Question: State University has three healthcare plans for its faculty and

State University has three healthcare plans for its faculty and staff to choose from, as follows.
Plan 1—monthly cost of $32 with a $500 deductible; the participants pay the first $500 of medical payments for the year, the insurer pays 90% of all remaining expenses.
Plan 2—monthly cost of $5 but a deductible of $1200, with the insurer paying 90% of medical expenses after the insured pays the first $1200 in a year.
Plan 3—monthly cost of $24 with no deductible, the participants pay 30% of all expenses with the remainder paid by the insurer.
Tracy McCoy, an administrative assistant in the management department, estimates that her annual medical expenses are defined by the following probability distribution.
Annual Medical Expenses Probability
$100......... 0.15
500......... 0.30
1,500......... 0.35
3,000......... 0.10
5,000......... 0.05
10,000......... 0.05




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  • CreatedApril 10, 2014
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