Rachel receives employer provided health insurance. The employer's cost of the health insurance is $6,000 annually. What is her employer's after-tax cost of providing the health insurance, assuming that the employer's marginal tax rate is 35 percent and is profitable?

Question

Quizplus · Accepted Answer

The employer's after-tax cost is calculated by subtracting the tax savings from the total cost. The tax savings is the cost of the insurance multiplied by the tax rate: $6,000 * 0.35 = $2,100. Therefore, the after-tax cost is $6,000 - $2,100 = $3,900.

Rachel Receives Employer Provided Health Insurance