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