Personal Finance: Insurance

• FICA (Federal Insurance Contributions Act): Medicare and Social Security taxes combined

• Social Security: (1935) the program includes retirement benefits, disability income, veteran’s pension, public housing, and even the food stamp program. The program is funded by taxpaying dollars (6.2% of your paycheck + 6.2% matched by your employer = 12.4% total).

• Medicare: healthcare for ages 65 and older; 1.45% of your income; matched by employer.

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• Medicaid: health care for low-income and disabled individuals; joint federal-state program• 2012, 16% of all U.S. citizens were receiving

Medicaid.• Unemployment Compensation: employer-made

payments (via taxes) to workers who become unemployed, but are still willing to actively seek a job (lasts for 6-18 months)

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• Severance package: financial compensation and benefits offered to fired employees (up to 6 months); more years = larger benefits

• Worker’s Compensation: employer pays for work-related injuries

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• Health Insurance: medical treatment for both the insured and his/her dependents. The older one gets, the more expensive health insurance premiums become. Many employers pay most, but not all, of an individual’s health insurance.• By 2013, there were close to 50 million Americans uninsured. Is

this number really accurate? • Congress and Obama’s HC plan still in the works.

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Video Clips

•John Q. (follow these clips in chronological order)• https://www.youtube.com/watch?v=3Jo9JylVN3A (PPO vs. HMO)• https://www.youtube.com/watch?v=Q-6ZA0MOyv8• https://www.youtube.com/watch?v=ptMj12dLbPo

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• HMO (Health Maintenance Organization): • PROS: no deductible to meet; small co-

payments; • CONS: members have restricted choice

on physician; more restrictive; longer lines.

• PPO (Preferred Provider Organization):• PROS: members can choose any

physician they want; don’t need a referral to see a specialist; less restrictive.

• CONS: sometimes require a deductible; often larger co-payments than HMOs

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• Deductible: the part of an insurance claim that is paid by the insured. • Ex.) if you get into an accident and your medical expenses are

$2,000 and your deductible is $300, then you would have to pay the $300 out-of-pocket first before the insurance company paid the remaining $1700.

• Premium: regular monthly payments made for an insurance plan

*Young, healthy people typically choose low monthly premiums and high deductibles (you have option to reverse that)

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• Co-pay: the insured has to pay a share of the cost of medical treatment; out-of-pocket expense covered by the patient, while the rest is covered by the employer. Ex) the co-pay for Vicodin (pain medication) is $30

• Life Insurance: Provides income to dependents after the policy holder’s death. Ex) a 30 year-old man spends $100 month for a $125,000 life insurance policy for his family in the event that he dies.• Term: coverage for a specified time; Whole: protection for a lifetime

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• Beneficiary: someone who becomes eligible to receive various benefits (i.e. health insurance, life insurance, etc.).

• Disability Insurance: people can buy disability policies that provide income over a specified period of time, when they are seriously ill and unable to work.

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• Auto Insurance: higher for young teens/adults and elderly. What can affect your auto insurance premiums? Answer: Accident records, traffic citations, DUIs, model or year of car, school grades, etc.• Traffic school can erase your ticket from your record,

ensuring that your car insurance will not increase. *Traffic school only every 18 months in most states.

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• Bodily-Injury Liability: means that this coverage pays off when the insured has caused an accident and people require care, such as hospitalization, as a result. This coverage applies to peo- ple in other cars and in the insured’s car,

• Property-Damage Liability: This coverage kicks in when the insured causes an accident that damages another person’s property such as a car or a fence.

• Collision: ays for damages to the insured’s car when he or she causes an accident.

• Comprehensive: pays for damages to the insured’s car caused by situations other than collision such as theft, fire, earthquake, weather, explosions, riots, and collisions with birds or animals.

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Auto Insurance

• Medical Payments: his covers medical and death benefits for you, your family members and others riding in your car who are injured or who die because of an accident, no matter who is at fault.

• Personal Injury: covers not only doctor bills but also wages lost because of an accident. It also covers the cost if the insured person is injured and must hire someone to assume responsibilities, such as household chores, that he or she cannot do because of the accident.

• Uninsured/Underinsured Motorist: This coverage kicks in when the other driver is at fault and does not have any insurance or enough insurance to pay for the damages you suffer — not only the medical bills but also lost wages and pain and suffering.

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2011 Uninsured by State

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