4. Consider a single individual with the following insurance plan:

Annual deductible: $500

Coinsurance: 20%

Annual Out of Pocket Maximum: $3,000

a.The individual undergoes a medical test in Januarythe first medical expense of the calendar yearfor which the negotiated price with their insurance plan is $336. How much should this individual expect to pay out of pocket for this service?

b. Suppose that in February of the same year, the individual had to undergo a procedurethe second medical expense of the calendar yearfor which the negotiated price with insurance is $540. How much should this individual expect to pay out of pocket for this service?

c. Now suppose this individual changes jobs in October 2019. The individual has the option to pick between one of the following plans from their new employer:

Plan A: $250 annual deductible, 10% coinsurance, $2,250 annual out of pocket max

Plan B: $2,000 annual deductible, 20% coinsurance, $5,000 annual out of pocket max

The monthly premium for Plan A is $124 and the monthly premium for Plan B is $68. Given that that deductible and out of pocket amounts will be reset at the new job, which plan should this individual choose for 2019 in order to maximize their utility for the remainder of the calendar year (assume that they can switch plans in 2020 if desired)? Explain.