The most important source of funding for Medicare is
a. the federal income tax.
b. premiums paid by elders and deducted from their monthly Social Security checks.
c. a 2.9 percent payroll tax paid by all workers, regardless of their age.
d. proceeds from the Medicare Trust Fund.
e. a tax on the health insurance premiums pay by all group plans.
Question 2
Continuing with the same family from the preceding question, suppose a risk neutral insurance company exists to provide vacation insurance. Suppose further that each vacation day requires a constant expenditure, and this expenditure is standard across everybody. This allows us to simplify the problem by considering all payments to be in terms of vacation days. What is the least the insurance company would charge (in terms of vacation days)?
a. 3
b. 4
c. 5
d. 6
Example FICA and Medicare deductions.
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