Insurance Insights: The Cleary Insurance Blog
The Cleary Insurance blog covers insurance, risk management, and financial planning for New England businesses and individuals. Our team of licensed advisors and specialists publishes regular articles on commercial and personal coverage, employee benefits, life and financial planning, and insurance compliance. Browse recent articles below, or use the category filters to find topics relevant to your business or personal situation.
ACA Replacement Bill for Withdrawn, Now What?
In late March 2017, Republican leadership in the U.S. House of Representatives withdrew the American Health Care Act (AHCA) and were unsuccessful at replacing and repealing the Affordable Care Act (ACA).
Because the House was unable to pass the AHCA, the ACA remains current law, and employers must continue to comply with all applicable ACA provisions.
While the future of the ACA as a whole is currently unclear, some definitive changes have been made to some ACA taxes and fees for 2017. Employers should be aware of the evolving applicability of existing ACA taxes and fees so that they know how the ACA affects their bottom lines.
Changes to ACA Taxes
A federal budget bill enacted for 2016 made the following significant changes to three ACA tax provisions:
- Delayed implementation of the ACA’s Cadillac tax for two years, until 2020
- Imposed a one-year moratorium on the ACA’s health insurance providers fee for 2017
- Imposed a two-year moratorium on the ACA’s medical device excise tax for 2016 and 2017
Changes to ACA Fees
In addition, the ACA’s reinsurance fees expired after 2016, although the 2016 fees will be paid in 2017. Reinsurance fees may be paid in either one lump sum or in two installments. Reinsurance fees paid in one lump sum were due in full on Jan. 15, 2017. Reinsurance fees paid in two installments are due as follows:
- Jan. 15, 2017: Remit the first contribution amount of $21.60 per covered life.
- Nov. 15, 2017: Remit the second contribution amount of $5.40 per covered life.
Retirement Needs are Likely Higher then You Think
- What haven’t I done yet? Clients may want to check a few items off their bucket list right away
- What didn’t I have time for? With an additional 40-60 hours on hand per week, clients can take on projects that they never got around to like remodeling the kitchen
- How can I say no to my kid? Children and grandchildren often account for many unexpected costs during retirement…i.e. adult children are laid off for a period of time, divorced, need a place to stay while their new home is built, failed to accumulate enough education funds, etc.
When it Rains it Pours
Umbrella insurance is extra liability insurance. It helps to protect you and your assets from major claims and big-ticket lawsuits. An umbrella insurance policy provides liability above and beyond the limits of your insurance policies and may cover claims that are excluded by other liability policies.
No matter how hard you try to avoid them; accidents happen. If you were to cause a major auto accident involving property damage and or extensive injuries to other parties, your hard-earned assets could be at risk. The costs of the property damage, injuries to other parties, and or subsequent lawsuits add up quickly and may exceed the limits of your auto insurance in no time. It is not simply auto accidents you need to worry about. There are other types of accidents as well. Imagine this: You’re having a graduation party and someone slips, falls, and is injured. Think you won’t be sued? Think again. In today’s society, lawsuits are common…and costly. A lawsuit has the potential to destroy your financial security, but an umbrella insurance policy may protect you.
Examples of umbrella insurance benefits include protection from the following:
- Significant property damage. Your standard auto insurance liability limit may be exhausted if you are at fault in an auto accident where you destroy another vehicle and/or other property.
- Serious bodily injury liability. Your homeowner’s insurance liability limit may be insufficient to cover medical and other costs related to a guest falling off a balcony at your home, or being bitten by your dog.
- Landlord liability. A tenant might file an expensive suit over an injury sustained while renting your property.
Libel or slander. Lawsuits could result from something that you say or write about another person. - Malicious prosecution. You may file a suit against someone and in turn be sued for wrongfully, or maliciously, prosecuting that individual.
The right umbrella limits for you depend on where you live, your profession and your aversion to risk. Liability coverage in home and auto policies rarely exceed $500,000, yet 13% of personal injury liability judgements and settlements are $1 million or more, according to a report, citing data from Jury Verdict Research. The amount of coverage you choose should bear some relation to your net worth.
When trying to determine the right amount of coverage to carry, consider these items:
Total Assets: Setting your umbrella limit based on your total assets will give you more protection than basing it off of your net worth. Instead of matching your liability coverage to your net worth, these advisors recommend coverage equal to the value of your assets without regard for your debts (this could help you avoid selling your home to pay a judgment if your net worth is your home equity, for example). Applying this to the example above, then, you’d want at least $500,000 of liability insurance, because the assets total $500,000. You may need an umbrella policy if your insurer’s basic liability coverage limit is less than $500,000.
Future Income: But that’s not all. If someone sues you and gets a judgment that exceeds your liability coverage, your future earnings may also be on the line, and could be garnished up to 25 percent. To address this, consider multiplying your income by five and adding that amount to your asset total. If your total household earnings are $100,000 a year and you have $500,000 in assets to protect, you may want a $1 million policy. You’d almost certainly want umbrella coverage.
Collateral Damage: Another facet of this examination is the potential damage to others. If you’ve got two teens entering college, plan to retire soon, or are supporting aging relatives, a financial wipeout could be catastrophic and possibly permanent. That’s another indication you might need to expand your liability insurance with an umbrella policy. If you’re young, single, broke, renting and healthy, losing everything you own would be terrible, but you’d probably recover eventually.
Like any insurance, an umbrella policy should bring you some peace of mind. With any luck, you’ll never have a circumstance where you need to use the coverage. But bad things do happen, and just knowing it’s there is one way of knowing you’re prepared to deal with a tragedy or accident beyond your control — at least from a financial aspect.
Pogol, Gina. “Umbrella Insurance Policy: Because When it Rains, it Pours.” Inurance.com Quinstreet, Inc., February, 21 2017. Web. April 24, 2017.