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# A family pays $800 per year for an insurance plan that pays  Question banks Downloads My Bookmarks Reviews Important topics Author Message TAGS: Senior Manager Joined: 30 Aug 2003 Posts: 325 Location: dallas , tx Followers: 1 Kudos [?]: 9 [0], given: 0 A family pays$800 per year for an insurance plan that pays [#permalink]  11 Nov 2003, 09:45
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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 _________________ shubhangi Manager Joined: 26 Aug 2003 Posts: 233 Location: United States Followers: 1 Kudos [?]: 2 [0], given: 0 [#permalink] 11 Nov 2003, 12:13 B? Family pays$1000, $800 for the plan +$200 as 20% of first 1000, up until the expense is $1000. So for the plan to match that amount, the expense has to add$200 to 80% of first $1000 expense. And that happens when the total expense reaches$1200.
Senior Manager
Joined: 30 Aug 2003
Posts: 325
Location: dallas , tx
Followers: 1

Kudos [?]: 9 [0], given: 0

B is right.. dont u think its bit confusing?
_________________

shubhangi

Manager
Joined: 26 Aug 2003
Posts: 233
Location: United States
Followers: 1

Kudos [?]: 2 [0], given: 0

shubhangi wrote:
B is right.. dont u think its bit confusing?

Yep, it's bit confusing at first glance but amazingly such is the fact all insurance companies rely on to make BIG BIG bucks.
Director
Joined: 28 Oct 2003
Posts: 503
Location: 55405
Followers: 1

Kudos [?]: 10 [0], given: 0

"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 "

I take issue with the wording.

For instance, if the total expenditure is $2000, the family will be on the hook for$1000.

800+ .2(1000)= 1000. So the family's expense is $1000, which means the insurance company's expense, to be equal, would also be$1000.

The phase "when the family's medical expenses total" is ambiguous.

I presume this possible misunderstanding is why $2000 is not one of the options. Director Joined: 13 Nov 2003 Posts: 971 Location: Florida Followers: 1 Kudos [?]: 32 [0], given: 0 [#permalink] 14 Nov 2003, 20:13 family will be paying:$800 (insurance) + $200 (out of$1000) = $1000. insurance pays:$800 (80% of $1000) +$s spent over $1000 (X) X + 800 = 1000 ..gives$200 & this is what family spent over $1000. Intern Joined: 30 Oct 2003 Posts: 33 Location: uk Followers: 0 Kudos [?]: 2 [0], given: 0 [#permalink] 19 Nov 2003, 18:22 probably writing the equations down will lessen the confusion in the problem. premium paid by the family = 800. If medical expense is M, amount paid by the plan = 800 + (M-1000)=M-200 excess over 'amount paid by the plan'(family will have to bear it as the company won't) = M - (M-200) = 200 Given that premium + excess over 'amount paid by the plan' = 'amount paid by the plan' 800 + 200 = M-200 M= 1200 [#permalink] 19 Nov 2003, 18:22 Similar topics Replies Last post Similar Topics: 2 A basic savings account pays interest once per year on Decem 3 27 Aug 2013, 23:57 1 Health insurance Plan A requires the insured to pay$1000 or 2 18 Jul 2011, 03:45
20 Health insurance Plan A requires the insured to pay $1000 or 9 17 Dec 2010, 07:33 A family pays$800 per year for an insurance plan that pays 3 09 Jun 2007, 19:52