Current and Future Planning Objective 8.03

Health Care Issues

Make smart health care decisions Research different health care providers Be honest on applications Be certain you understand all exclusions and conditions Be aware of expiration dates, cancellation terms, and

renewal policies Power of attorney: court document naming someone who

has permission to act on the person’s behalf in case of illness or inability to perform their normal duties

Know the Legal Issues involved with Health Care

Types of consentGeneral consent: permission given for

tests and treatments, the moment the patient enters the hospital

Informed consent: procedure which requires physicians to tell patients in advance of any risks involved in forthcoming treatment; must be in writing

Health Insurance

Basic health insurance – a limited medical insurance covering hospital, surgical and medical expenses. Limited by:– Numerous exclusions– Low maximum benefits– Waiting periods

Major Medical Insurance

A broad medical policy covering – Inpatient and outpatient hospital care – Long term hospitalization– Home nursing care– Prescription drugs– Physician visits – Surgery – Laboratory tests

Major MedicalCan be purchased two ways: Group plan through optional employer benefits

– Employer pays a portion of employee’s premium– Employee has option to pay extra and include

dependents on the plan – Insurer usually offers lower premium due to large

group (large risk pool spreads expenses so rates are lowered)

– May also include vision and dental insurance Individual plan

– Insured must choose plan and pay all costs

Major Medical

May require patient to pay :– Annual deductible before insurer

pays anything– A flat co-pay for doctor visits– A %(10-30%) of the remaining

balance due– A maximum out of pocket expense

each plan year

Cost factors for Health Insurance

– Type of policy– Limits and exclusions of coverage– Deductible/Co-pays– Group or individual plan– Age– Health– Company

*Supplemental Info* Additional Health Insurance Options

Health Maintenance Organization (HMO)– Requires co-pays– Patient chooses from list of approved service

providers– Designed for preventive medical service

Preferred Provider Organization (PPO)– Patient chooses from list of approved service

providers

*Supplemental* Other Health Insurance

Vision - coverage for care of eyes Dental -coverage for care of teeth Cancer-coverage for treatment of

cancer Hospital Indemnity - pays insured when

in hospital

Medicare and Medicaid

Medicare: Provides health coverage for most people over age 65 and some disabled persons, provides medical and hospital insurance

Medicaid: Covers certain individuals who need public assistance

Health Care Review

Answer the following questions: 1. Explain the difference between general

and informed consent. 2. What does basic health care cover? 3. What two ways can Major Medical

Insurance be purchased? 4. Name 4 cost factors for Health Insurance. 5. What is the difference in Medicare and

Medicaid?

Disability

The Americans with Disabilities Act Employers cannot discriminate against individuals with

disabilities The ADA defines a disabled individual as an individual who

has a physical or mental impairment that substantially limits one or more of the major life activities

Indirect discrimination: includes using a qualification for hiring that is not related to job performance, but is used to exclude the disabled individual

Direct discrimination: includes not hiring an individual simply due to their disability

Private Income Disability Insurance

Purpose: To protect the individual against risk of losing income from regular occupation due to illness or injury causing disability.

Insured may buy a policy from a private company.

Indemnifies for wages lost– Proceeds (benefits paid) are not taxable– Proceeds are 65% of normal wage

Disability Insurance

For private disability insurance, the insured chooses: – Short term or long term policy– Total or partial disability options– Elimination period - number of weeks

before claim is payable

Disability Insurance

– Elimination period or waiting period is the number of days or weeks that the insured waits before the insurer pays disability claim

– Form of risk retention– Comparable to a deductible– Cause and effect similar to a deductible:

Longer elimination period=lower premium Shorter elimination period=higher premium

Cost Factors Private Income Disability Insurance

Dollar Amount of disability benefit requested

Length of elimination period

Risk involved in type of work

Company

Age

Health

Disability Review

Answer the following questions: 1.T/F Employers can discriminate against individuals

with disabilities. 2. What is the difference in indirect and direct

discrimination 3. What is the purpose of Private Income Disability

Insurance? 4. From private disability insurance, what can the

insured choose? 5. What is the difference in a longer and shorter

elimination period?

Retirement Planning

Private Pension Plans

Government Pension Plans

Individual Pension Plans

Private Pension Plans

Benefits by an employer to provide retirement funds to their employees– Examples: 401K, SEP, Profit Sharing

Offered as a benefit, not required by law Employers have the option to fund the plan by

themselves or require the employee to contribute Vesting: act of giving a worker a guaranteed right to

receive a future pension Portability: ability to transfer pension benefits from

one job to another

Government Pension Plans

Can receive a percentage of social security by age 62, but the individual can receive full benefits at either age 65 or 67.

A person can receive social security benefits if their spouse dies.

Disability is considered a social security benefit. Medicare is also considered a social security benefit Railroad pensions Military pensions Civil service pensions

Social Security Disability

The D in RSDHI of Social Security benefits

Replaces income when a severe long lasting disability prevents eligible person from doing “any substantial work”.

Employer and employee match contribution into social security fund.

File claim through Social Security Administration Six month required elimination (waiting) period Only long term disability or terminal illness Periodic review of status to continue benefits

Individual Pension Plans

Can be set up by self-employed individuals, or individuals who do not receive private pension plans from their employers

Individual Retirement Accounts (IRA’s): individual pension plans where a portion of their income is saved each year Only a certain amount of income is allowed to be placed in

an IRA The interest on the IRA is not taxed until the money is

withdrawn Keogh Plans: set up by individuals who are

sole-proprietors or in a partnership

Unemployment Insurance

Designed to lessen the financial hardship of losing one’s job

Must have been working to file for benefits

Controlled by individual states

North Carolina’s Employment Security Commission regulates disbursements when claim filed

Unemployment Insurance

Social Security Act provides for joint federal and state unemployment system

Federal Unemployment Tax Act (FUTA) State Unemployment Tax Act (SUTA)

– Both FUTA and SUTA taxes are paid completely by employer

Monies are paid into a special fund for workers who have been discharged without cause (lost their jobs through no fault of their own)

Unemployment Benefits

Employee files claim through NC Employment Security Commission

One or two week waiting period before benefits are paid

Benefits payable for limited number of weeks

Percentage of lost wages paid

Filing Unemployment Claim

Employee

– Files claim with Employment Security Commission

– Collects money when laid off from job or otherwise “discharged without cause”

– Searches for replacement job

Unemployment Insurance

Reasons workers are NOT covered:

– Violating a contractual employment obligation or other discharges “for cause”

– Striking employees

– Quit voluntarily

– Refuse to accept similar replacement work

Unemployment Insurance Costs

Business’ employment history is risk factor

How often employees are laid off from work

How many employees are laid off from work

How long employees are laid off from work

Worker’s Compensation

A government-regulated program that provides medical benefits and income to employees who are injured or who develop a disability or disease as a result of their job

Indemnifies (pays) employee for their loss Job related illness or injury Coverage is no fault Insurance is paid for by employer

Worker’s Compensation

Worker’s compensation indemnifies employee for:– Rehabilitation– Related medical expenses – Time lost from work– Permanent damage from injury or illness

Workers Compensation

Costs – Paid completely by employer

Cost factors– Employer’s claim history– Risk rating of job

Retirement Review

Answering the following questions: 1. Name 3 examples of retirement plans. 2. What is portability? 3. What are 2 examples of Government

Pension Plans? 4. What is the retirement plan called that an

individual saves part of their income each year?

5. What is one thing an employee must do in order to file for unemployment?

Will Requirements

Will - Document drawn up and signed by persons during their lifetime to provide for distribution of their property upon their death

Decedent - Deceased person Heirs - Persons who inherit by right of

relationship A man who makes a will is called a testator, a

woman is called a testatrix The testator/testatrix must have capacity to

create a will

Will Requirements (cont.)

The law of wills varies from state-to-state A will must be in writing, properly signed, and

witnessed. In some states a holographic will (written in the

decedents own handwriting) is acceptable. A nuncupative will is an oral will that some states will

recognize. To change a will, the testator/testatrix should write a

new will or change it by a codicil (amendment to a will).

Will Requirements (cont.)

A will states an executor/executrix Executor: person named in the will to carry out the

terms of the will The executor or representative will: make sure the

assets are assembled, preserved, inventoried, and appraised (court supervised procedure), publish notice to creditors, pay all receivables from debtors, pay all legitimate expenses of the decedent, distribute property according to will (must divide according to state law)

The will may state a guardian for children if spouse is not alive

Intestacy

A person who dies without making a will is said to have died intestate.

The estate is handled in the same way as if there was a will.

Instead of an executor/executrix, there is an administrator/administratrix to look after the estate

Intestacy (cont.)

The administrator/administratrix must distribute the estate according to the laws of the state

The personal property of the decedent goes to the heirs according to state law

Generally, the spouse is entitled to one-half or one-third of the estate

Children split the remaining equally Children cannot be forgotten If someone dies without a will and does not have a

living relative, after the bills are paid, then the estate is escheated (held by state government)

Trusts

Trust: transfer of property from one party to another with instructions on how it is to be managed for the benefit of the transferor or a third party

Trusts may be created during the lifetime of the settlor (creator), known as inter vivos trust

Trusts may also be created after the death of the settlor in correspondence with his or her will, known as a testamentary trust

A charitable trust is created for the fulfillment of humane purposes

A private trust is created for a private purpose Spendthrift trust protects the beneficiary from creditors

Trusts (cont.)

Express Trusts are created by a written or oral statement in which all terms are clearly expressed.

Implied TrustsResulting Trust: formed when the body intended to

receive the benefit of an express trust cannot do so

Constructive Trust: created to require a person holding property to transfer it to another because retaining the property would be wrong and unjust

Will Requirements Review

Answer the following questions: 1. What is an executor? 2. What is an administrator? 3. What is the term for when a person

dies without a will? 4. What is a holographic will? 5. What is the transfer of property from

one person to another called?