 Personal Finance Practice Problem using OneNote. PPO Payout Calculation. Prepare to get financially fit by practicing personal finance. You're not required to, but if you have access to OneNote, would like to follow along, we're in the icon on the left-hand side, Practice Problem tab in the 9050 PPO Payout Calculation tab. Also take a look at the Immersive Reader Tool. The practice problems are typically in the text area too, same name, same number, but with transcripts. It can be translated into multiple languages, either listened to or read in them. Information on the left-hand side, we're imagining we have a PPO Medical Insurance Plan and we have a claim of emergency room bill 2100. So the information on the plan is, we have emergency room care at a network hospital coverage percent after the member has met an annual deductible 75% and then we have the deductible of 500. So let's go over our terms here, the deductible. Those contributions are tax deductible. Often a little bit more complicated with the medical insurance. I have great medical insurance. And other kinds of insurance like property insurance where we might think of deductible as the amount that we pay and then anything over and above the deductible, oftentimes the insurance company pays possibly up to some kind of maximum. When we think about the health insurance, it's often a little bit more complicated and in this case we have the deductible, the amount that we're gonna pay up to the deductible and then the amount over the deductible, we still pay a portion and the insurance company pays a portion 75%. That means that we're gonna pay 25% and then there could be a max out-of-pocket maximum in which case the insurance company might pay 100% over and above that amount. So you get like another layer than you might see in other kinds of insurance. Now this is a great problem for working on your tables, I highly recommend putting this in Excel. We'll put it into a table a couple different ways. So we're gonna say, okay, that means that we've got the claim 2100 for the emergency room bill. We're gonna say that the deductible, the amount that we have to pay is gonna be $500. So the difference between the two, 2100 minus 500, 1600, the insurance company is gonna pay 75% of the amount above the 500 above the deductible. That is 75%. Let's pull out the trustee calculator just for the fun of it. 1,600 times 0.75. That was totally fun. I'm so happy I pulled that. So that's gonna be the 1,200. So if that's the amount the insurance company is going to pay, then we're gonna pay 400. In other words, the amount over the deductible was 1,600. They're gonna pay 1,200 of it. So this minus 1,600 is gonna be the 400 or we'll calculate it this in another way. You could think of it as one or 100 minus 0.75, 75% is 25% times the 1,600 to get to that 400. We'll do that calculation in another table just so you can see it a couple different ways. The claim up to the deductible, so we're gonna pay that 400 plus the deductible of the 500. That means that we're gonna pay Pay? Pay. The 900 out of pocket. Now, you wanna be able to set up your table on the right-hand side and your data if you were to do this in Excel so you can change the data on the left-hand side and see what will happen on the right. For example, we might wanna change this emergency fund and see what would happen in different scenarios. If this number was to go below $500, then our formulas would get messed up because this number shouldn't go negative here. So we could use a logic function and if kind of function to say, I want you to subtract it unless it goes below zero in essence and then stop there. I won't go over the logic function here, but we do do this in Excel. Good practice to run that. And then down here, this deductible amount, if it was below the amount that we paid, if this claim amount was below 500, the deductible amount, then we would want this to cap at that amount. So we could do that by taking this lesser of the men, in other words, of these two numbers. And that would be a way that we can format our table in Excel to run different scenarios. Now, if this is the amount that we're gonna pay, note that the claim was $2,100. So if we're gonna pay 900 ourselves, that means the insurance company is gonna pay 1,200, which we already calculated up top, but we're just kind of checking it out. So the 1,200 and the 900 is the 2,100 for the actual bill. Let's look at it a different way. We're just gonna calculate it a different way here. We're gonna say the amount after deductible, this part starts the same, except now we have a nicer little subcategory up top with a colon. We indented it here, 2,100 minus the deductible, $500. And then that's gonna give us the amount after the deductible, 1,600. And then we're gonna calculate the percent paid out of pocket after the deductible. Instead, in other words, of multiplying times 75%, we're gonna multiply times one, or 100%, minus 0.75 or 75%, the amount that we're gonna pay 25%. In other words, if the insurance company pays 75% of the amount over the deductible, we're gonna pay 100% minus 75% or 25%. And then we can calculate the outer column. Look how nice and neat this is because we're gonna do this indentation. We're visualizing our tables and kind of putting it up into a table kind of worksheet as neatly as possible so we can visualize it as easily as possible. Now we can take the 1,600 times the 0.4, I'm sorry, 0.25, gives us the 400. And then we've got the claim up to the deductible, meaning we also paid the deductible of the 500. And that's gonna give us the 900 down here. So same 900, just a little bit different calculation. If you were to put this table into Excel, again, you might want an if or logic function because if this dropped below 500, if this number was below 500, we would not want to this to go negative. We're staying positive here. We're just positive people. I must stay positive. So if it goes negative, you could use a logic function to cap it. And you can also use this one here. If this was to go below the 500, we wanna take the lesser of the claim or the deductible down here. And that can help us to kind of format this good practice in Excel. We can then try to calculate the amount paid by the insurance company by saying we have the 2,100. We paid the 900 out of pocket. That means the insurance company would be paying the 1,200, 1,200 plus the 900 gets us to the 2,100, which was the claim.