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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 non-contributory basis with the employer's contribution to the cost of COVerage equal to $2,500, and
(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 ,2 50.
Question 1: What would the difference be between and the other two scenarios if individual insurance costs Helen $2,700 due to a higher expense loading?
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