What are two reasons why employees would prefer for their employer to pay for their health insurance rather than receiving increased wages and paying for their own health insurance?
What will be an ideal response?
1. The wage an employer pays employees is taxable income to the employees but the money an employer spends to buy health insurance for employees is not taxable.
2. Insurance companies are typically willing to charge lower premiums for group insurance, particularly to large employers, because risk pooling is improved and adverse selection and moral hazard problems are lower when compared with individual policies.
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If the production of a good causes an external cost, then the efficient quantity is
A) equal to the quantity at which the marginal benefit equals marginal cost. B) less than the quantity at which the marginal benefit equals the marginal cost. C) more than the quantity at which the marginal benefit equals the marginal cost. D) the quantity at which the marginal private benefit is greater than the marginal social benefit. E) None of the above answers is correct.
When a Japanese automaker makes a profit on a plant located in the United States, this enters into the U.S. balance of payments in the category of
a. merchandise exports b. merchandise imports c. income receipts on foreign investments d. income payments on foreign investments e. unilateral transfers