There are many Medigap policies offered by many different insurers, so this is hard to answer. Plan F is the most robust coverage, currently, and it will be the most expensive, with premiums that can go up to $10,000 a year. There isn’t a concrete answer. Your costs will depend on how old you are, your health, and which of the 12 plans you choose. Medigap policies come in flavors such as Part F, Part K, and Part L. Continue reading...
There are pros and cons to buying so-called Medigap coverage, and it can depend on how much medical care and services you anticipate needing. They cover all or nearly all of the out-of-pocket costs left over by Part A and Part B, but they don’t offer Part D coverage. Obviously, buying a Medigap policy will mean additional costs. If you have the means and you’re looking to extend your medical insurance to areas not covered by Medicare Part A and B (original Medicare), it might be a good option. Continue reading...
Medicare Part A is the standard, baseline hospital coverage that comes at no cost as part of everyone’s Medicare benefits. It will pay for inpatient stays at hospital and skilled care facilities, but only for a certain number of days. Medicare Part A is hospitalization and inpatient care insurance. It will pay fully for about 20 days of care, but only if there is an inpatient procedure first and the patient appears to be convalescing. If the patient is not gradually recovering, their Medicare benefits will be suspended. Continue reading...
“Pari-passu” is a Latin phrase meaning “equal footing,” typically in reference to treatment of creditors or beneficiaries when assets are distributed. Some examples of pari-passu in practice would be bankruptcy proceedings when credits are given ‘equal access’ to assets of the company, or in a probate hearing when assets are divided equally amongst beneficiaries. Continue reading...
Counter-party risk is the risk that the person on the other side of the trade will not meet his or her contractual obligations. In other words, it’s essentially the risk of doing business with someone. In financial contracts, counter-party risk is also known as “default risk.” Continue reading...
Par value is the nominal value of a security (such as a stock or a bond) that is typically indicated on the certificate of ownership. Par value is most often associated with bonds, and refers to the amount that will be returned to the investor at the bond’s maturity. Par value of bonds is generally $100 or $1,000. Bonds traded on the open market are not generally bought and sold at par value, as they typically trade at a premium or a discount to par. Bond prices are influenced by interest rates, and have an inverse relationship with them. Continue reading...
Medicare is a medical insurance benefit for Americans 65 years of age or older, but it also provides coverage for those with severe disabilities, ALS (Lou Gehrig’s disease), and ESRD (end-stage kidney disease) at any age. The premiums for what is known as Part A are paid throughout the insured’s working career, with Part B available as a supplement at low cost. Once you’re over 65, this becomes your medical insurance unless you’re still on an employer’s plan. Medicare provides coverage for in-patient procedures and short stays in the hospital, as well as hospice care and a few other small benefits for home health care. That is just for Part A—the “free” portion of Medicare people pay into over their working lives as part of their FICA taxes. Continue reading...
Forward contracts are agreements to exchange specific assets on a specific date, at a price determined at the outset. Forward contracts are similar to futures contracts, but they are over-the-counter private contracts drafted for specific purposes, quantities, and dates that satisfy the specific needs of the counter-parties. These contracts are mostly entered into by institutional investors seeking a hedge against risks such as interest rates and exchange rates. Continue reading...
An Abandonment Clause primarily refers to maritime insurance contracts in which a lost vessel can be replaced without the expectation of recovery or salvage, or the terms by which a construction contract or lease agreement can be dissolved. This is not to be confused with an Abandonment Option contract between a financial advisor and his or her client. It can also refer to a frequently used clause in construction law, in which the contractors define an abandoned project and give their counter-parties the right to move on and find another contractor to finish the job. Continue reading...
Ethereum smart contracts are an essential part of the Ethereum blockchain that can be coded into financial transactions or decentralized applications. Smart contracts were first described in 1998 by Nick Szabo, but they did not really make their debut until being popularized by the Ethereum platform in 2015. Bitcoin even has protocols in its code to facilitate smart contracts, but Ethereum, because it is a platform for the development of decentralized applications, instead of just a medium for currency like Bitcoin, has gotten all the glory. Continue reading...
A billing cycle is the frequency with which a company creates and sends invoices for the goods or services rendered during a time period. A billing cycle is usually a month long, and may begin at the first day of the month and end on the last day. This varies depending on the structure of the business and the systems they have in place to regulate their cash cycle. A bill or invoice will be sent out to customers or debtors from whom the business can expect payment for goods or services rendered during a specific time period. Continue reading...
401(k)s can offer many options for investment, but they generally only offer 15 or fewer in each plan. Investment options in your 401(k) are completely determined by the agreement between your employer and the custodian. Therefore, you’re limited to the investment instruments selected for you. The majority of 401(k) plans will offer fewer than 15 investment options, which are generally part of prepackaged 401(k) products from major broker-dealers or mutual fund companies. Large companies will frequently also offer stock of their company within the 401(k) plan architecture. Continue reading...
Collections companies are known as Bill Collectors, and their jobs are to extract as much payment from those who are past-due on payment obligations as they can to settle an account or to bring it current. When people do not pay their credit card companies back within about 150 days, the card company will pass the debt off to a collections company. Other businesses who do their own billing will also sometimes find it necessary to pass off the obligation to the collections company. Continue reading...
A 401(k) plan Administrator will usually be an officer of the Employer sponsoring the plan. A 401(k) plan document will specify who is the Administrator of the plan, but it is generally an executive or officer of the company sponsoring the plan. 401(k)s can be sold in packages that are essentially the same from employer to employer. When the design is well-established, and there are systems in place to enroll employees and maintain the plan, such as an employee website, a company’s CFO or human resources department chair may wear the Administrator hat. Some plans require a special administrator, and this may be a requirement of the broker-dealer acting as Custodian, especially if the plan has been designed from an open architecture, and there are many moving parts. Continue reading...
A foreign fund is a mutual fund that invests solely in companies abroad and does not invest in corporations owned in the US. Owning foreign companies can be a very good diversification strategy and is considered a core holding in the portfolio of most investors. Foreign exposure means that if the US economy hits a rough patch, you may have a hedge in the foreign fund if the companies or markets in other parts of the world are not entirely correlated. Continue reading...
Medicare Part B covers some doctors visits, outpatient care, and many other services not covered by Part A. There is a standard premium which is around $100/month for those receiving social security benefits at the same time. Medicare Part B covers outpatient procedures – visits to the doctor, regular checkups, physical therapy, etc. In other words, it covers medical expenses that don’t involve a hospital stay. Medicare Part A is free (if you’ve contributed to Social Security for at least 10 years), but Part B comes with a price tag. Continue reading...
Medicare Part C, also known as Medicare Advantage, is offered in a few variations by several third-party carriers. These plans are approved by Medicare and a person must still pay their Part B premiums to get them, but the Medicare Advantage plans are designed to be more appealing with their deductibles and copays than original Medicare Part A and Part B. Medicare Part C, is a private plan that is mandated to be at least equal in coverage to Part A and Part B. Continue reading...
Part D is prescription drug coverage to supplement the coverage of Medicare Part A and Part B. It can be a standalone policy, or it can be included in a package with Part C. Medicare Part D is purchased through private insurers. While the premiums vary, they tend to range from $15- $150 a month. There was a maximum deductible of $360 for these plans in 2016, after which the insurer would trigger 75/25 coinsurance or something in that range. Continue reading...
Contribution limits depend on if you are making contributions as a government employee, a non-profit employee, or a highly compensated employee. Government employees can defer up to $18,000, plus a $6,000 catch-up contribution for those over 50, in 2016. These plans use the same elective deferral limits as 401(k)s. A non-governmental, non-profit employee can only contribute the $18,000, and is not allowed to make the $6,000 catch-up. Both of these types of employees are allowed to use the alternate catch-up provision of 457s, however. Continue reading...
A foreign tax credit (or deduction) allows a citizen who earned income in another country to reduce the amount of domestic income taxes owed if the foreign government has already taxed the income abroad. Workers who earn income in a foreign country may be entitled to a credit or deduction on their domestic income taxes if they show that this income was already taxed by the foreign government where the income was earned. In the US, there are at least three types of foreign income tax exemptions, with a foreign tax credit being one of them. Continue reading...