A health insurance company charges policyholders a $2250 annual premium for health insurance for hospitalization.

5. A health insurance company charges policyholders a $2250 annual premium for health insurance for hospitalization. The company estimates that each time a patient is hospitalized costs the company $3200.  Furthermore, they have estimated that 85% of patients will not be hospitalized, 10% will be hospitalized once a year, and no one will be hospitalized more than twice.