Exam 2 Part D

Question 1

Worker’s Compensation

Answer 1

• Covers occupational disease and work related accidents
• Arising out of or in the course of employment
• System is on a state by state basis
• Prior to WC, injured EEs had to sue ER to gain compensation
• Results - ERs could successfully deny legitimate claims

Question 2

Compromise Between ER and EE

Answer 2

• ER is held absolutely liable for injuries
• EE cannot sue EB
• ER pays in some cases where there is no negligence
• EE receives swift and certain payments
• Prior to WC, injured EEs had to sue ER to gain compensation

Question 3

Features of State Laws

Answer 3

• Virtually all wage and salaries EEs covered
• Premiums are usually experience rated ERs
• Makes injuries part of cost of production
• Provides incentives to control losses; safety

Question 4

Four Types of Worker’s Compensation Benefits

Answer 4

• Loss of income benefits
• Medical Expenses
• Rehabilitation
• Survivor Benefits

Question 5

Types of Income Benefits

Answer 5

• Income Benefits - usually in terms of % of lost wages (e.g. 66.66%)

Question 6

How Employer’s Comply With Law

Answer 6

• Purchase WC insurance policy from private insurer
• Self insurance in some cases
• Purchase from state fund or Federal Agency

Question 7

W.C. Issues

Answer 7

• Many suspicious claims
• Occupational Disease
  1. Long Latency
  2. Difficult to prove cause
  3. Medical Costs are very high
  4. Many EEs still sue

Question 8

Unemployment (SUI)

Answer 8

• Weekly bash benefit during periods of involuntary unemployment
• Stabilize economy during recession
• encourages employers to stablize employment

Question 9

Eligibility (SUI)

Answer 9

• Earn qualifying wages
• Be able to work and be available for work
• Actively seeking work
• Satisfy a waiting period

Question 10

Financing

Answer 10

• Employer payroll taxes

- Employee tax (some states)

Question 11

Issues

Answer 11

• Small proportion of unemployed actually receive benefits (approx 50%)
• states inadequately funded
• Inadequate benefits for middle income and up

Question 12

Social Security

Answer 12

• OASDHI
• 90% of EEs coverd
• Some exclusions (railroad workers, some govt workers, some teacher unions)
• Must earn a minimum amount in at least 40 quarters to be fully insured
• Approx. $1,000 a quarter

Question 13

Old Age

Answer 13

• Retirement benefits
• Amount based on earnings
• Normal retirement age is 65-67 (Depending on DOB)

Question 14

Surivers

Answer 14

• Life insurance coverage for the survivor of a fully insured worker - spouse or dependent

Question 15

Disability

Answer 15

• Insured is disabled

- Definition is strict - not as liberal as regular disability policies

Question 16

Health insurance - Medicare

Answer 16

• Part A
• Part B
• Part D

Question 17

Part A

Answer 17

• Hospital Benefits
• Inpatient
• Post hospital home care
• Hospice Care
• Coverage Free - pay deductible

Question 18

Part B

Answer 18

• Medical Benefits
• Monthly Premium
• Covers most expenses except
  1. Routine Physicals
  2. Routine eye, foot and ear care
  3. Immunizations

Question 19

Part D

Answer 19

• Prescriptions
• Effective 1/1/2006
• Pay premium
• Doughnut Hole

Question 20

Funding of Social Security

Answer 20

• Payroll tax on ER and EE
• 6.2% OASDI up to wage base level ($110,000)
• 1.45% for Hi (medicare) - unlimited
• 7.65% total - known as FICA taxes
• In theory held constant (1980 last hike) while wage base goes up - increasing revenue
• S.S. benefits are taxed as income when recieved

Question 21

Future Issues For S.S.

Answer 21

• System flawed - pay as you go as opposed to being funded as normal insurance vehicles - creating future funding issues
• Privitiazation of the system - your decisions will outperform the system