Quandaries and Queries

Name: Khadijah

Who is asking: Student
Level: Middle

Last week congressional approval was given to legislation involving prescription drug coverage for seniors. One summary of the legislation explains that it is estimated that in 2006 a senior will pay a premium of $35 per month, then pay their first $250 in pharmacy bills. After the bills reach $250, the coverage would pick up 75% of their bills that bring their total bills between the $250 and $2250 mark. After their bills reached a total of $2250, the senior would be responsible for all bills bringing their total annual bills between $2250 to $5100. Then any bills after the $5100 mark has been reached will be 95% covered by the insurance. Using this information, letís analyze the situation of a senior who accumulates $6000 in pharmacy bills over one year and has the insurance coverage. Over the course of this year, how many dollars will the senior pay? Please help me!! This problem baffles me every time!!!

Hi Khadijah,

As I read this there are 5 parts to the payment

  1. Premiums
  2. The first $250.00
  3. $250.00 to $2250.00
  4. $2250.00 to $5100.00
  5. Over $5100.00

Calculating these items I get

  1. Premiums: 12 $35.00 = $420.00
  2. The first $250.00: the senior pays it all $250.00
  3. $250.00 to $2250.00: The coverage pays 75% so the senior pays 25% of $2000.00. (You calculate this time.)
  4. $2250.00 to $5100.00: The senior pays it all; $5100.00 -$2250.00 = $2850.00
  5. Over $5100.00: the coverage pays 95% so the senior pays 5% of $6000.00 - $5100.00. (You calculate again.)

So the total is ????


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