What to Do Before an Emergency

The possibility of public health emergencies arising in the United States concerns many people in the wake of recent hurricanes, tsunamis, acts of terrorism, and the threat of pandemic influenza. Though some people feel it is impossible to be prepared for unexpected events, the truth is that taking preparedness actions helps people deal with disasters of all sorts much more effectively when they do occur.

Make a Plan

Your family may not be together when a disaster strikes so it is important to plan in advance: how you will get to a safe place; how you will contact one another; how you will get back together; and what you will do in different situations. Click here to read more about Family Communication during an emergency.

Ready.gov has made it simple for you to make a family emergency plan. Click here to download the Family Communication Plan for Parents and Kids (PDF – 1.2 Mb) and fill out the sections before printing it or emailing it to your family and friends.

You should also inquire about emergency plans at places where your family spends time: work, daycare and school, faith organizations, sports events and commuting. If no plans exist, consider volunteering to help create one. Talk to community leaders, your colleagues, neighbors and members of faith or civic organizations about how you can work together in the event of an emergency. You will be better prepared to safely reunite your family and loved ones during an emergency if you think ahead and communicate with others in advance. Click here to read more about school and workplace plans.

Concerned about your personal insurance coverage? At Cleary, our experienced Personal Lines department will work with you to evaluate your insurance needs, identify exposures, and create a customized insurance portfolio. Give us a call today at 617-723-0700.

What Everyone Can Expect from ACA Essential Benefits

The Affordable Care Act’s Essential Health Benefits (EHB) provision created ten general categories of benefits outlined below. The requirements apply to all fully insured health plans offered in the individual and small group insured markets both inside and outside of the Exchanges. EHB requirements do not apply to ASO plans, fully insured large group plans or any grandfathered plans. All plans (even those that are not required to offer EHB) that include Essential Health benefits must remove any annual or lifetime dollar limits. The pricing impact of EHB will vary in each state depending on that states benchmark plan and the state specific EHB definition. EHB will become effective in the fully insured small group and individual markets upon renewal in 2014.

The following are the ten Essential Health Benefits:

Prescription Medications
This is currently an option with most plans but not mandatory. However, the new law will make all small group and individual plans cover at least one drug in each class and category of the United States Pharmacopeia. Prescription costs will count toward upfront expense caps.

Ambulatory Services
This is also called outpatient care, and it happens when a person goes in to be treated and leaves the same day. Most health plans currently offer this form of coverage, but the new law will ensure that network sizes for these offerings are sufficient.

Mental Health
Coverage will be limited to a specific number of sessions, and patients may be billed a small amount for each one.

Rehabilitative Services
People who suffer injuries or illnesses today may or may not have rehabilitative services on their policies. The new plans must cover these services and equipment items such as braces, canes, wheelchairs, walkers and other essential devices. Habilitative services will also be added, and these are rarely covered in existing plans. They help people cope with the slow effects of long-term illnesses such as multiple sclerosis.

With the new law, an insurer must provide coverage for hospital stays. However, patients may be responsible for 20 percent or more of the total bill if an out-of-pocket limit has not been reached. With average hospital stays often exceeding $2,000 per day, experts felt that this was an important inclusion.

Emergency Care
Under most existing plans, emergency care is covered. Many providers charge a fee for out-of-network emergency services, or they may require pre-authorization. With the new law, these two requirements will no longer exist.

Maternity And Newborn Care
The new law will classify prenatal care as a preventative service, so there will be no extra cost. It will also require all insurers to cover childbirth and infant care.

Pediatric Care
Although few current health plans cover dental, orthodontic and vision care, the new law will set provisions for those areas for kids under the age of 19. Each one will be able to receive medically necessary orthodontic care, fillings, x-rays and two teeth cleaning sessions per year.

Wellness And Preventative Services
The purpose of this benefit is to keep the number of needs-related doctor visits down. Experts say that if people make healthier choices for their lifestyles, the need for serious medical care will lessen. Every person will be allowed one free wellness visit per year, and 50 other preventative health services are also available.

Laboratory Services
Preventative screening tests will be required as part of the new law, but patients may still be billed a small amount for diagnostic tests. Costs may range from $20 to up to 30 percent of an MRI.

Other changes to expect in 2014

Out-of-Pocket Maximum limits – The new accumulation rules for out-of-pocket maximum (OOPM) which apply for all funding types and employer sizes. The OOPM will be $6,350 (for self only coverage) and $12,700 (for other than self-coverage) in 2014, with future increases indexed for inflation. All cost sharing for EHB must accumulate to the OOPM. For plans that have in and out-of-network benefits, only the in-network benefits are subject to the OOPM.

Excessive waiting period limitations – In group markets of all sizes and funding, a maximum waiting period of 90 days will take effect on January 1, 2014 upon a group’s renewal.

Small group deductible limits – The deductible caps is for Small Groups plain in 2014 have been set at $2,000 for single coverage and $4,000 for family coverage. The deductible caps will be will be indexed for inflation.

Pre-existing condition – This exclusion must be removed for all members, not just those under age 19, and all fully insured plans must have guaranteed issue and renewability

Health insurance plans will certainly see several changes as the new law takes effect.

At Cleary, we know how important a comprehensivee benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.

Can Your Business Survive an Interruption?

Every year, after nearly every natural disaster, thousands of small businesses face a true acid test: Can their business survive an interruption? Hurricanes Andrew, Katrina and Sandy and the tornados that struck Joplin, Missouri in 2010 didn’t just affect structures: They knocked thousands of small and medium-sized businesses out of commission for days, weeks and sometimes months.

These business owners were caught in a double whammy: First, they lost out on the revenues from sales and operations at affected locations. Second, they still had ongoing expenses to pay. If your business were to be hit by a disaster, do you have the cash on hand to continue making the following payments:

  • Your own salary as an owner-employee
  • Salaries of key people whom you can’t afford to lose
  • Salaries and hourly wages of workers helping with clean-up and recovery
  • Insurance premiums on company vehicles
  • Payroll taxes
  • Fringe benefits
  • Health insurance premiums
  • Lease payments on critical equipment
  • Marketing and advertising expenses – many of which are done on a forward contract?
  • Temporary office and warehouse space
  • Utilities
  • Deductibles from other insurance coverage

If revenues from operations came to a halt, and you had to add up all these expenses and keep things going, how long could your business run? Would you be faced with the loss of key salespeople and staff? Would valuable institutional memory be forced to go to other employers because you can’t pay them for an extended period of time?

You may be at an elevated risk of severe economic harm from business interruption if the following conditions apply:

  • You have substantial business overhead in general
  • You rely on leased equipment or vehicles to operate, or if you have financed equipment subject to repossession if you don’t apply.
  • You rely on vendor financing.
  • You have key employees that are not easily replaceable
  • You have one location, or if you have multiple locations within the same geographic area
  • You cannot operate without electric power and generator power is not realistic or cost-effective for you.
  • You rely on being able to purchase gasoline or diesel locally.
  • You rely on your income from the business to get through each month.
  • You will have to rent computers, vehicles or capital equipment on a temporary basis to continue to function.
  • You are locked into forward purchasing contracts for materials, inventory or advertising
  • You rely on income from e-commerce operations that would vanish in the event of a sustained power outage.

We are available to discuss and help you evaluate your business interruption insurance and business overhead insurance exposures. It is important to tailor your coverage to account for considerations specific to your industry. For example, some industries are seasonal: Damages from an unexpected shutdown in operations during tourist season or at some other critical time would be much more damaging than shutdowns at other times during the year. Your coverage should take this into account.

What About Non-Disaster-Related Shutdowns?

Not every business shutdown is due to a natural disaster. Sometimes you may have a shutdown due to the illness or disability of a key employee. Depending on the circumstances, you may need to wait things out until a partner/owner or key employee is able to return to work. In other circumstances, you will need to recruit and train a replacement. In some instances, the business could come to a near halt until this is accomplished. To ensure your business stays on solid ground, you might consider getting life insurance for key employee so that you’ll be compensated in the event of an unfortunate circumstance.

Ordinary key-person coverage should provide some point-blank protection, for example, to pay the costs of recruiting and training a new key salesperson, executive or other vital individual. But you may need additional coverage, called business overhead insurance, to keep your business’s key functions running while you deal with your personnel changes, or buy time for your key individual to recover from the illness or injury that took him or her out of action.

At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. Give us a call today at 617-723-0700.

Patient Protection Affordable Care Act and SCA

Federal Contractors must focus on how the Patient Protection Affordable Care Act (PPACA) may soon affect their bottom line. As the changes brought about by the PPACA Act approach, many Federal Contractors are unaware of the potential cost increases bearing down on them.

According to Cloud Business Advisors (an innovative employee benefits brokerage and consulting firm) and Proskauer law firm for Employee Benefits and (ERISA) law. There are four key components to PPACA:

  • Individual Mandate (delayed to 2015)
  • Subsidies
  • Penalties
  • Insurance Mandates
  • State Mandates
  • Employer Mandates

Companies must also adhere to the following PPACA mandates:

  • Individual Annual Penalties for Not Maintaining Coverage
  • Premium Assistance Tax Credit
  • 2013 Federal Poverty Guidelines
  • Exchanges: What the states are doing and not doing and how exchanges work
  • What is a Large Employer
  • Parent- Subsidy Controlled Group
  • Brother- Sister Controlled Group
  • Who do you have to offer coverage to
  • What are the Penalties and how to avoid them
  • Affordability Safe Harbors
  • 90 Day Waiting Period
  • Timing and Determination of Eligible Employees
  • Taxes and Fees

When the Department of Labor, Wage and Hour Division, Washington, DC was asked a question regarding how they would be involved in integrating the PPACA with the Service Contract Act (SCA); they responded that both the PPACA and Service Contract Act are separate and must be handled individually.

For example: If a contractor does not offer fringe benefits and pays cash in lieu of benefits to service contractor employees (which is permitted by SCA), is this a violation of PPACA since no benefits are offered?

This is just one example of many questions relating to SCA and PPACA that must be resolved by individual contractors and companies prior to 2014.

If you violate the SCA Act, you may face a DOL Compliance Officer who will investigate; but if you violate the PPACA Act you can face the IRS or another Federal Administrative Agency.

These investigations are time consuming and complicated, and take an experienced individual from your company to handle them. Under SCA you may face penalties and or debarment; however we have yet to see what penalties may be handed out for PPACA violations.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe-benefit obligations and provides your employees with valuable benefits.

What is a “Preliminary Physical Audit”?

Preliminary Physical Audit

At the beginning of your policy year, an on-site audit may be performed to review operations, classifications, and exposures. The auditor will review a representative base period in order to project exposures for the full policy term.

We are starting to see an uptick in preliminary physical workers compensation policyholder audits. Rather than waiting until the policy year-end audit to address any potential classification or payroll issues, carriers are looking for corrections at the beginning of the policy year.

Why are they doing this?

There are two main reasons. The first is to make sure that the insured is using proper classifications and the second is to make sure that appropriate payroll amounts are being attributed to the correct classifications. Both of these reasons collectively, decrease the amount of uncollected premiums as a result of improper classifications or underreporting of payroll.

Most “voluntary” workers compensation carriers do not perform preliminary audits, although they are permissible according to the policy terms & conditions. We are seeing most of them carried out by the servicing carriers of the various state “Assigned Risk” workers compensation programs. These servicing carriers are also known as the residual market, for those companies who for one reason or another have trouble getting voluntary coverage. (Hazardous industries, having higher than usual loss history or having poor safety and loss control programs are some examples of companies that use the residual markets.)

Most payroll and employee hour tracking reports are automated and readily available through payroll processing companies. These reports help to ensure that companies eventfully pay the correct amount of workers compensation premium. However, it is not unheard of for underreporting to take place during the year. Some insurance carriers are trying to collect the proper premiums at the beginning of the policy year instead of waiting until the final audit.

Employee classifications can have a drastic impact on workers compensation premium as the rates are significantly different from class to class. For instance, the Massachusetts “Clerical” (code 8810) rate per $100 of payroll is $.09, whereas the rate for “Iron or Steel Erection” (code 5040) is $54.08 and there are hundreds of classifications with rates in between. Purposeful misclassification is a criminal act. However, there are many ways to interpret what an employee does as his “governing” classification. It is natural for the policyholder to want a lower rated class and for the carrier to want a higher rated class.

If you have any questions as to what the proper payroll run rate should be or how to properly classify your employees please reach out to us and we would be happy to assist you. It is important to keep in mind that you can and in certain instances should have your broker at any audit, not just a workers compensation preliminary audit. We are always available to assist you.

At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. Give us a call today at 617-723-0700.