March 29, 2017

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bayside insurance offers two health plans. under plan A, giselle would have to pay the first 160 of her medical bills, plus 25% of the rest. under plan B, giselle would have to pay the first 180, but only 20% of the rest. for what amount of medical bills will plan B save giselle money? assume she has ove 180 in bills.

  • math - ,

    Assume her bill is $x >180,then
    Equate the two plans and find when the benefits cross over:
    160+0.25(x-160) = 180+0.2(x-180)
    Solve for x.
    I get x=480.

    Since the incremental cost (0.2) is less for plan B, we conclude that plan A is advantageous up to $480 in claims, and plan B for $480 and up.

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