The following three options are available on a state health

The following three options are available on a state health exchange based on the recent “Affordable Care Act”. Option A: Monthly premium of $75. Deductible is $1,500 and the insurance company pays 90% of the balance. Option B: Monthly premium of $100. Deductible is $500 and the insurance company pays 80% of the balance. Option C: Monthly premium of $150. No deductible and the insurance company pay 70% of the cost. Beth has kept a record of her medical expenses for the past few years. Based on her record, the following probability table has been compiled. Annual Medical

Expenses $1,200 1,000 $1,800 $2,000 $800 $3,000

Probability 0.30 0.08 0.17 0.20 0.15 0.10

Based on prior medical expenses, which is the best option for Beth?

Solution

Plan B