Exam #1 Flashcards
reasons why Employee Benefits came about
industrialization and Great Depression
1940s and 50s federal gov restrictions on wage levels
What is OASDI
Old Age Spouse (or Survivor) Disability Income
What are the tax rates for OASDI
it is 12.4% and the employee pays 6.2% and employer pays 6.2%
What is the purpose of Social Security
to promote Economic Security
increase access to certain services
Raising living standards
add to U.S. Economic Stability
Why do employers offer benefits
cost advantage
Recruiting
tax incentives
what is the wage limit for social security to be able to tax
$118,500
this means the most an employee and employer can pay in S.S. tax is $7,347
Factors influencing Employment Benefits
Industrialization organized labor Wage controls cost advantages inflation legislation
Most americans prefer employer-provided health coverage?
TRUE
The planning cycle
Current Situation: where am i now?
Goals: where do I want to be?
Brainstorm Alternatives: How can I accomplish my goals?
Analyze and select alternatives
Create a plan using the alternatives chosen
Reevaluate Periodically
What are the lifetime planning Phases?
Asset Accumulation
Conservation/Protection
Distribution
Planners providing investment advice must register with
the Securities and Exchange Commision
Planners in the securities industry must register with
Financial Industry Regulatory Authority
What is ERISA
Employment Retirement Income Security Act
it regulates medical, Life and Disability Income, Pension Programs
Why was ERISA adopted
Car company collapsed and and a lot of worker’s pension plans were affected
what does ERISA do?
it created new requirements for private-sector defined pension plans and established Pension Benefit Guaranty Corporation (PBGC)
how is PBGC funded?
insurance premiums paid by companies that have pension plans
investment income
list in order what was added to social security and time period
Social security adopted Spouse/survivor added COLA added Disability benefits added Medicare adopted this all happened between 1935-1965
social security covers
Salaries, wages paid leaves Severance pay Stock compensation tips if over $20 per month
Medicare must be paid by everyone
what is the % of income
both employer and employee must pay 1.45% (total 2.9%)
employee only pays an additional 0.9% on wages over $200,000
Average retirement benefit amount
$1304
what average age of retirement for the millennial generation?
67
the Social Security reserve will last until
2035
the disability trust reserve will last
until 2023
medicare will last until
2028
what are “Defined Benefit” plans
these are traditional pension plans
what are “Defined Contribution” plans
Pre-tax savings plans
ex. 401(K)
What are the four parts of medicare
A. Hospitalization
B. Other Medical Costs
C. Medicare Advantage
D. Drugs
what does part A of medicare cover?
expenses in the hospital,
expenses at a nursing facility
doctor visiting your home
Hospice care
There are deductibles and co-payments for medicare.
True
Medicare pays roughly how much of the costs
80%
How is Part A of medicare funded?
Payroll taxes
taxes coming from social security
interest from medicare reserves
premiums
Medicare Part B pays for
other medical expenses
ex. x-rays, Ambulances, Lab Tests
how is part B of medicare funded?
premiums deducted by Social Security checks
and
interest from medicare reserve
what is the consequence for delaying Part D of medicare
penalty of 1% of the base premium per month delayed after eligibility
What is the Doughnut whole in medicare Part D
the patient pays 45-58% until they pay $4850
45% of the cost of name brands
58% of the cost of generic brands
Medicare part A and B are called
“fee for service” plans
