1. Suppose that Helen's marginal income tax rate is 28 percent. Compare her after-tax in- come...

 

 

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1. Suppose that Helen's marginal income tax rate is 28 percent. Compare her after-tax in- come and her group medical costs under three scenarios: (a) She receives $45,000 in salary and pays $2,500 for individual med- ical coverage, (b) she receives $43,000 in salary and group medical coverage on a non- contributory basis with the employer's con- tribution to the cost of coverage equal to $2,500, and (c) she receives $46,000 in salary and group medical coverage on a con- tributory basis with the employer's contribu- tion equal to $1,250 and her required (tax de- ductible) contribution equal to $1,250. What would the difference be between (a) and the other two scenarios if individual insurance costs Helen $2,700 due to a higher expense loading? 1. Suppose that Helen's marginal income tax rate is 28 percent. Compare her after-tax in- come and her group medical costs under three scenarios: (a) She receives $45,000 in salary and pays $2,500 for individual med- ical coverage, (b) she receives $43,000 in salary and group medical coverage on a non- contributory basis with the employer's con- tribution to the cost of coverage equal to $2,500, and (c) she receives $46,000 in salary and group medical coverage on a con- tributory basis with the employer's contribu- tion equal to $1,250 and her required (tax de- ductible) contribution equal to $1,250. What would the difference be between (a) and the other two scenarios if individual insurance costs Helen $2,700 due to a higher expense loading?

Answer rating: 100% (QA)

SOLUTION To compare the aftertax income and group medical costs for the three scenarios we need to calculate Helens aftertax income for each scenario ... View the full answer