Question

Lou's employer covers 70% of the cost of a $3800-per-year health insurance plan and 90% of the cost of a $1200-per0year disability insurance plan. If Lou gets paid monthly, what is the total amount deducted from his gross income for health and disability insurance during each pay period?

Answer 1

Lou is responsible for 30% of his health insurance and 10% of his disability insurance costs. Annually, that's $1,140 for health and $120 for disability. Divided by 12, Lou has a monthly deduction of $105 from his gross income for these insurances.

Step-by-step explanation:

The question requires us to calculate the total amount deducted from Lou's gross income for health and disability insurance during each pay period, assuming he is paid monthly. The annual cost for health insurance is $3,800, and his employer covers 70% of this cost. Thus, Lou is responsible for the remaining 30%. The annual cost for disability insurance is $1,200, and the employer covers 90% of this cost, leaving Lou with 10% to pay.

Firstly, we calculate Lou’s contribution to the health insurance per year:
$3,800 * 30% = $1,140.
Next, we calculate the contribution for disability insurance per year:
$1,200 * 10% = $120.
Now, we add both contributions to get the total annual deduction:
$1,140 (health) + $120 (disability) = $1,260.
To find the monthly deduction, we divide the annual total by 12:
$1,260 ÷ 12 = $105.

Therefore, $105 is deducted from Lou’s gross income each month for health and disability insurance.