Topic 2 Flashcards
1
Q
Social Insurance Programs
A
- OASDI + Medicare
- UC+UI
- TDI: Temporary Disability Insurance
2
Q
Why Do Social Insurance Programs Exist
A
- Individuals tend to be myopic in planning
- Private insurance market in some cases is unable to insure a particular risk:
1. Issues with requirements of insurable risk; adverse selections, moral hazards and market failure
3
Q
Why Is it Important for ERs to understand SI Programs in Designing a Benefit Plan?
A
- Possibility of individuals being overinsured for particular loss exposure
- Disability: ASDI, Short Term/Long Term, Worker’s Comp, Integrated into plan design - ERs provide much of funding for these programs
4
Q
2 Major Characteristics of SI Program
A
- Compulsory purchase of insurance or compulsory participation in a program
- Government acts as an insurer; State, Federal or both
5
Q
OASDI
A
- All benefits are monthly income amounts
- PIA: Primary Insurance Amount; function of AIME
- AIME = Average Index Monthly Earnings
- Federal Government is the risk bearer
6
Q
OASDI Financing
A
- Financed by payroll taxes
- 6.2% of salary up to maximum taxable usage base (earned income); 2013=$113,7000
- Paid by EE and matched by ER
7
Q
PIA:
A
Primary Insurance Amount
8
Q
AIME
A
Average Index Monthly Earnings
9
Q
Health Insurance Tax (OASDI)
A
- EE pays 1.45% ≤ $200,000
- EE pays 0.9% ≥ $200,000; total 2.3%
- ER matches the 1.45%; not the 0.9%
10
Q
Worker’s Compensation
A
On the job injuries/death benefits
11
Q
Types of Benefits for Worker’s Compensation
A
- Medical Expenses
- Loss of Income
- Both are economic losses
12
Q
Worker’s Compensation: Type of Compulsion
A
State Law
13
Q
Worker’s Compensation Compulsion Targeted At
A
Aimed at ER
14
Q
Worker’s Compensation Risk Bearer
A
- Private Insurance
- ER if plan is self insured
- State Funds:
1. Competitive (Last resort, High Risk)
2. Monopoly
15
Q
Sources of Funds for Worker’s Compensation
A
ER: premiums/self insurance contributions
