insurance plan

[Taniuca]

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)1000
b) 1200
c) 1400
d) 1800
e) 2200

[Rahul@gurome]

Let the family's medical expenses = x
Then amount that the family paid by the plan = 800 + (x - 1000) = x - 200
Extra amount paid by the plan = x - (x - 200)= 200
Therefore, amount that the family paid by the plan = extra amount paid by the plan + $800
x - 200 = 200 + 800
x = $1200
The correct answer is B.

[Deepthi Subbu]

Hello Rahul ,

I am unable to understand the question.Can you explain?

[vishubn]

i second that , Can u please explain ?

[Rahul@gurome]

i second that , Can u please explain ?

In this question the key point is that at which point the family and the company will come at the same level.
A family buys a mediclaim policy and it pays $800 in a year as the premium.
Now if that family produces a bill of $1000 in that year, then the company will pay 80% of $1000 = $800 and the remaining $200 will be paid by the family itself (because as per policy in first $1000 expenses the company has to pay only 80% of the expenses).

The question is asking that at what level will the company and the family, both will pay the same amount.

Till now, the family has paid $800(premium) + $200 = $1,000 but the company has paid only $800, so if the total bill is of $1000+$200 = $1200, then the company will pay $800 + $200 = $1000 (please note that the company will pay 100%, as it is mentioned that if the medical expenses are over $1000, then the company will bear the total expenses), which is the same as that paid by the family.

Does that help?

[diebeatsthegmat]

Let the family's medical expenses = x
Then amount that the family paid by the plan = 800 + (x - 1000) = x - 200
Extra amount paid by the plan = x - (x - 200)= 200
Therefore, amount that the family paid by the plan = extra amount paid by the plan + $800
x - 200 = 200 + 800
x = $1200
The correct answer is B.

i dont understand this, can you please explain more.?
as i understand, the family will have too pay 800+0.2*1000 and all the money left will be paid by the insurance =x
is it equal X-200=800+200
X=1200

for the method you used , i dont understand this "Then amount that the family paid by the plan = 800 + (x - 1000) = x - 200
Extra amount paid by the plan = x - (x - 200)= 200
Therefore, amount that the family paid by the plan = extra amount paid by the plan + $800"
is it not right that x-x=0?