Final answer:
The statement is true; non-cash benefits like health insurance are not taxed, which makes them more cost-effective for employees, and their preferred form of compensation. Insurance companies can also negotiate lower healthcare rates due to their large client base, further increasing the benefits of being insured.
Step-by-step explanation:
True or False: Because non-cash benefits such as health insurance are not subject to income tax they are cheaper for the employee and therefore preferred. This statement is generally true. Non-cash benefits, particularly health insurance, are often exempt from income tax, making them a cost-effective form of compensation for employees. These benefits are indeed preferred by many employees as they effectively increase their total compensation package without incurring additional income tax liability.
Furthermore, since insurance companies have such a large number of clients, they are able to negotiate with health care and other service providers for lower rates than an individual could secure on their own. This collective bargaining power leads to reduced costs for healthcare services, which increases the benefit to consumers of becoming insured, while also saving insurance companies money when they pay out claims.
Thus, it is financially advantageous for both employees to receive health insurance as part of their compensation package, and for insurance companies to attract a large client base to negotiate better deals with service providers.