Captive Insurance Programs

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Captive insurance programs are an alternative to standard insurance protection. They are not new; but they are getting a lot more attention now than they had in the past.

Captives can provide the highest quality insurance protection for its owners. By banding together to create a true sharing of risk, the shareholders of a captive can control their insurance costs and avoid the volatility of the traditional insurance industry. Additional benefits are created through the increased assurance of coverage, the stabilization of premiums, and the improved management of risk through effective loss control and claims management.

Captives were created to satisfy the need of companies to obtain casualty insurance coverage at a predictable cost. They started when companies perceived that the commercial insurance industry was not responsive to their risk needs. The goal of these business owners was to:

  • Increase buying power
  • Allow member companies many of the same advantages of control generally afforded to only the largest companies

In addition to the tax deductibility of premiums paid into a captive, there is also the opportunity for the members to share in the underwriting profits and investment income of a captive.

Well run, financially stable, low loss frequency companies make ideal candidates for a captive alternative. If you are wondering if a captive alternative is for you, please call Mike Regan at Regan Cleary Insurance.

At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. We are members of the National Association of Surety Bond Producers (NASBP), the professional organization for agents that also specialize in surety bonding. Give us a call today at 617-723-0700.

SCA Contracts

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The DOL has sufficient funding to hire over 200 full time additional Wage & Hour Investigators. The funding was provided over the past several years by the American Reinvestment & Recovery Act (ARRA).

Timothy J. Helm, Chief for the Branch of Government Contracts Enforcement for the Wage & Hour Division of the DOL has been responsible for the hiring and training of these individuals. According to Mr. Helm and his staff, open investigations are at an all-time low as a result of the additional investigators. At the quarterly Professional Services Council (PSC) Labor Relations meetings, Mr. Helm spoke of violations following a DOL audit, mentioning that his goal is to debar contractors instead of negotiating settlements with them.

We have been encouraging contractors, as a result of the above, to ensure that all their personnel dealing with these Service Contact Act (SCA) and Davis Bacon Act (DBA) contracts have the appropriate training to handle DOL audits. If contractors have not had all their respective personnel properly trained, they should make sure that this is done as quickly as possible.

We have been coordinating Service Contract Act training programs for the PSC Association three times a year, and these will continue in 2012 in March, June and November. We have also designed a one-day Davis Bacon training program that will be held in early April 2012. The DOL Wage & Hour staff has agreed to participate in this training, as they have always done with the SCA programs.

Additionally, MARAL, LLC has been offering SCA and DBA one day training programs in Rosslyn, VA and at client locations for the past several years. Their schedule and registration procedures can be found on www.eventville.com/maral or e-mail Al Corvigno at acorvigno@marall.com.

Some contractors are reluctant to provide their employees working on SCA or DBA contracts the appropriate fringe benefits listed on their respective Wage Determinations. In lieu of providing the fringe benefits, they choose to pay a cash value. While this meets the minimum legal requirement, it actually increases the cost to both the contractors and the employees due to the taxable implications.

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.

Voluntary Benefits

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In previous years, employers offered voluntary benefits to retain employees, attract strong candidates and boost morale. They weren’t as popular as they are now. Since there has been significant growth in economic pressures, most employers want to use these benefits because the plans have no direct costs for them. However, employers’ costs aren’t the only benefit. Many employers offer these benefits because their employees are able to afford them. The same employees may not be able to afford similar benefits on their own.

Advantages of offering voluntary benefits include:

1. Desired Benefits
Employees usually ask prospective employers about disability, life, health and dental benefits. It’s always beneficial to be able to offer good prospective employees the benefits they desire.

2. No Employer Expenses
The only thing better than being able to offer employees the benefits they desire is being able to do so without paying much. The payroll tax savings gained from Section 125 offsets the administrative costs that are often associated with voluntary benefits.

3. Group Rates
Since the rates are calculated for a group, individual costs for employees are lower. This means that employees are able to enjoy the same great benefits they desire for an affordable cost. Employees enjoy the benefit of paying less upfront for costly medical procedures or illnesses. If a serious illness or accident occurs, plan members receive cash benefits. These benefits may be used for groceries, travel, living expenses or other expenses related to the medical issue.

4. Lower Employee Turnover Rates
Employers who offer better benefit packages to their employees enjoy a low turnover rate. Good benefit choices also attract good prospective employees. When employment levels are high, it’s essential for employers to have the best benefit offerings to attract the best job candidates.

5. No Secondary Market
Some of the best programs are only offered in plans that are sponsored by employers. This aspect is also more attractive to prospective employees because they can’t obtain the same insurance coverage without working for the employer who offers it.

6. Fosters Goodwill
Employees appreciate employers who show that they care enough to offer good benefit options. This shows employees that the employer cares about their individual needs and the needs of their families.

7. Good Underwriting
Most individuals are not able to find life or disability coverage on their own. This is especially true for individuals who have a medical history that is not favorable. Voluntary benefit plans have simple underwriting requirements. They are also guaranteed without any health questions.

As business owners seek better ways to manage healthcare expenses, they also seek more flexible benefit choices. In addition to reducing costs to employers, voluntary benefit plans reduce FICA contributions. Whether employers offer indemnity, discount or insurance, voluntary benefits are the best choice for employee relations, employee retention and company savings.

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 business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.

Power Outages

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Winter is right around the corner. Depending on where you live, this could mean extreme amounts of snow and/or ice; and with that comes power outages. While there is little you can do about a winter power outage once it has happened, you can take steps to prepare yourself.

Lots of Water

When you lose power for weeks at a time, water becomes a guarded resource as there is no way to use the toilet or bathe without some type of extra water supply. Preparing gallons or buckets of water is one of the best things you can do to prepare yourself. If you should lose power and you have not saved water, think of what available resources you may have. This may mean getting water from a local lake or pond (if it is not frozen over). As with any water source that has been sitting for a very long time, remember to boil the water prior to use.

A Cooking Source

It is important to have some way to cook food (and boil water); there are several available options. You may want to consider purchasing a gas stove and having it installed now. If you do not have a gas stove, consider using your grill. Though you may only think to use a grill in summer, it can really come in handy during a winter power outage – as long as it hasn’t been covered by several feet of ice! Keep in mind that an outside grill should only be used outside.

Easy-to-Make Foods

Although it is always best to have a source available to boil water, it is a good idea to stock up on some foods which require minimal to no cooking when you know that a big storm is about to hit. Some options include bread, peanut butter crackers and cups of soup which require only boiled water to heat. As always, canned foods make excellent choices to have handy.

A Source of Light

Light becomes crucial during a winter power outage, especially if your power should go out for weeks at a time. Given winter’s reduced daylight hours, having candles and flashlights on hand is important. Don’t forget to stock up on matches and new batteries.

Outside Sources of News

Keeping in touch with the real world can help bring you a sense of hope that things will improve. Having a portable radio will provide you with news in your area, weather predictions and information around when your power may return. A cell phone can also be used to call the electric company or local centers offering updates. Keep in mind, however, that a cell phone battery needs to be recharged, so consider having a charger that can be plugged into your car’s cigarette lighter.

A Source of Heat

Many people invest in wood stoves or gas heating so that they can have a source of heat available for use during an outage. This can be a great idea even if you do not use your heater at any other time of the year. Having blankets, sweatshirts and extra layers available is also very important. Remember to keep babies and young children bundled up well. If your child wants to go outside to play during a winter power outage, the best thing you can do is say no, as they may have a hard time getting warm again after experiencing such cold.

A winter power outage can be an inconvenience to many, especially if lengthy, so it is important to be prepared. Many families begin making preparations mid-fall, such as stocking up on flashlights and water, just in case there is an unexpected autumn snow or ice storm.

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.

Estate Planning

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There are several reasons to create an estate plan, such as to reduce estate tax liability, protect assets from creditors, make charitable donations and distribute your wealth according to your wishes. There are many estate planning techniques and strategies to help you achieve your estate planning goals. But an important final estate planning step is communicating your intent and wishes to your family. The last thing you want is for your estate plan to create interfamily disputes after you’re gone. You have to know what happens when you don’t leave a will and the events that might follow. To help avoid this unfortunate outcome, create a mission statement.

Write it Down

The idea behind a mission statement is to communicate a basic set of values and principles – on anything and everything, from philanthropy to education to religion to the future of the family business – that guide your estate plan, and to memorialize them in a written document. Your family members may still not agree with the result, but they will at least understand the motivation. You will need to bring in an estate planning lawyer to help craft this so that you have everything in order and put in a satisfactory and informative way that everyone can understand.

There are no special rules that govern the format or length of a mission statement. It can be a single sentence or a 20-page monograph. The important point is to make sure that everyone is on the same page and that there are no surprises when it comes time to implement your estate plan.

A mission statement is particularly valuable if you own a family business, plan to give a sizable portion of your estate to charity, have children from a previous marriage, or have established one or more “incentive trusts” designed to shape the behavior of your heirs.

When a family business is involved, for example, you may struggle to balance your desire to treat all of your children equally with your interest in preserving the business and rewarding those children who are committed to working in it. If most of your wealth is tied up in the business, it may be difficult to provide for children who don’t work in the company without giving them an equity interest. But this may be objectionable to the children whose hard work contributed to the business’ success.

One potential solution is to divide the equity equally among your children but to provide those working in the business with management control by issuing voting stock to them and nonvoting stock to the others. Another solution may be giving real estate or a life insurance policy instead of shares in the business to children not involved in the business. Whatever strategy you come up with, the key to success is to discuss it in advance with those who have a stake in the outcome. It may also be necessary to involve an estate lawyer from Asurest Estate Planning company or another similar firm as they might be able to develop the perfect estate plan for your family.

If one of your goals is to leave a philanthropic legacy, it’s even more important for your family to participate in the discussion. Warren Buffett is famously leaving the bulk of his multibillion dollar estate to charity, and his children are fine with that. But imagine if they didn’t learn of his intentions until the reading of his will.

Build Understanding

By discussing these potentially divisive issues in advance and outlining your plan in a mission statement, you can avoid unpleasant surprises and disputes. After all of the work that goes into creating an estate plan, you don’t want to still be worrying about your family members fighting over your assets after you die. A mission statement can be an effective way to help your loved ones understand your motives and the values and principles underlying your estate plan.

At Cleary, we are committed to a holistic approach of protecting and preserving our clients’ financial assets. Give us a call today at 617-723-0700 and let us know how we can help you.

2012 Medicare Open Enrollment

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Medicare open enrollment began October 15, 2011 and will end December 7, 2011.  This is the one time of year when everyone with Medicare can make changes to their health and prescription drug plans for coming year.

Please click here for the official 2012 Medicare Handbook.

Client Testimonial

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We are a growing company and use Cleary for all our insurance coverages.  It makes our lives easier to deal with one company who can handle all our insurance needs.  Everyone at Cleary is incredibly responsive, and they certainly have demonstrated many times their ability to handle all our issues.

Irene Costello
Co-founder
Effie’s Homemade

Cost Cutting Health Benefits

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Reviewing Your Options

Like many employees, businesses consider ways they can cut expenses during difficult economic times. One common focal point of such is employee benefits programs, especially in the area of health benefits. Considering that health benefits are frequently the most expensive aspect of a company’s benefits program, this may seem like a reasonable, logical place for an employer to take cost-cutting measures. However, employers should carefully consider what the consequences will be from making cuts to their employee benefits programs; whether or not there are any alternative cost-cutting options available; and, if benefits cuts are a must, how they can lessen the impact.

The Consequences

Perhaps you, as an employer, have decided to target your employee benefits program and make some significant cost shifts toward your employees with the idea that you will cut costs and save money. If the cost shift involves higher deductibles and/or co-pays for employees, then they may procrastinate seeing a physician when they’re suffering symptoms of illness or injury, forgo or delay filling vital prescription medications, and do without wellness care. If the cost shift involves premium increases, then many employees, especially young and relatively healthy ones, might decide to drop coverage all together. The exodus could leave your plan with a larger and more undesirable risk pool.

These types of cost shifts can very well cost the health plan more money over the long run. Furthermore, it can negatively impact your company’s financial bottom line when it comes to employee morale, productivity, disability costs, and absenteeism.

An Alternative

An alternative to cost shifts would be to focus your benefit dollars on the measures that will enhance employee well-being and overall health. Some ideas would include:

  • Using incentives to motivate employees to participate in wellness activities, such as weight loss and fitness programs, tobacco cessation classes, and nutrition education and counseling
  • Using incentives to motivate employees to participate in activities that can screen and detect serious medical conditions, such as glucose level testing, blood pressure screenings, cholesterol testing, and completion of health risk assessments
  • Providing extensive preventive care coverage
  • Having an employee assistance program (EAP) available to your employees can be especially helpful during poor economic conditions since it can provide resources and/or referrals for things like financial counseling, crisis intervention, and stress management

If You Must…
Despite the negative consequences, you might feel that cost-shifting is your only feasible option. If so, make sure that you do everything possible to soften the blow to your employees, such as:

  • Offer voluntary benefits to your employees. This will cost you little, if any, money. While the employee will be responsible for most to all of the cost, they’ll benefit from group rates, convenient payroll deductions for the premiums, and the ability to personalize their coverage selections to meet their own unique needs.
  • Offer flexible spending accounts (FSAs). FSAs let employees pay for health care expenses with pre-tax dollars and get the most of their health care dollars.
  • Offer employees consumer-directed health plans (CDHPs). These plans combine a health savings account (HSA) with a health plan that has a higher deductible.

All of the above options have a commonality in that they each require an employee to get more personally involved in their own health and the management of their health-related benefits. Whether the change makes the employee more vigilant in scheduling preventive care visits, participating in wellness activities, or budgeting their future health care expenses, the point is that the employee is assuming more responsibility for their health care and management thereof. It is this greater individual responsibility on the part of the employee that can be one of the best long-term cost-management tools available to an employer.

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 or contact us by e-mail 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.

SCA Contracts

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Impending Legislation

The Department of Labor (DOL) published a final rule on August 29, 2011 implementing Executive Order #13495 on “Non -Displacement of Qualified Workers” under SCA contracts. This rule will not be effective until the Federal Acquisition Council issues regulations, which should happen very soon. It will pertain to every contract under the Service Contract Act and the only exemptions must be approved by the head of the contracting department. Employees of the predecessor contractor must work for three months before being eligible “to be offered the first right of refusal“. An employment offer must be made to all the predecessor employees in writing or electronically. The predecessor employees will be given ten days to accept an offer from the successor contractor. All workers eligible must be service employees. A successor can refuse to hire a predecessor employee if they can prove that the employee is not qualified. The predecessor must provide a list of their employees within ten days before the end of their contract. The prime contractor is also responsible to ensure that these rules are flowed down to all their subcontractors. The DOL’s Wage and Hours Division will be responsible for auditing these rules.

Earlier, on August 10, 2011, the Office of Federal Contract Compliance Programs (OFCCP) published an advance notice of proposed rulemaking in the Federal Register on a new Compensation Data Collection Tool. OFCCP is increasing its audit and investigative activity, and this would be another tool to root out non-compliance with Equal Employment Opportunity and anti- discrimination requirements. While a proposed rule is likely in the next several months, a number of questions regarding the scope and details of the data collection tool and related items must be addressed.

The Professional Services Council’s (PSC) Labor Relations Committee has invited OFCCP to speak at their next meeting on September 21, 2001 in Arlington, VA. They will be exploring these two important rules, both of which have wide ranging implications for the government services industry.

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 or contact us by e-mail and we will work with you to create a plan that meets your fringe benefit obligations and provides your employees with valuable benefits.

Earthquake Insurance

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Why It’s Important for Everywhere

When most people think about earthquakes in the United States, Alaska and California are the first two states they think of. However, Tuesday’s earthquake in Virginia shattered this idea. The initial 5.8 magnitude quake was followed by several aftershocks, which were felt as far away as Georgia, Chicago and Toronto. Although there hasn’t been extensive physical damage, the feeling of safety many people had was shaken. Many residents of the larger cities on the East Coast relocated there after experiencing tremendous earthquakes in California. One of the most important things that has become apparent from the Virginia earthquake is the need for preparedness and ample insurance coverage.

Earthquake damage isn’t covered under most business or homeowners insurance policies. Chris Hackett, Director of Personal Lines Policies for Property Casualty Insurers Association of America, stated that most policies don’t cover damage from sinkholes or earth movement. However, fires or other incidents that are triggered by an earthquake may be covered by property insurance. He encourages policyholders to thoroughly read their policies to understand any exclusions.

Many people think they won’t experience a major earthquake during their lifetime. This is especially true for those who live in areas where earthquakes happen every 100 years or less. Although many people may not experience a strong earthquake like the recent Virginia incident, there are over 5,000 incidents recorded each year by the USGS. Damage from earthquakes has been recorded in all 50 states in history. There have been reports of damage in 39 states alone since 1900. This proves that while some people may not live in areas that commonly experience earthquakes, they’re still not immune to the threat.

Earthquake coverage can be purchased as a rider to a personal or business property insurance policy, and insurance costs vary by location, building type and the age of the building:

It’s much more expensive to insure older buildings
Brick structures are more expensive to insure
Buildings with wood frames withstand the force of earthquakes better, so it’s cheaper to insure them

Every earthquake policy also has a deductible. This means that homeowners must pay upfront for a portion of the damages before the insurer pays the remaining amount. The deductible may be up to 20% of the structure’s replacement value. The percentage depends on the insurer and the location of the structure.

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 or contact us by e-mail.