Guys ,
A family pays $800 per year for an insurance plan that pays 80 percent of the first
$1,000 in expenses and 100 percent of all medical expenses thereafter. In any given
year, the total amount paid by the family will equal the amount paid by the plan
when the family's medical expenses total.
A. $1,000
B. $1,200
C. $1,400
D. $1,800
E. $2,200
OAB
Thanks ,
Shreyans
insurance
This topic has expert replies

 Legendary Member
 Posts: 510
 Joined: Thu Aug 07, 2014 2:24 am
 Thanked: 3 times
 Followed by:5 members
 Jim@StratusPrep
 MBA Admissions Consultant
 Posts: 2279
 Joined: Fri Nov 11, 2011 7:51 am
 Location: New York
 Thanked: 660 times
 Followed by:266 members
 GMAT Score:770
You can break this up into pieces.
The first $1,000 in medical expenses:
Family total = $800 (initial premium) + $200 (20% of expenses) = $1000
Insurance total = $800 (80% of total)
After this the insurance company pays all the expenses and is $200 behind the family total, so an additional $200 must me spent to make the totals equal.
$1,000 + $200 = $1,200
B
The first $1,000 in medical expenses:
Family total = $800 (initial premium) + $200 (20% of expenses) = $1000
Insurance total = $800 (80% of total)
After this the insurance company pays all the expenses and is $200 behind the family total, so an additional $200 must me spent to make the totals equal.
$1,000 + $200 = $1,200
B
GMAT Answers provides a world class adaptive learning platform.
 Push button course navigation to simplify planning
 Daily assignments to fit your exam timeline
 Organized review that is tailored based on your abiility
 1,000s of unique GMAT questions
 100s of handwritten 'digital flip books' for OG questions
 100% Free Trial and less than $20 per month after.
 Free GMAT Quantitative Review
 Push button course navigation to simplify planning
 Daily assignments to fit your exam timeline
 Organized review that is tailored based on your abiility
 1,000s of unique GMAT questions
 100s of handwritten 'digital flip books' for OG questions
 100% Free Trial and less than $20 per month after.
 Free GMAT Quantitative Review
 GMATGuruNY
 GMAT Instructor
 Posts: 15539
 Joined: Tue May 25, 2010 12:04 pm
 Location: New York, NY
 Thanked: 13060 times
 Followed by:1906 members
 GMAT Score:790
Since the plan pays 80 percent of the first $1,000 in expenses, the family pays 20% of the first $1000 in expenses.j_shreyans wrote:Guys ,
A family pays $800 per year for an insurance plan that pays 80 percent of the first $1,000 in expenses and 100 percent of all medical expenses thereafter. In any given year, the total amount paid by the family will equal the amount paid by the plan when the family's medical expenses total
A. $1,000
B. $1,200
C. $1,400
D. $1,800
E. $2,200
Thus:
The total amount paid by the family = premium + 20% of the first $1000 in expenses = 800 + 200 = 1000.
We can PLUG IN THE ANSWERS, which represent the total amount of medical expenses.
When the correct answer choice is plugged in, the plan will pay the same amount as the family's total ($1000).
D: 1800
Since the plan pays 80% of the first $1000 and 100% of the remainder, the amount paid by the plan = 80% of 1000 + 100% of 800 = 800+800 = 1600.
Too much.
Since the correct answer choice must be SMALLER, eliminate D and E.
B: 1200
Since the plan pays 80% of the first $1000 and 100% of the remainder, the amount paid by the plan = 80% of 1000 + 100% of 200 = 800+200 = 1000.
Success!
The correct answer is B.
Private tutor exclusively for the GMAT and GRE, with over 20 years of experience.
Followed here and elsewhere by over 1900 testtakers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia  a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua  a long list of top programs.
As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.
For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3
Followed here and elsewhere by over 1900 testtakers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia  a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua  a long list of top programs.
As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.
For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3
GMAT/MBA Expert
 Brent@GMATPrepNow
 GMAT Instructor
 Posts: 16207
 Joined: Mon Dec 08, 2008 6:26 pm
 Location: Vancouver, BC
 Thanked: 5254 times
 Followed by:1268 members
 GMAT Score:770
I like to start with a "word equation"j_shreyans wrote:Guys ,
A family pays $800 per year for an insurance plan that pays 80 percent of the first
$1,000 in expenses and 100 percent of all medical expenses thereafter. In any given
year, the total amount paid by the family will equal the amount paid by the plan
when the family's medical expenses total.
A. $1,000
B. $1,200
C. $1,400
D. $1,800
E. $2,200
Amount paid by family = Amount paid by plan
$800 premium + 20% of first $1000 + 0% of anything over $1000 = 80% of first $1000 + 100% of anything over $1000
Simplify: $800 + $200 + $0 = $800 + 100% of anything over $1000
Now, let T = total of family's medical expenses
We get: $800 + $200 + $0 = $800 + 100% of (T  $1000)
Simplify: $1000 = $800 + 1.0(T  $1000)
Simplify: $1000 = $800 + T  $1000
Simplify: $1000 = T  $200
Solve: T = [spoiler]$1200[/spoiler]
Answer: B
Cheers,
Brent
GMAT/MBA Expert
 Jeff@TargetTestPrep
 GMAT Instructor
 Posts: 1462
 Joined: Thu Apr 09, 2015 9:34 am
 Location: New York, NY
 Thanked: 39 times
 Followed by:22 members
If we let m = total medical expenses incurred by the family and p = total amount paid by family, then p = 800 + 0.2m if m â‰¤ 1000, or p = 800 + 0.2(1000) = 1000 if m > 1000.
A family pays $800 per year for an insurance plan that pays 80 percent of the first
$1,000 in expenses and 100 percent of all medical expenses thereafter. In any given
year, the total amount paid by the family will equal the amount paid by the plan
when the family's medical expenses total.
A. $1,000
B. $1,200
C. $1,400
D. $1,800
E. $2,200
If we let n = total amount paid by the insurance plan, then n = 0.8m if m â‰¤ 1000, or n = 0.8(1000) + m  1000 = m  200 if m > 1000.
We need to determine when n = p. We have two cases: 1) if m â‰¤ 1000; 2) if m > 1000.
1) If m â‰¤ 1000, we have:
n = p
0.8m = 800 + 0.2m
0.6m = 800
m = 800/0.6 = 8000/6
We see that m > 1000, which is contradictory to our assumption that m â‰¤ 1000. So, let's analyze case 2.
2) if m > 1000, we have:
n = p
m  200 = 1000
m = 1200
We see that m = 1200 is within our assumption that m > 1000. So, if the family's total medical expenses are $1,200, then the family and the insurance company will have paid equal amounts.
Answer: B
Jeffrey Miller
Head of GMAT Instruction
[email protected]
See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews
Why in ever answer we are assuming that insurance is paying the the family back on the same money?
Family spends 800 > gets nothing back (family money 800)
Family spends 1000 > gets 800 back (family money 1000)  why everyone is saying at this point that insurance will pay 800 again??? They already paid it back....?
Family spends 200 > gets back 200 (family money 1000)
Again even if we say insurance counts 800 as money spend by family:
F spends 800 > nothing back (800)
F spends 200 > (totals 1000) gets 800 back (f money is 200)
F spends 200 (total jumps to 400) > gets back 200 (200)
How come insurance is returning money back from the past? Oh you spend 1 dollar today, here is $1000 back based on your total spent?
Like family got 80% discount and paid 200 not 1k, and after that they get $800 for just spening that 200?
How does this world works
Family spends 800 > gets nothing back (family money 800)
Family spends 1000 > gets 800 back (family money 1000)  why everyone is saying at this point that insurance will pay 800 again??? They already paid it back....?
Family spends 200 > gets back 200 (family money 1000)
Again even if we say insurance counts 800 as money spend by family:
F spends 800 > nothing back (800)
F spends 200 > (totals 1000) gets 800 back (f money is 200)
F spends 200 (total jumps to 400) > gets back 200 (200)
How come insurance is returning money back from the past? Oh you spend 1 dollar today, here is $1000 back based on your total spent?
Like family got 80% discount and paid 200 not 1k, and after that they get $800 for just spening that 200?
How does this world works