We got the personal costs so we're gonna say the claim was $10,000. Now remember this is great work to put into an Excel worksheet or something like that so that we can change the data on the left hand side and set up our table so we can run different scenarios. So keeping that in mind as we go we've got the deductible 500. So that would mean we have the amount over the deductible at 9,500. So of that 9,500 how much would we be paying? Well, we know that they're gonna pay the insurance company 80% over the deductible. So one or 100% minus 80% would be 20%. So we would be paying 20% of the amount after the deductible has been cleared. So if we take of course that 9,500 times the 0.2 or 20% we get then to the 1,900 and then we would also be paying the deductible if we had cleared the deductible. So 1,900 plus the 500 deductible that gets us to then the 2,400. So that's gonna be the out of pocket amount. Now, if we had an out of pocket maximum of 4,200 then we could say, okay, there's the 4,200 and we would take the lesser of the out of pocket amount 2,400 or the 4,200. In this case, it would be the 2,400. So we can then adjust the numbers in our calculation on the left hand side to say, okay, when would that 4,200 kick in basically to make this number 2,400 here above the 4,200 so that we would be capped at the 4,200. So if you do this in Excel, then you can adjust, for example, this number, the amount of the claim upwards to see how high basically you could go to get to kind of your breakeven point or the amount that you hit that stop loss cap amount here. We do do this in Excel it's a good practice problem to work with. And if you set it up right, of course, you can adjust all these numbers on the left hand side and then run your scenario on the right hand side. The other kind of condition that we've seen in prior presentations is that you might say, well, what if this amount was less than the deductible like it was $400 that we had here. Well, then this first amount there wouldn't be any amount over the deductible. So we would want this to cap at zero. We can use a logic function to do that in Excel. So if you want to practice that in Excel, great little tool to practice that. And then when we have this 500 down here that we're going to be paying out of pocket, if that number was less than 500, then we would be only paying up to that amount the whatever the amount was. So we would be taking the lesser of these two number, the 500 or the 10,000 which we can use a min function for. And this calculation down here, the personable costs would be either the 2,400, the amount that would be the out of pocket before the cap or the cap. And again, we can use a min function here to calculate that. And if you work that in Excel, then you can adjust these numbers on the left-hand side, especially this 10,000 for example, and get the point at which it would hit the cap, for example, and do calculations such as that. So these are great little problems to put in Excel and practice some very common tools and functions that aren't just the sum function like logic test functions and min functions.