Chapter 12&19 Study Guide

Retirement Planning Decisions

- Whether you should change jobs. - Determining the tax consequences of your investment. - Adjusting the risk of your own investments according to the years to your retirement.

Retirement Plan Decision

401K, 403B, SEP

Health insurance protects net worth by minimizing the chance that you will have to reduce savings or incur debt when you require medical attention.

True

IRAs

The contributions may be tax deductible if the IRA Owners adjusted gross income is below a specified limit.

Most people obtain health insurance through group plans offered by employers

True

Private health insurance plans contain hospital​ insurance, physician​ insurance, and surgical insurance.

True

Concerns about Social Security.

there will be more retirees in the future with fewer workers supporting them.

Flexible Spending Account

to use​ pre-tax income to pay for medical expenses.

Retirement Planning and Age

the power of the time value of money allows you to accumulate far LARGER sums of money if you begin while you are young. Postponing saving and investing for retirement for just a few years significantly INCREASES the size of the contributions needed to accumulate the same amount that you can amass with smaller contributions over longer time periods.

HMO versus PPO (quiz)

the maximum out of pocket expenses per year,

PPO Charges

the payment by the patient to the hospital is determined by the contract between the patient and the PPO.

Social Security

- Federal, is not - 40 credits to qualify for social security. - All of the above.

Health Savings Account

- Health savings accounts allow you to set aside​ pre-tax income that can be used for qualified medical expenses. You must be UNNDER the age of 65 and have a​ HIGH-DEDUCTIBLE insurance plan before you can take advantage of an HSA. - An HSA has HIGHER contribution limits than a flexible spending account and you can carry over any remaining funds into succeeding years. In​ contrast, flexible spending accounts must be depleted each year. The fund balance in an HSA also earns a minimal amount of interest. The contribution limits in 2018 were​ $3,450 for individuals and​ $6,900 for families.

401(k) versus​ 403(b) Plans

- It is a defined-contribution plan established by companies for their employees. (hw) - It is a defined-contribution plan established by non profit organizations for their employees. (quiz)

Contents of health care plans

- Specify geographic coverage location. - identify the various types of coverage - identify cancellation and renewability options - identify expenses not covered by the plan - identify the individuals insured

PPO Charges (Quiz)

- The breakdown of the payments is dictated by the contract between the PPO and the patient.

The cost of health care has risen dramatically in recent years due to which of the​ following?

- The high cost of​ R&D in health care and Pharma - People are living longer and requiring attention for longer periods of time (A and B are both correct)

Investing Contributions

- The length of time prior to when you intend to retire is important since the LONGER your time horizon the more risk you can take. - You should also consider your individual tolerance for risk - As you approach your retirement date you can begin switching your investments to BONDS OR INCOME stocks that will give you greater preservation of capital.

Employer Matching

- a retirement​ match, offered by some​ employers, to give you incentive to begin saving for retirement. Typical matches​ 100% of ​ 3% to​ 5% of your annual salary. - You should always take advantage of the employer match since it will give you an immediate​ 100% return on your matched contributions.

Medicaid

- covers medical services to low income individuals - must meet federal guidelines

Ethical Dilemma

- deceived Nancy and Al but he may also have had dementia. - When planning for​ retirement, you should only factor in those elements over which you have at least some control.

Annuities

- financial contract that provides annual payments for a specified period or for the​ annuitant's life - provides a specified return on an investment - high fees associated with them charged by the financial institution that sells and manages them

Health Insurance Providers

- government and private insurance companies - are offered such that the employer pays A PORTION of the premium

Defined-Benefit Plan

- he employee a specific amount of income when he retires. - can claim a portion of the retirement money that has been reserved for him. - all money reserved for the employee each year will be maintained in the retirement account.

Medicare

- health insurance to qualified individuals who are 65 or older. - is used to cover expenses associated with nursing facilities.

Medicare Prescription Act

- now covers some prescription drugs that were not covered before.

Retirement Accounts

- of the tax benefits. - Investing all your disposable income in a traditional savings account.

Health Insurance

- provides protection against the high expenses of health care that could eliminate wealth - it has become so expensive.

Affordable Care Act

- requiring U.S. citizens to obtain health insurance and thus access to medical care - preventing anyone from being denied coverage due to a preexisting medical condition - allowing certain retirees to obtain prescription drugs at substantial discounts - preventing anyone from being denied coverage due to a preexisting medical condition

Defined-Contribution Plan

- specifies the guidelines under which you​ and/or your employer can contribute to your retirement account. - place more responsibility on the employee to contribute the money and decide how it is invested. - the money contributed by the employer is like extra compensation to the employee.

Private Health Insurance

- that can be purchased from PRIVATE INSURANCE COMPANIES. - Physician insurance provides coverage for various forms of physician's medical care, such as office consultations. - Hospital insurance provides coverage for individuals who require care from a hospital, up to a specified limit. (Quiz)

Long-Term Care Insurance

- that cause individuals to need help with everyday tasks. - Social Security eligibility. - The premium to be paid and the credit rating of the insurance company.

HMO versus PPO

- the limits of coverage.

Retirement Benefits

- the number of years in which you earned income and your average level of income. - can be taxed for retirees with high income.

Buying health insurance through employer−sponsored plans is somewhat more expensive than buying your own policy individually.

False

Roth 401(k)

Income contributed to a Roth​ 401(k) is taxed at the​ contributor's MARGINAL TAX RATE at the time of the contribution. The advantage of a Roth​ 401(k) is that funds are not taxed when withdrawn from the​ account, as they are when withdrawn from a traditional​ 401(k) account. In​ essence, the Roth​ 401(k) plan allows contributors to avoid paying taxes on the interest or capital gains generated by the account.

Other Health Care Coverage

Many health insurance policies do not cover dental​ work, rehabilitation, vision​ coverage, and mental health issues.

Health Care and Retirement

Many people fail to consider the cost of health care in retirement. Medicare is available at age (65) but it does not cover all costs. Over many years of​ retirement, these costs are significant. Assuming that a couple will live to their​ mid-80s, they might pay a total of​ ($250,000) or more for health insurance premiums and other health care expenses during retirement.

Health Care Retirement

Many people fail to consider the cost of health care in retirement. Medicare is available at age 65 but it DOES NOT cover all costs. Over many years of​ retirement, these costs are significant. Assuming that a couple will live to their​ mid-80s, they might pay a total of​ $250,000 or more for health insurance premiums and other health care expenses during retirement

Determinants of Patient Costs

The amount of the​ deductible, the coinsurance specified in the​ policy, coverage​ limits, and​ stop-loss provisions all determine the amount you might be required to pay for a given claim.

Cost of Medical Care

The cost of medical care is rising for several reasons. One reason is that the average age of the population is increasing. Because OLDER individuals require MORE health​ care, the cost of providing health care is rising. People are living​ longer, partly due to effective health​ care; therefore, they require medical attention for a longer period of time.​ Additionally, research and development for new drugs and medical procedures is very expensive.

ESOPs

The employer can contribute a portfolio of diversified stock to the​ employee's retirement account.

Project Retirement Funding

The number of jobs you have worked.

PPO

allows individuals to select their health care providers.

Continuous Health Coverage

allows you to continue your health insurance provided through an employer's plan for 18 months.

Fee for Service versus Managed Plans (Quiz)

give individuals the freedom to decide which health care providers they want to use.

Medigap Insurance

private insurance companies to cover medical expenses that are not covered by Medicare.

Fee for Service versus Managed Plans

require individuals to pay only the amount due after the insurance has paid.

Social Security and Retirement Age

you can receive Social Security benefits starting at age 62 but the benefits will be reduced for every month that is prior to full retirement age. You only receive full benefits if you wait until you turn SIXTY SEVEN for those born after 1960. Postponing retirement until your SEVENTIETH birthday will increase your retirement benefits even more.

​Employer-Sponsored Retirement Plans

you​ and/or your employer contribute money to a retirement account each pay period.