A family pays $800 per year for an insurance plan that pays 65 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.
Options:
(A) $1,000
(B) $1,200
(C) $1,400
(D) $1,500
(E) $2,200 Hmmm, my stream of consciousness:
Upfront payment for insurance plan = 800$
Family needs to pay 35 % of first 1000 $ in expense = 350$
Total amount paid by family when medical expenses are equal to or greater than 1000 $ = 800 + 350 = 1150 $
Total amount paid by insurance plan for first 1000 $ = 800 $
Total amount paid by family will equal amount paid by plan when medical expense = 1500 $
(Since insurance plan will pay 100% of amount that exceeds 1150$ ) So, the answer is (D).