1. Based on the following information , please answer the following 2 questions. Assume an employee has a 25 % marginal tax rate. If she, on her own, wants to buy a health insurance policy that will cost her $1500. (assume her total medical cost in the tax year is lower than the 7.5% limits) How much does she pay for this insurance out of her pretax income ?
a) $1875
b) $1333
c) $ 2000
d) None of the above is correct
2. Assume it costs the employer $1300 to purchase the same health insurance coverage. As long as the reduced salary is between _$?? ; $??__ both the employer and employee are better off. ( hint: should take the tax effect into consideration)
a) $1300 ; $1500
b) $1300 ; $1875
c) $1300 ; $200
d) None of the above is correct
3. Which of the following statement about maximum probable loss (MPL) is/are correct ?
a) MPL at 95% is the amount of loss that is expected not to be exceeded with 95% certainty
b) MPL at 95%means that losses will be bee less than the MPL 95% of the time
c) both of the above are correct
4. Which statement about the legally required benefits is incorrect?
a) old- age survivor and disability insurance provides not only retirement income but also income to survivors of deceased works and income to disabled works.
b) Medicare provides medical coverage only for U.S citizens age 65 and older
c) worker’s compensation program is run by each individual state
d) worker’s compensation program only compensate for economic losses