mysseo wrote:Health insurance Plan A requires the insured to pay $1,000 or 50% of total cost, whichever is lower. Plan B requires the insured to pay the initial $300, but then pays 80% of the cost over $300. Which of the following is a cost level for which both insurance plans pay out the same amount?
A.$600
B.$1,000
C.$3,800
D.$5,300
E.$6,200
The question is asking for the cost level at which both the insurance plans would pay the same amount to the insured.
Work from the answer choices:
A)600: Plan A pays: 300 (50% of 600)
Plan B pays: 240 (80% of 300)
the two amounts are not same. Hence
incorrect
B)1000: Plan A pays: 500 (50% of 1000)
Plan B pays: 560 (80% of 700)
the two amounts are not same. Hence
incorrect
C)3800: Plan A pays: 2800 (3800-1000)
Plan B pays: 2800 (80% of 3500)
the two amounts are same. Hence
correct
You can work the remaining options too, for checking.
So the correct answer is
C
