Let's break down the problem step by step.

Part 1: How much will the Baulding family pay?

1. Total expenses for each family member:

   • $982
   • $1,582
   • $183

   Total medical expenses:
   $982 + 1,582 + 183 = 2,747$ dollars

2. Deductible:
   The family has a deductible of $250 per person. Since there are three family members, and all have incurred expenses, the total deductible amount will be: $250 \times 3 = 750$ dollars

3. Expenses after deductibles:
   Subtract the total deductible from the total expenses: $2,747 - 750 = 1,997$ dollars

4. Insurance coverage:
   The insurance covers 80% of the expenses after the deductible: $0.80 \times 1,997 = 1,598$ dollars

5. Baulding family's portion:
   Since the insurance covers 80%, the family pays the remaining 20% of the expenses after the deductible plus the deductible amount: $(0.20 \times 1,997) + 750 = 399 + 750 = 1,149$ dollars

Answer for Part 1:
The Baulding family will pay $1,149.

Part 2: How much will the insurance company pay?

The insurance company will cover the remaining 80% of the expenses after the deductible, which we calculated earlier: Insurance payment:
$1,598$ dollars

Answer for Part 2:
The insurance company will pay $1,598.

Part 3: Benefits of a Flexible Spending Account (FSA)

A flexible spending account allows individuals to use pre-tax dollars to pay for health care expenses not covered by insurance, such as co-pays, deductibles, and other out-of-pocket expenses. Let's evaluate the options:

Option B is correct:

A flexible spending account offers the Bauldings the advantage of paying for health care expenses not covered by insurance (such as unreimbursed medical or dental expenses, including co-pays to doctors, deductibles, and qualified child care) with pre-tax dollars. Disadvantages include the "use it or lose it" feature of the plan; any contributions to the flexible spending account not used by the end of the year are lost.

Summary:

• Baulding family pays: $1,149
• Insurance company pays: $1,598
• Best FSA Option: B

Would you like more details or have any questions?

Related Questions:

1. How would the calculation change if only two family members had medical expenses?
2. What are some ways to maximize the benefits of a flexible spending account?
3. Can the Baulding family set a higher deductible plan to reduce premiums? What would be the trade-offs?
4. How would switching to a different insurance plan affect the overall cost?
5. What is the maximum allowable contribution to an FSA under current regulations?

Tip:

Consider estimating your yearly medical expenses to determine how much to contribute to a flexible spending account to avoid losing unused funds.