Question

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.

Answer 1

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.