. Job A pays a salary of $40,000, and the firm will contribute 5 percent of your salary to a retirement plan. Job B pays a salary of $42,000, and the firm doesnt offer a retirement plan. They are both located in the same area. If all other factors are equal, which job opportunity is better? Explain your reasoning.

Job A pays a salary of $50,000 but does not provide health insurance. You can buy health insurance on your own for $5,000 per year. Job B pays a salary of $44,000 with fully paid health insurance. Your marginal tax rate is 20 percent. If all other factors are equal, which compensation package is better? Explain your reasoning.

4. Your health insurance requires payment of an annual deductible of $500 per person or $1,000 per family. After meeting the deductible, you must pay 20 percent of covered charges until you reach $5,000 out of pocket, after which the insurer will pay 100 percent of the costs. Assume that your family has had no other claims during the year and that your child requires emergency surgery. If the total covered charges for the surgery are $20,000, all incurred in the same plan year, how much will you end up paying out of pocket?

5. Your employer offers two health plan choices and requires that employees pay part of the premium cost. The fee-for-service option will cost you $100 per month for single coverage, does not cover preventive care, and imposes a $300-per-person annual deductible and 20 percent coinsurance to a limit of $2,000. The fee-for-service plan also covers prescription drugs after a copay of $30 per prescription. The managed care option (an HMO) will cost you $200 per month, covers all medical services (including preventive care and prescription drugs), and requires a $10 copay for each office visit or prescription.

Over the course of a year, if you have an annual physical ($200), visit the doctor twice for illness ($50 per visit), and incur prescription drug costs of $500 (10 prescriptions at $50 each), how much would your out-of-pocket expenses be under both the fee-for-service plan and the managed-care option?

Over the course of a year, if you have an annual physical, surgery for a skiing injury ($3,000 covered charges), and prescription drug costs of $200 (four prescriptions at $50 each), how much would your out-of-pocket expenses be under both the fee-for-service plan and the managed care option?

What factors would you consider when choosing between the fee-for-service plan and the HMO plan?

6. Your employer offers a defined-benefit plan with the following formula: 1 percent of final salary for each of the first 15 years of service, 1.5 percent of final salary for each of the next 15 years of service, and 2 percent of salary for each of the next 20 years of service.

If you work for the firm for your entire 45-year career and your final salary is $100,000, how much will you receive annually as a benefit?

If you work for the firm for only five years, but are fully vested, how much benefit will you be entitled to receive at retirement, assuming that your final salary at the company is $40,000?

If you work for the firm for only five years, but the firm has three- to seven-year graded vesting, how much benefit will you be entitled to receive at retirement, assuming that your final salary at the company is $40,000?

7. Youve been laid off by your employer where you had been participating in a contributory health-care plan. Your share of the premiums, $200 per month, was 50 percent of the actual cost to the employer.

Under what circumstances should you consider getting COBRA continuation coverage through your employers plan, and how soon do you need to decide?

If you opt for COBRA continuation coverage and your employer adds a 2 percent administrative charge, how much will you have to pay per month for the coverage?

What alternative sources of health-care coverage do you have, and are they likely to be more or less expensive?

8. You are offered a job in Urban City that will pay $50,000 per year. You currently have a comparable job with comparable benefits in Rural Town, but it pays only $40,000. If the cost of living for Urban City is 105 percent of the national average and the cost of living in Rural Town is 85 percent of the national average, which job will give you more purchasing power?

9. Allison currently earns $3,000 per month and takes home $2,300. Her monthly expenses total $2,000. Her employer provides 5 sick days per year and a short-term disability policy that will pay benefits after 30 days of disability. The policy will pay 60 percent of her gross income for up to 12 months. The disability income payments arent taxable because she used after-tax dollars to pay the premiums.

If Allison wants to have sufficient liquid assets to cover the short-term disability needs that arent met by her employers plan, how much should she set aside for this purpose, assuming she might be disabled for a period of one year?

If Allison is considering purchasing long-term disability insurance to cover a disability that lasts for more than 12 months, and assuming that she wouldnt qualify for Social Security disability, what would the monthly benefit need to be, assuming that she will pay the premiums with after-tax dollars?