A college provides its employees with a choice of the two medical plans shown in the table. For what size hospital bills is Plan 2 better than Plan 1? ( Hint: The cost to the employee includes both the deductible payment and the employee's insurance co-payment.)
A) Anything over $900
B) Anything less $1,200
C) Anything over $600
D) Anything over $1,000
E) Anything less $1,300

Question

A college provides its employees with a choice of the two medical plans shown in the table. For what size hospital bills is Plan 2 better than Plan 1? ( Hint: The cost to the employee includes both the deductible payment and the employee's insurance co-payment.) 
A) Anything over $900 
B) Anything less $1,200 
C) Anything over $600 
D) Anything over $1,000 
E) Anything less $1,300

Quizplus · Accepted Answer

To determine when Plan 2 is a better option, we need to calculate the total cost to the employee for different sizes of hospital bills. Let's start by calculating the total cost under each plan for a hospital bill of $500:

Plan 1: $300 (deductible) + 0.2($500 - $300) = $320
Plan 2: $200 (deductible) + 0.1($500 - $200) = $280

In this case, Plan 2 is the better option, since it results in a lower total cost to the employee. We can repeat this calculation for different hospital bills to determine when Plan 2 is the better option:

For a hospital bill of $600:
Plan 1: $300 (deductible) + 0.2($600 - $300) = $340
Plan 2: $200 (deductible) + 0.1($600 - $200) = $260
Plan 2 is the better option.

For a hospital bill of $900:
Plan 1: $300 (deductible) + 0.2($900 - $300) = $420
Plan 2: $200 (deductible) + 0.1($900 - $200) = $290
Plan 2 is the better option.

For a hospital bill of $1,000:
Plan 1: $300 (deductible) + 0.2($1,000 - $300) = $460
Plan 2: $200 (deductible) + 0.1($1,000 - $200) = $300
Plan 2 is the better option.

For a hospital bill of $1,200:
Plan 1: $300 (deductible) + 0.2($1,200 - $300) = $540
Plan 2: $200 (deductible) + 0.1($1,200 - $200) = $380
Plan 2 is the better option.

Based on these calculations, we can see that Plan 2 is the better option for hospital bills over $1,000. Therefore, the answer is D) Anything over $1,000.

A College Provides Its Employees with a Choice of the Two