Description of income tax

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Suppose that Helen's marginal income tax rate is 28 percent. Compare her after-tax income and her group medical costs under three scenarios:

a. She receives $45,000 in salary and pays $2,500 for individual medical coverage.

b. She receives $43,000 in salary and group medical coverage on a noncontributory basis with the employer's contribution to the cost of coverage equal to $2,500.

c. She receives $46,000 in salary and group medical coverage on a contributory basis with the employer's contribution equal to $1,250 and her required (tax deductible) 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?

Reference no: EM1364665

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