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Insurance

by umaa » Thu Dec 03, 2009 9:57 pm
Health insurance Plan A requires the insured to pay $1000 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?

$600

$1000

$3800

$5300

$6200

OA is C
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by papgust » Thu Dec 03, 2009 11:58 pm
I tried using Backsolving method which i find it easier than setting up equations.

According to the problem, a particular cost for both plans should be equal. Try plugging in the answer choices. As a strategy, pick the middle of the lot (Choice C).

Plan A - 3800 - 1000 = $2800
Plan B - 80% of 3800 = $2800

Hence it is C.
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by ace_gre » Fri Dec 04, 2009 12:02 am
Let x be the cost of the care.
Plan A pays
x-1000 or 0.5x

Plan B pays
0.8(x-300)

For both insurance payouts to be equal, x-1000=0.8x-240.
Solving x=3800

Also 0.5x=0.8x-240
Solving x=800

Since only 3800 is given,answer choice is C.
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by viju9162 » Fri Dec 04, 2009 1:37 am
I didnt understand this part Plan A requires the insured to pay $1000 or 50% of total cost, whichever is lower

I understood 0.5 of total cost, but couldn't figure out to derive "X-1000" I was considering "1000" only. [/url][/i]
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by ace_gre » Fri Dec 04, 2009 10:22 am
In plan A, first 1000$ is payed by the individual. So payout by insurance will be anything over 1000.Hence x-1000 will be paid by insurance company.

Hope it helps.
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by heshamelaziry » Fri Dec 04, 2009 4:26 pm
papgust wrote:I tried using Backsolving method which i find it easier than setting up equations.

According to the problem, a particular cost for both plans should be equal. Try plugging in the answer choices. As a strategy, pick the middle of the lot (Choice C).

Plan A - 3800 - 1000 = $2800
Plan B - 80% of 3800 = $2800

Hence it is C.
Last edited by heshamelaziry on Fri Dec 04, 2009 6:55 pm, edited 1 time in total.
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by viju9162 » Fri Dec 04, 2009 6:31 pm
Got it. Thank you ace_gre :)
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by ssuarezo » Mon Dec 07, 2009 11:20 am
papgust wrote:I tried using Backsolving method which i find it easier than setting up equations.

According to the problem, a particular cost for both plans should be equal. Try plugging in the answer choices. As a strategy, pick the middle of the lot (Choice C).

Plan A - 3800 - 1000 = $2800
Plan B - 80% of 3800 = $2800 ---> Papgust, you mistyped 3800 by 3500, but the total is correct.
---> it should be 3500 (3800-300) since it's 80% of Cost over 300$

Hence it is C.
Hi Papgust, please read my note in bold, underlined.
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by papgust » Mon Dec 07, 2009 6:13 pm
Hi,

Thanks for pointing out the typo!
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by umaa » Mon Dec 21, 2009 9:34 am
The OA is C
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