FIN 3140 8-12 notes

Mediation-Arbitration

- An agreement to try mediation and if not resolution is reached, to submit to arbitration which is legally binding

Controlling Health Care Costs

-Review fees and charges -Seek preventive care -Ask for generic drugs -Practice preventive care and stay well -Consider a high deductible -Use a flexible spending plan

Government Mortgage

Mortgage insured by a government entity, such as Federal Housing Administration (FHA), Veteren's Administration (VA) or Rural Housing Service (RHS).

three types of fixed rate mortgage

conventional, government programs, balloon

life insurance need cycle

childhood and singlehood marriage children empty nest retirement

employer self-funded health plans

company runs self-insured insurance program, collects premiums from employees, pays medical benefits as needed

Evaluating Alternatives

comparison shopping, selecting options (mechanical, convenience, aesthetic), new or used, buy or lease

owning a manufactured home disadvantages

difficult to set may be to difficult quality be poor

Major provisions in health insurance

eligibility assigned benefits internal limits co-payments service benefits exclusions and limitations cancellation and termination

owning a manufactured home advantages

flexibility in selection if features and appliances

Group Health Insurance

health insurance consisting of contracts written between a group, (employer, union, etc.) and the health care provider

Individual Health Insurance

health insurance plans purchased by individuals to cover themselves and their families. Different from group plans, which are offered by employers to cover all of their employees.

Medicare Part A (aka Hospital Insurance or HI)

helps pay for care in a hospital or skilled nursing facility or for care from a home health agency or hospice

price comparison

implying prices are below retail value or lower than at other stores

Supplements to group health insurance

individual insurance to cover what your health insurance lacks

Major Medical Insurance

insurance that includes treatment for long-term, high-cost illnesses or injuries and inpatient and outpatient expenses.

conventional mortgages

loans that do not have mortgage insurance or a loan guarantee from a U.S. governmental agency

Estimating Life Insurance Needs

multiple of income method easy method dual income no kids non-working spouse method family need method

Problem Identification

needs vs wants

Medicare Part C (Medicare Advantage)

optional, premium payment required participation in part A and B required provides coverage that a Medigap Plan would provide

Health insurance marketplaces

organizations established to create more organized and competitive markets for purchasing health insurance

hospital expense insurance

pays part or all of hospital bills for room, board, and other charges

Why does health care cost so much?

•expensive technologies •Duplication of tests •Increases in the variety and frequency of treatments •Increasing number and longevity of elderly people •Regulations burdens •Increasing number of accidents and crimes that require emergency medical services •Limited competition and restrictive work rules in the health care delivery system •Labor intensiveness and rapid average earnings growth for health care professionals •Using more expensive medical care than necessary •Malpractice insurance and fraud •Built-in inflation in health care delivery system •Aging baby boomers

owning a previously own home advantages

-establish neighborhood -pride of ownership -tax benefits

owning a new home disadvantages

-financial commitment -higher expenses than renting -limited mobility

owning a previously own home disadvantages

-financial commitment -higher expenses than renting -limited mobility -possibility of repairs

owning a condominium disadvantages

-financial commitment -less privacy -limited mobility -uncertain demand -rules -assessments

Private insurance companies

-individual policy -group policy sold to an employer

opportunity cost of housing choices

-interest income lost -time and cost of commuting -no tax advantages for renters -no equity build up for renters -time and money to repair/improve lower priced home -time and effort to custom build

Determining Purchase Price

-know information about vehicle, -deal with person of authority to lower price, -get starting price information in advance, -get price prior to mentioning trade -in, -look for rebates or low interest rates, -compare financing alternatives

leasing a vehicle

-lower payments and cash outlay -no ownership in vehicle -maximum number of miles set -need to know the numbers

owning a new home advantages

-no previous owner -pride of ownership -tax benefits

apartment renting disadvantages

-no tax benefits -remodeling limitations -restrictive covenants

house renting disadvantages

-no tax benefits -remodeling limitations -restrictive covenants -higher utilities than apartment

owning cooperative advantages

-ownership is non-profit -stable property values

owning cooperation disadvantages

-potential disagreements -must cover cost of vacant units

Owning a condominium advantages

-pride of ownership -tax benefits -less maintenance than house -accessibility to recreation and business district

find and evaluate a property to purchase

-select a location -consider using a real estate agent -conduct a home inspection

Practical Purchasing Strategies

-timing purchases (seasonal) -store selection -brand comparison -label information -price comparison -evaluate warranties -service contracts

obtaining financing

acquiring assets from creditors

health care costs

high administrative cost US has highest per capita medical cost

Purpose of life insurance

pay off debts provide income to survivors provide education cover medical and funeral cost make charitable bequests provide retirement income estate planning and estate taxes

surgical expense insurance

pays part or all of the surgeon's fees for an operation

Label information

Certain label information is helpful; however, other information is nothing more than advertising. Federal law requires that food labels contain the company name and address, ingredients, nutrients & food allergy warnings. Product labeling for appliances includes information about operating costs, to assist you in selecting the most energy-efficient models.

Vision Care Insurance

Cover eye examinations, prescription lenses, frames, and contact lenses.

decision making process phase 3:

Determining purchase price

The best buy

First decide on quality (features needed), then select best price

Evaluate warranties

Full or limited express warranties Implied warranties of fitness and merchantability

Types of Medical Coverage

Hospital expense insurance Surgical expense insurance Physician expense insure Major medical Insurance Comprehensive major medical insurance

long-term care insurance

Insurance coverage that provides a daily monetary benefit to people who are chronically ill and who require living assistance either at home or in a residential facility

Hospital Indemnity

Pays you a fixed amount for each day you are hospitalized Does not cover medical costs Supplement to the other plans

decision making process phase 4:

Post-purchase activities

decision making process phase 1:

Preshopping activities

time purchases

Price variations with the time of the year

Pre-shopping activities

Problem identification, information gathering

HIPAA

The Health Insurance Portability and Accountability Act, a federal law protecting the privacy of patient-specific health care information and providing the patient with control over how this information is used and distributed.

Benefit Period

The length of time over which the insurance benefits will be paid for each illness, disability or hospital stay.

Medicare Part B(medical)

The part of the Medicare program that pays for physician services, outpatient hospital services, durable medical equipment, and other services and supplies.

Waiting Period

Time between the beginning of a disability and the start of disability insurance benefits.

Home Health Care Agencies

provide skilled care in a person's home

physician expense insurance

provides benefits for doctors' fees for nonsurgical care, x-rays, and lab tests

Dental expense insurance

provides reimbursement for the expenses of dental services and supplies and encourages preventive dental care

Legal Options

small claims court, class action suits, using an attorney, legal aid society, prepaid legal service

Common Consumer Myth

- I can return my new car within 3 days -My credit report is confidential -My creditors can't call me at work -You cant repossess my car on private on private property -An auto lease is like a rental -If I lose my credit card I am liable -It says I won! It must be true

Resolving Consumer Complaints

- Place of purchase - Manufacturer's headquarters - Consumer agency - Legal action (mediation, Arbitration)

Brand Comparison

- better position brand relative to competition - emphasize benefits and downplay risks

Hospital and medical service plans

- blue cross = hospital care - blue shield = surgical and medical services

health insurance trade-offs

- reimbursement versus indemnity - internal limits versus aggregate limits - deductibles and coinsurance - out-of-pocket limit - benefits based on reasonable and customary charges

strategies for effective consumer buying

-Daily buying decisions involve trade-offs -Wide variety of economic, social and personal factors affect daily buying habits -Long term stability is achieved by not spending your entire income -Overspending leads to misuse of credit

Personal Consumer Protection

-Do business only with reputable companies -Avoid signing contracts you do not understand -If it seems too good to be true, it probably is -Compare the cost of using credit vs. cash -Avoid rushing to a good deal (impulse buying)

Determine Home Ownership Needs

-Evaluate owning your place of residence -Assess types of housing units -Calculate amount you can afford

Motor Vehicle Maintenance

-Keep good expense records -At least follow the maintenance schedule in the manual --more frequent intervals may minimize major repairs

price the property

-determine an appropriate market price -negotiate an agreement price

house renting advantages

-easy to move -less maintenance -minimal fanatical commitment -more space than apartment

apartment renting advantages

-easy to move -less maintenance -minimal financial commitment

Automobile Operation Costs

1. Fixed Ownership Costs: -Depreciation -Interest on auto loan -Insurance -License, registration, taxes, & fees 2. Variable Operating Costs: -Gasoline & oil -Tires -Maintenance & repairs -Parking & tolls

Home Buying Process

1. determine home ownership needs 2. find and evaluate a property to purchase 3. price the property 4. obtain financing 5. close the purchase transaction

the home buying process

1. determine home ownership needs 2. find and evaluate a property to purchase 3. price the property 4. obtain financing 5. close the purchase transaction

Decision Making Process

1.Preshopping activities 2.Evaluating Alternatives 3.Determining purchase price 4.Post-purchase activities

Medicaid

A federal and state assistance program that pays for health care services for people who cannot afford them.

Disabilty Income Insurance

A form of health insurance that provides periodic payments to replace income when the insured is unable to work as a result of illness, injury, or disease-not as a result of a work-related accident or condition

Private Health Insurance

A health policy that individuals and families can purchase to cover health services (e.g. optical and dental) not covered by Medicare

HMO (Health Maintenance Organization)

A managed care organization that provides comprehensive medical services for a predetermined annual fee per enrollee.

Fixed Rate Mortgage

A mortgage in which the interest rate does not change during the entire term of the loan.

Ballon Mortgage

A mortgage with a very large last payment, with all other payments being relatively low

closing purchase

A transaction in which a writer covers a position by purchasing an option is called:

PPO (Preferred Provider Organization)

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan's network.

Affordable Care Act

An expansion of medicaid, most of employers must provide health insurance, have insurance or face surtax, prevents rejection based on pre-existing condition. Also referred to as "Obamacare", signed into law in 2010.

decision making process phase 2:

Evaluating Alternatives

Plan Types

Group health insurance Individual health insurance Supplements to group health insurance

Lemon Laws

Laws that protect consumers from the consequences of buying a defective car.

information gathering

Refers to the process of identifying, collecting, documenting, structuring, and communicating information from various sources in order to enable educated and swift decision making to occur.

Post-purchase activities

Lemon laws, automobile operation costs, motor vehicle maintenance (servicing sources and problems)

Store selection

Location, price, selection, services

Sales Techniques to Avoid

Lowballing - low price quote increases with last minute add-ons Highballing - high trade-in offer + high new car price "How much can you afford per month?" Never leave a deposit unless ready to buy "Your price is only $100 above our cost." Sales agreements with preprinted amounts

Government health care plans

Medicare Medigap Medicaid

Comprehensive major medical insurance

a type of major medical insurance that has a very low deductible and is offered without a separate basic plan

Medicare—Part D Prescription Drug Coverage

a United States federal-government program to subsidize the costs of prescription drugs and prescription drug insurance premiums for Medicare beneficiaries.

Medigap

a private insurance policy that pays the difference between the medical charge and the amount that Medicare pays

service contract

a separately purchased agreement by the manufacturer or distributor to cover the costs of repairing the item