Final answer:
After calculating annual healthcare costs for the two options based on Rachel's expected usage, Option 1 (Fee-for-service) will cost her $3,423, and Option 2 (HMO) will cost her $8,102. Thus, Option 1 is the more cost-effective choice for Rachel.
Step-by-step explanation:
To determine which health insurance option is more cost-effective for Rachel, we need to compare the annual costs associated with each plan under her expected healthcare usage. Let's calculate the total healthcare costs for each option based on the given information.
Option 1 (Fee-for-service):
Monthly premium: $225 x 12 months = $2,700
Deductible: $7,500 (not met, since Rachel's costs are below this amount)
Primary Care Physician visit: $30 x 12 visits = $360
Allergy Specialist visit: $75 x 1 visit = $75
Generic Drugs: $12 x 2 prescriptions x 12 months = $288
Total Cost for Option 1 = $2,700 (premiums) + $360 (PCP visits) + $75 (specialist visit) + $288 (drugs) = $3,423
Option 2 (HMO):
Monthly premium: $630 x 12 months = $7,560
No deductible
Primary Care Physician visit: $20 x 12 visits = $240
Allergy Specialist visit: $62 x 1 visit = $62
Generic Drugs: $10 x 2 prescriptions x 12 months = $240
Total Cost for Option 2 = $7,560 (premiums) + $240 (PCP visits) + $62 (specialist visit) + $240 (drugs) = $8,102
Comparing the total costs, Rachel will pay $3,423 for Option 1 and $8,102 for Option 2. Since Rachel has very few healthcare requirements and the total costs for Option 1 are lower than Option 2, the correct statement is:
c. Rachel's health care needs will cost less under Option 1 if she is able to avoid additional health care costs.