Question

Referring to my previous question someone answered that employee will be deducted 13.7 % from the net pay. How did you find /calculate 13.7 % less. where did you get this percentage?

(Question: Your organization, located in Manitoba, will be enhancing the group benefits plan offered to employees in two months by adding accidental death and dismemberment (AD&D) coverage and vision care coverage. The organization will pay 50% of the cost of the AD&D premiums and 50% of the cost of the vision care premiums, with the employees paying the other 50% of each premium. The Manager of Finance, Cheryl Hunt, has requested that you, as the Payroll Supervisor, prepare a communication for the employees, explaining how these new benefits will impact their net pay. regarding

Answer 1

Answer:

To understand the impact of this policy on the net pay of the employees, we need to understand with the help of an example:

Suppose the current pay of the employee is $ 100 per employee.

suppose the cost of AD&D plan and Vision care plans are $10 each then total cost for the organisation is $20.

Now as per the policy the organisation is going to bear the 50% of cost i.e. $ 10 for both the policies and will charge the remaining 50% cost i.e. $ 10 to employees.

In that case now the salary of employee would be only ($ 100 - $ 10) i.e. $ 90 and he would be receiving the benefit of $ 20 by just paying the $ 10.

and hence the net impact on the salary would be to the extent of 50% of the cost of the plan and  benefit would be for 100%.

( We have not been given the cost of the plan in value or percentage and hence, it is not possible to find out direct percentage impact on net pay)