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# A family pays $800 per year for an insurance plan that pays  post reply Question banks Downloads My Bookmarks Reviews Important topics Author Message Senior Manager Joined: 30 Aug 2003 Posts: 324 Location: dallas , tx Followers: 1 Kudos [?]: 26 [0], given: 0 A family pays$800 per year for an insurance plan that pays [#permalink]

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11 Nov 2003, 10:45
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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 [?]: 8 [0], given: 0 [#permalink] ### Show Tags 11 Nov 2003, 13:13 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: 324
Location: dallas , tx
Followers: 1

Kudos [?]: 26 [0], given: 0

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11 Nov 2003, 13:36
B is right.. dont u think its bit confusing?
_________________

shubhangi

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

Kudos [?]: 8 [0], given: 0

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12 Nov 2003, 07:24
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.
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12 Nov 2003, 14:26
"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.