Chapter 18

Question 1

Define Assumption of Risk Doctrine

Answer 1

Defense against a negligence claim that bars recovery for damages if a person understands and recognizes the danger inherent in a particular activity or occupation

Question 2

Define Average Indexed Monthly Earnings (AIME)

Answer 2

Under the OASDI program, the person’s actual earning are indexed to determine his primary insurance amount.

Question 3

Define Competitive State Fund

Answer 3

A state fund that provides workers compensation insurance and competes with private insurers.

Question 4

Define Contributory Negligence Doctrine

Answer 4

Common law defense blocking an insured person from recovering damages if he or she has contributed in any way to the accident.

Question 5

Define Credit (quarter of coverage)

Answer 5

Needed before you or your family can receive benefits, it is earned when you work for a certain amount of work in covered employment. In 2014 you receive one credit for each $1160 of covered earnings. A maximum of four credits can be earned each year.

Question 6

Define Currently Insured

Answer 6

Status of a covered person under the OASDI program who has at least six credits out of the last thirteen quarters, ending with the quarter of death, disability, or entitlement to retirement benefits.

Question 7

Define Delayed Retirement Credit

Answer 7

Available to those that delay receiving retirement benefits beyond the full retirement age, it is the % increase you get from the time you reach full retirment age until you start receiving benefits, or until you reach age 70.

Question 8

Define Diagnosis-Related Groups (DRGs)

Answer 8

Method for reimbursing hospitals under the Medicare program. Under this system, a flat, uniform amount is paid to each hospital for the same type of medical care or treatment.

Question 9

Define Disability Insured

Answer 9

Status of an individual who is insured for disability benefits under the OASDI program

Question 10

Define Earnings Test (Retirement Test)

Answer 10

Test under the OASDI program that reduces monthly cash benefits to those beneficiaries who have annual earned incomes in excess of the maximums allowed.

Question 11

Define Experience Rating

Answer 11

(1) Method of rating group life and health insurance plans that uses the loss experience of the group to determine the premiums to be charged.
(2) As applied to property and casualty insurance, the class or manual rate is adjusted upward or downward based on past loss experience.
(3) As applied to state unemployment insurance programs, firms with favorable employment records pay lower unemployment compensation tax rates.

Question 12

Define Extended Benefits Program

Answer 12

Benefits available to workers who exhaust their regular benefits in state with high unemployment. It provides up to 13 weeks of additional benefits.

Question 13

Define Fellow Servant Doctrine

Answer 13

When the injured worker could not collect if the injury resulted from the negligence of a fellow worker.

Question 14

Define Full Retirement Age

Answer 14

Age at which unreduced retirement benefits are payable to beneficiaries under the SS program.

Question 15

Define Fully Funded Program

Answer 15

Means that the accumulated OASDI trust fund asset plus the PV of future contributions will be sufficient to discharge all liabilities over the valuation period.

Question 16

Define Fully Insured

Answer 16

Insured status of a covered person under the OASDI program. To by fully insured for retirement benefits, 40 credits are required.

Question 17

Define Hospital Insurance (Medicare Part A)

Answer 17

Part A of Medicare that covers impatient hospital care, skilled nursing facility care, home health-care services, and hospice care for Medicare beneficiaries.

Question 18

Define Individual Equity

Answer 18

Means that contributors receive benefits directly related to their contributions; the actuarial value of the benefits is closely related to the actuarial value of the contribution.

Question 19

Define Liability Without Fault

Answer 19

Principle on which workers compensation is based, holding the employer absolutely liable for occupational injuries or disease suffered by workers, regardless of who is at fault.

Question 20

Define Means Test

Answer 20

Used in public assistance; welfare applicants must show that their income and financial asset are below certain levels as a condition of benefit eligibility.

Question 21

Define Medical Insurance (Medicare Part B)

Answer 21

Part B of the Medicare program that covers physician’s fees and other related medical services. Most eligible Medicare recipients are automatically included unless they voluntarily refuse this coverage.

Question 22

Define Medicare Advantage Plans (Part C)

Answer 22

Private health insurance plans that are part of the Medicare program.

Question 23

Define Medicare Prescription Drug Coverage (Part D)

Answer 23

Plans that provide coverage for prescription drugs under the Medicare program; beneficiaries have a choice of plans.

Question 24

Define Monopoly State Fund

Answer 24

In some states, covered employers generally must purchase workers compensation from the state fund, or self-insure the risk

Question 25

Define Primary Insurance Amount (PIA)

Answer 25

Monthly cash benefit paid to a retired worker at full retirement age, or to a disabled worker eligible for benefits under the OASDI program.

Question 26

Define Short-Term Involuntary Unemployment

Answer 26

Periods during which weekly cash benefits are paid to unemployed workers.

Question 27

Define Social Adequacy

Answer 27

Means that benefits paid should provide a certain standard of living to all contributors. This means that the benefits paid are heavily weighted in favor of certain groups, such as low-income persons, large families, and the presently retired aged.

Question 28

Define Social Security

Answer 28

Common name for OASDI, the most important social insurance program in the US.

Question 29

Define Unemployment Insurance

Answer 29

Federal-state programs that pay weekly cash benefits to workers who are involuntarily unemployed.

Question 30

Define Workers Compensation

Answer 30

Insurance that covers payment of all workers compensation and other benefits that the employer must legally provide to covered employees who are occupationally disabled because of a job-related accident or disease.

Question 31

Why are social insurance programs necessary? 3

Answer 31

• To help solve complex social problems
• To provide coverage for perils that are difficult to insurance privately
• To provide a base of economic security to the population.

Question 32

What characteristics do social programs have that distinguish them from other government insurance programs? 8

Answer 32

• Most programs are compulsory
• Programs are designed to provide a floor of income
• Programs pay benefits based on social adequacy rather than individual equity.
• Benefits are loosely related to earnings
• Programs, benefits, and benefits formulas are prescribed by law.
• A formal means test is not required
• Full funding of benefits is unnecessary
• Programs are designed to be financially self-supporting.

Question 33

What groups are covered under the SS program? 7

Answer 33

• Employees in private firms
• Federal civilian employees
• State and local government employees
• Employees of nonprofit organizations
• Self-employer persons who earn $00/year or more
• Domestic employees in private homes who earn $1500/year or more
• Miscellaneous other groups, including ministers, US military personnel, and railroad workers.

Question 34

Left off on page 7 in ch 18.

Answer 34

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