Chapter 4.A, Problem 55E

You have a choice of two health insurance plans:

•Plan A (low deductible): Annual premium is $5400, deductible is $100 (for the year), and there are no co-payments. The insurance plan covers 100% of all expenses after the deductible is met.

•Plan B (high deductible): Annual premium is $1500, deductible is $2000 (for the year), and the co-payments are $100 for an emergency room visit, $100 for radiology procedures such as CT scans, and $30 for an office visit. The insurance covers 80% of all expenses after the deductible is met and your co-payments are subtracted.

Find the out-of-pocket expenses under each plan assuming that, in one year, you have one emergency room visit that costs $3500, one annual check-up that costs $300, and one CT scan that costs $700.