Deshawn Carter

$3.$ Deshawn Carter just received his open$-$enrollment benefits notification from his employer and has asked you to assess his disability insurance coverage. He currently has a long$-$term, any$-$occupation disability policy available through his employer. The policy pays a benefit of $80$ percent of his $$85,000$ gross annual income. Deshawn previously elected to have his premiums deducted from his salary on a before$-$tax basis. The premium dollars are not being added back into his taxable income. For the purposes of this case scenario, assume Deshawn is in the $22$ percent marginal tax bracket and that the tax bracket begins with income of $$38,700.$ He has asked you to determine the net after$-$tax benefit he will receive should he become disabled under each of the following situations:$133$

a$.$ No changes are made to his policy.

b$.$ He elects to have the pre$-$tax dollars used to pay his policy premiums added back into his taxable income. $($Remember to remind Deshawn that this is an irrevocable election.$)$

c$.$ His employer has offered to pay $50$ percent of the premium on his behalf, with Deshawn electing to pay the other half of the premium with after$-$tax dollars. $($Remember to address with Deshawn how the income tax impact of this election will change his net benefit over the next several years, assuming his salary remains static.$)$