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 the cost of the insurance minus the tax savings from the deduction. The tax savings is $6,000 * 35% = $2,100. Therefore, the after-tax cost is $6,000 - $2,100 = $3,900.

Rachel Receives Employer Provided Health Insurance