Fran Eller’s corporate employer has a cafeteria plan under which its employees can receive a $3,000 year-end holiday bonus or enroll in a qualified medical reimbursement plan that pays up to $3,000 of annual medical bills. Fran is in a 24 percent tax bracket and averages $2,300 in medial bills each year.
Compute the after-tax value of holiday bonus and medical reimbursement plan. (Ignore any payroll tax implications.)