Question

The estimated medical costs are expected to be $7,500 during an employee's retirement. The retiree is expected to pay 30% of the cost and Medicare is expected to pay 50% of the cost. What is the company's estimated net cost of benefits?
A.$3,750.
B.$5,250.
C.$7,500.
D.$1,500.

Answer 1

Answer:

option D

Explanation:

given,

estimate medical cost are expected = $7,500

The retiree is expected to pay 30% of the cost.

Medicare is expected to pay 50% of the cost.

company estimated net cost benefits = ?

retiree expected pay = 30 % of $7,500

                                   = 0.3 x $7,500

                                   = $2,250

Medicare expected pay = 50% of $7,500

                                        = 0.5 x $7,500

                                        = $3,750

company's net cost benefits = $7,500 - ($2,250+$3,750)

                                               = $7,500 - $6000

                                               = $1,500

hence, the correct answer is option D