Economics For Healthcare Managers
4th Edition
ISBN: 9781640550483
Author: Robert H. Lee
Publisher: Health Administration Pr
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Chapter 1, Problem 3E
To determine
Insurance plans and tax burden.
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What makes the Earned Income Tax Credit (EITC) different from other poverty-fighting programs?
The amount of the credit is doubled if the head of household is attending college.
The tax credit is phased out gradually, rather than at a specific income cutoff point.
The amount of the credit is not determined by the number of dependent children in the household.
The EITC doesn't require the recipient to pay a minimum amount of income tax in order to receive the credit.
It creates less of an incentive to work than other programs.
Mark earns $18,000 a month as a physician. He becomes disabled under an own occupation definition policy with a 50% prior wages clause because he lost his hearing in a hunting accident. He returns to work as a researcher making $3,000 per month, a reduction of 83.33%. He has a residual benefit provision in his disability policy that calls for monthly benefits of $12,000. What will be his total income per month including any residual benefits?
$3,000 (one time payment)
$12,000 (the greater of his salary or the disability benefits)
$13,000 (the $3,000 plus $10,000 from the residual)
$15,000 (the $12,000 plus the $3,000)
Question 8: Consider two workers, Ralph and Steve. Both of them work for the same employer, and each earns $15 per hour. Steve is taxed at the 15 percent marginal rate. However, Ralph is married, and due to his wife’s income, he is taxed at the 28 percent marginal rate. Using Figure 11.3, indicate which one would be expected to seek more health insurance and why.
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- 1.3 A mandatory health insurance plan costs $4,000. One worker earns $24,500 in employment income and $500 in investment income. Another worker earns $48,000 in employment income and $2,000 in investment income. A third worker earns $68,000 in employment income and $7,000 in investment income. A premium-based system would cost each worker $4,000. A wage tax–based system would cost each worker 8.5 percent of wages. An income tax–based system would cost each worker 8 percent of income. For each worker, calculate the cost of the insurance as a share of total income. E = Employment income I = Investment income P = Premium cost of insurance Premium as a percentage of income = P/(E + I) W = Wage tax cost of insurance = 0.085 × E Wage tax cost as a percentage of income = W/(E + I) T = Income tax cost of insurance = 0.080 × (E + I) Income tax cost as a percentage of income = T/(E + I) 1.4 Which of the plans in exercise 1.3 would impose the larger burden on those with incomes under $25,000: a…arrow_forwardThis is the third time. please answer correctly. A characteristic NOT found in a group disability income policy is: A.cost of living adjustment B.benefits based on an employee's income C.medical underwriting D.elimination periodarrow_forwardCalculate Social Security taxes, Medicare taxes, and FIT for Jordon Barrett. He earns a monthly salary of $11,900. He is single. Before this payroll, Barrett's cumulative earnings were $142,100. (Social Security maximum is 6.2% on $142,800 and Medicare is 1.45%.) Calculate FIT by the percentage method. (Use Table 9.1) Note: Round your answers to 2 decimal places. FIT Social Security taxes $ 737.80 Medicare taxes $ 172.55arrow_forward
- For the healthcare organization and medical insurance, Discuss at least three positive and negative impacts of the ACA that must be considered.arrow_forwardThe table below presents the system in the country of Boonton. The numbers indicate the percentage of income in that bracket that is taxed. For example, someone making $13,000 would be taxed 23% of that amount. Income Earned Tax % applied to that Income Under $15,000 23 $15,001 - $30,000 24 $30,001 - $45,000 25 $45,001 - $60,000 27 If a household in Boonton currently makes $20000, how much do they owe in taxes?arrow_forwardExplain the difference between TANF, the earned income tax credit, SNAP, and Medicaid.arrow_forward
- Social security provides to all of the following except— disabled persons who are unable to work, able-bodied persons who choose not to work, retired persons who have reached the appropriate age, minor children whose parents are unable to care for themarrow_forwardAs of 2016, social insurance tax on a typical worker’s income is calculated as ___ of the worker’s pretax paycheck amount. Only ____ of that amount is actually deducted from the worker’s paycheck. The other ____ is paid by the employer. Self-employed individuals, however, must pay the full ____ themselves. For Social Security, though not for Medicare, the amount of income taxed is capped. The cap for 2016 is ____. Answer Choices: 5.1% 7.65% 10.2% 15.3% $118,000 $125 $133 700 900arrow_forwardSuppose the government implements a negative income tax plan to deal with the poverty problem. The negative income tax rate is set at 30%, and the break-even level of income is set at $20,000. 1. What is the guaranteed annual income level assured each family,. regardless of the amount of income earned by the family? 2. If a family earns $10,000 income, what will their negative income tax subsidy be? 3. If a family earns $30,000 income, what is their disposable income?arrow_forward
- Consider a working mother who is guaranteed an income of $18,000 per year from a combination of working and government assistance. In order to earn $20,000 herself, through work, how many hours would she need to work? $25,000 $20,000 $18,000 $16,000 $15,000 $10,000 $5,000 500 1,000 1,500 2,000 2,500 + Leisure (hours) Labor (hours) Select the correct answer below: 500 labor hours O O labor hours 2500 labor hours O 1000 labor hours Incomearrow_forward26) If an employee receives health insurance through his or her employer, the employer A) still withholds contributions for Medicare and Medicaid from the employee's paycheck. B) still withholds contributions for Medicare, but not Medicaid, from the employee's paycheck. C) still withholds contributions for Medicaid, but not Medicare, from the employee's paycheck. D) is no longer required to withhold contributions for Medicare or Medicaid from the employee's paycheck. 27) Which of the following is not part of the "individual mandate" provision of the Patient Protection and Affordable Care Act (ACA)? A) Individuals are allowed to opt out of the insurance program if they can prove they have no serious health issues and do so before the act fully takes effect in the year 2014. B) By 2016, fines for not having health insurance will be the greater of $695 per person or 2.5 percent of income. C) Beginning in 2014, individuals who do not…arrow_forwardConsider an income guarantee program with an income guarantee of $3,000 and a benefit reduction rate of 50%. A person can work up to 2,000 hours per year at $6 per hour. Mia, Lucas, Thomas, and Deborah work for 100, 333 %, 400, and 600 hours, respectively, under this program. The government is considering altering the program to improve work incentives. Its proposal has two pieces. First, it will lower the guarantee to $2.000. Second, it will not reduce benefits for the first $3,000 earned by the workers. After this, it will reduce benefits at a reduction rate of 50%. a. Draw the budget constraint facing any worker under the original program. Explain. b. Draw the budget constraint facing any worker under the proposed new program. Explain. I c. Which of the four workers do you expect to work more under the new program? Who do you expect to work less? Are there any workers for whom vou cannot tell if they will work more or less? Explain.arrow_forward
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