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 21 percent and the employer is profitable?

Question

Quizplus · Accepted Answer

The after-tax cost to the employer can be calculated as:

After-tax Cost = Cost of health insurance * (1 - Marginal tax rate)
After-tax Cost = $6,000 * (1 - 0.21)
After-tax Cost = $4,740

Therefore, the employer's after-tax cost of providing the health insurance is $4,740.

Rachel Receives Employer-Provided Health Insurance