BUS Unit 4 Exam
how much is the cost of a will with zoom?
$100-200
how much is the cost of a will with an attorney?
$300-500
Medicaid eligibility
*eligibility set by state - varies* - individual makes less than 100% - 200% of the Federal Poverty Level, *&* is pregnant, elderly, disables, a parent/caretaker, or a child
"non-working spouse" method of determining life insurance needs
*utilized if non-working spouse DIES* - 10k/year PER number of years the youngest* child has until they're 18 ex: 3, 4, 5, yr old 18-3 = 15 15 x 10,000 = $150,000
benefits of Health Savings Account
- helps pay deductibles - tax-deductible deposits - tax-deferred growth - tax-free for medical care - if account balance is never withdrawn, can be added to IRA
what population are annuities ideal for
- individuals that have funded their 401k and IRAs to allowable limits - have extra $ for retirement and want to get more tax deferred growth
earliest Social Security Benefits can be collected
62 (collecting too early can limit availability of benefit)
what is full retirement age
67
what is the best age to collect social security benefits
70 (benefit amounts increase with age)
"easy method" of determining life insurance requirements
70% of combined income for 7 years (income x 7) x 0.7
Roth IRA
A self-funded/self-managed savings or investment account intended for retirement (deposit amounts are limited per year) - no tax deductions on contributions
What is an Individual Retirement Agreement (IRA)?
A self-funded/self-managed tax-deferred savings or investment account intended for retirement (deposit amounts are limited per year) - benefit now, taxed later
Required minimum distribution (RMD) rule for IRAs
After the age of 72, a certain amount must be withdrawn from the account each year
What is Social Security funded by
FICA tax
What is Blue Cross known for covering?
Hospital care benefits
Medigap Policy requirements
additional coverage for high premium - must have Medicare A and B
2 most important factors impacting life insurance cost
age gender
Medicare Part B cost
approx. $145 monthly premium 20% co-insurance deductible
Medicare Part D cost
approx. $30 monthly premium
mental accounting
assigning different values/purposes when it comes to money
elimination period
associated with disability insurance: - specific amount of time that must elapse until insurance benefits can be accessed - typically 1-6 months
Rule of 72
formula to approximate the number of years it will take for an investment to double: - divide 72 by annual rate of return ex: annual return = 6% - 72/6 = 12 years for investment to double
Medicaid
government health program offered to low income individuals - very good coverage/additional insurance is not required
Medicare
health insurance for individuals over the age of 65, with disabilities, or end stage renal disease (kidney failure)
Health Maintenance Organization (HMO)
health insurance plans that gives individual access to network of specific doctors and healthcare providers - in exchange for fixed prepaid premium
Health Savings Accounts can only be paired with:
high deductible insurance plans
what is a typical person's most valuable asset as they reach retirement?
house
disability insurance
insurance in place that provides individuals with a paycheck if they are unable to do job due to non-work related accident or illness - longer premium period / elimination period should have lower premium total
group health insurance
insurance offered by employer to large group
what is a will?
legal document that specifies how property should be distributed after death - must be signed by you in front of 2 witnesses
term insurance
life insurance coverage for a specific period of time - cheaper than whole life insurance
group life insurance
life insurance that is offered to large group by employer - easier to sign up for / better deal
limit of financial gifting
more than 11.58 mil --> 40% tax
Summary Plan Description (SPD)
outlines benefits and legal rights (such as coverage, dependents, copays, deductibles) - makes understanding financial responsibilities easier
What is the cash value in whole life insurance?
portion of premium that goes into a side account and earns a modest rate of return
Medicare Part D coverage
prescription drugs
Medicare Part C cost
run through private insurance companies (not gov't) --> higher (highest) premium
deductible
set/fixed amount that must be paid by the individual before receiving any benefits from insurance
inheritance tax
state tax collected if individual inherits more than $1mil - paid by individual receiving inheritance
opportunistic rebalancing
systematic process of buying things when they have lost value and selling things that have been performing well
What is the tax treatment of money in a Roth IRA?
tax now, benefits later - annual contributions are not tax deductible, but earnings grow tax-free - no tax on withdrawals
estate tax
tax on assets at death - less than $13 mil. --> no estate tax (more than 13 - every dollar above is taxed extra 40%)
gift tax
tax on financial gifts exceeding $17,000 - excess contributes to $13mil figure
Health Savings Account
tax-deferred savings account that allows individual to put money aside for medical expenses
what is spent less on in retirement
transportation, clothing, taxes, housing (if mortgage is paid off)
what is spent more on in retirement
travel, health insurance, recreation, medical care
coinsurance
type of agreement made with insurance company that splits up remaining balance after copay is made (% to be paid by individual, % to be paid by insurance)
premium
what you have to pay each month to have insurance
when should you apply for life insurance
when others are dependent on your income
what population is term insurance most used by
young families - cheaper for younger individuals ex: good premium estimate on a 1mil 20 yr policy @ 30 yrs old = $45 / month
what population is the Roth IRA ideal for
younger generations / people who are in lower tax brackets
4 major sources of income in retirement
1. employer pension plans 2. public pension plan (social security) 3. personal retirement plans (IRA) 4. Annuities
Social Security Benefit eligibility
10 full years of working (40 credits)
Affordable-Care Act
Obama Care - permits individuals to remain on parent health insurance plan until age of 26 - requires employers with other 200 employees to offer insurance
What is the significance of Blue Cross/Blue Shield?
Oldest and largest system of privately sponsored insurance
What is whole life insurance?
Permanent life insurance that lasts for the duration of the individual's lifetime if premiums are paid
What is Blue Shield known for covering?
Services provided by physicians
What is the tax treatment of money in an IRA?
Tax deferred until withdrawal - no income tax is paid on the money put into the account in a given year
defined benefit plan
a retirement plan in which both employee and employer contribute equal amounts to pension - benefits based on total earnings and years on the job (benefits are known) - ASRS managed (fixed contribution amounts) - withdrawals are not permitted until retirement - mandatory participation
defined contribution plan
a retirement plan in which both employee and employer contribute to varying amounts to retirement savings (401k, IRA) - benefits based on performance of investments (benefits are unknown) - employee managed (optional contribution amounts) - withdrawal are permitted before retirement - voluntary participation
how are credits earned
calculated in a quarterly basis (1 quarter, 1 credit)
Medicare Part C coverage
combines Part A and Part B into one plan (covers inpatient & outpatient care expenses) - includes extra coverage: prescription drugs, dental/vision/hearing, health and wellness programs
immediate annuity
contract owner can access income immediately
deferred/longevity annuity
contract owner will be able to access income later - fixed, tax-deferred premium
annuity
contract with life insurance company that provides income to individual in exchange for premium
Probate
court processes will and additional requests for deceased individual's assets
Medicare Part A coverage
covers inpatient hospital service expenses: - home care services following hospitalization - hospice care - transplants
Medicare Part B coverage
covers outpatient hospital service expenses: - doctors visits - home care services NOT following hospitalization - ambulance services - outpatient therapies (physical, speech, occupational) - x-rays
Medicare Part A cost
deductible only (no monthly premium)
Living Will
document that is made by the individual when they are in good health, determining how they wish to be medically treated if they become terminally ill
Intestate
dying without valid will
vesting
employee's right to the employer's contributions/ benefits attributable employer savings plan if employee leaves or retires early
what is your estate
everything you own (assets - liabilities)
What is NOT covered by Medicare? (Part A and B)
eye exams, dental, hearing aids, long-term care, acupuncture, cosmetic
Medigap Policy
federal program that supplies additional coverage for expenses not included by Medicare (fills the gaps) - i.e., deductibles and coinsurance
copayment
flat fee that is paid per visit
anchoring
focusing on how much was paid for a stock/what has been contributed to stock vs. how the stock is doing
worker's compensation
form of insurance that covers/reimburses individual for hospital expenses/missed pay in event of accident that occurs AT the workplace - commonly used by construction workers
