Employers interested in forming Association Health Plans (AHP) to purchase health care benefits for their employees have a resource to help with federal regulations and guidelines. The U.S. Department of Labor (DOL) added compliance assistance information to its Employer.gov website: https://tinyurl.com/ycnu7r9v.
AHPs give small businesses the ability to purchase insurance in the large group market with the same leverage to negotiate prices and benefits as large companies. To form an AHP, small employers must be in the same business, trade, industry or profession or have a principal place of business in a region not exceeding the same site or metropolitan boundaries. Owners who don’t have employees also can join AHPs for their own and their family’s health coverage.
AHPs are employee welfare benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA). They must:
New compliance materials include:
For information about the best group plans for your AHP, contact your broker.
“Nice to have” policies are those that all businesses should at least consider purchasing. Three of the most important ones include:
In addition to lawyers, doctors and accountants, many businesses now need PL insurance. You don’t have to consider yourself a “professional” to need coverage for negligent acts. If you give advice and recommendations, if you create programs or products for your customers or if you provide a service, you need liability protection. Some examples you may not think of right away include:
Some of the main risks of cyber-crime include:
Directors & Officers Insurance
There are two or sometimes three parts to these policies:
If you have questions or feel that you lack any of these coverages, please contact us.
Workers Compensation terms can seem arcane and legalistic.
Although there are many special terms used in workers compensation insurance, these are basic. Though there are variations in terminology and procedure in every state, these definitions are widely used.
Temporary Partial Disability (TP)
Payments for temporary, but only partial, incapacity from work of an injured worker with a work-related injury or illness. During such a period, the worker is able to perform SOME types of work, as defined by his or her attending physician, but earns less than before the injury.
Permanent Partial Disability (PPD)
Payments for the permanent loss, or loss of use, of one or more body part(s) resulting from a work-related injury or illness to a worker who can still work, but whose ability to compete in the open labor market is reduced.
Temporary Total Disability (TT)
Payments for temporary, but total, incapacity from ANY type of work of an injured worker with a work-related injury or illness. A percentage of wages, usually two-thirds, are paid during the period of total disability.
Permanent disability (PD)
Payments to a worker when an injury or illness results in a permanent impairment that reduces the injured worker’s ability to compete in the labor market. The amount the injured worker will receive depends on the extent of the disability. Factors considered when calculating PD include the date of the injury, the age when injured, and occupation. PD benefit amounts are set by law.
Vocational rehabilitation (VR)
Once a physician determines that an injured worker is medically eligible and unable to return to his or her previous type of work, the employer and worker jointly select a rehabilitation counselor who will determine whether vocational rehabilitation is feasible, and if appropriate, develop a suitable rehabilitation plan. The goal of a rehabilitation plan is to return the injured worker to suitable, gainful employment. The benefits are paid if it is unlikely the worker will be able to return working the same job held prior to his/her injury and the employer does not offer other work.
Form required to be filed by an employer in cases of an employee’s work-related injury or illness that results in incapacity from work of one day or more. An accident report is NOT a claim for workers’ compensation benefits, although it usually gets things started once filed.
This form is filed by the employee with an alleged work-related injury or illness, or dependent(s) of a deceased employee, claiming workers’ compensation benefits.
IRS Form 941
This is a form used by the federal Internal Revenue Service to report income on your employees. It is submitted to the IRS quarterly and is a good source of information for your workers’ compensation premium audit because it should be very accurate and comprehensive. Generally, it should not be the only documentation of your compensation for audit purposes. See the www.irs.gov/forms-instructions website for more details.
IRS Form 944
This form serves the same purpose as the IRS Form 941, but is submitted annually, rather than quarterly. You would usually use only the Form 941 or the Form 944, not both. See the www.irs.gov/forms-instructions website for details.
The medical practitioner who is the primary medical caregiver of an employee with a work-related injury or illness.
Any person making a claim for workers’ compensation benefits: usually, an employee claiming a work-related injury or illness, but may also be a surviving dependent of a deceased employee claiming survivors’ benefits.
An employer or its workers’ compensation insurance carrier in a workers’ compensation case.
Unless you’re an attorney, doctor or accountant, it may not be obvious to you that you may need professional liability insurance.
Forty percent of businesses believe they may have professional liability risks but have not purchased insurance for it, according to a recent survey of small business owners by The Hanover Insurance Company.
Over the past twenty years there have been many changes in the ways businesses interact with customers and they may be surprised to discover they now have a gap in their liability coverage. Many businesses don’t realize that their general liability does not cover professional liability (PL) exposures.
In addition to lawyers, doctors and accountants, many businesses now need PL insurance. You don’t have to consider yourself a “professional” to need coverage for negligent acts. If you give advice and recommendations, if you create programs or products for your customers or if you provide a service, you need liability protection.
Take, for instance, an ice sculptor. A socially prominent couple contracts with an ice sculptor to provide a figure of two swans for their very expensive wedding. When the sculpture is unveiled, the bride gasps—the swans look like ducks. She claims this mistake ruined her wedding and threatens to sue, not just for the cost of the sculpture, but for the cost of the entire reception.
One of the most important reasons to carry professional liability (also referred to often as errors and omissions) insurance coverage is for defense costs. Even if the ice sculptor can prove that the client signed off on the design before it was unveiled, and it did indeed look like swans, the cost to defend the lawsuit could put a small organization out of business.
You can find the most extreme examples of costly lawsuits in the medical field, where 65 percent of claims are withdrawn before trial and 90 percent of claims that go to trial are denied, according to the Physicians Insurance Association of America. Nonetheless, it costs an average of $120,000 to defend frivolous cases.
Whether you buy a PL or E&O policy, it usually will be tailored to the specific needs of your business classification. For instance, a policy for real estate brokers typically includes coverage for failure to advise clients on the existence of fungus, asbestos or bacteria. Policies for accountants might provide coverage for acting as a trustee or administrator of an estate. Some policies also cover inadvertent transmission of computer viruses and corruption of customers’ data.
Examples of other professionals who need protection include:
Many insurance companies offer group policies to members of trade associations. In other cases, insurance companies form buying pools that professionals can “join.” Miscellaneous professional liability coverage is also available for a variety of businesses such as translators, meeting planners, publishers, and collection agencies. If you need coverage, we can advise you on the best approach.
Sole proprietors may choose to protect their personal assets by forming a limited liability company, but their corporate assets are still at risk unless they buy E&O coverage.
It is important to understand that most PL and E&O policies are written as “claims-made,” which means the policy only covers claims filed during the policy period. A few companies offer occurrence-based policies, which cover any qualifying claim arising from an incident that occurred during the policy period — no matter when filed. If you switch from a claims-made to an occurrence policy, you have to make sure you don’t create a gap in coverage.
In specific situations, a claims-made policy may allow an extended period for reporting claims: when an insured dies, retires or becomes permanently disabled. This is an important feature, because new claims can be filed years after the policy period. To qualify as a retiree, the insured usually has to be at least 55 years old, and he/she has had to maintain coverage with the same insurance company for several years — something to plan for if retirement is in your near future.
If you have any concerns about the liability coverage for your business, please give us a call.
The only thing certain about the Affordable Care Act (ACA) is change. And with a new year comes new compliance deadlines and proposed new rules and regulations. The Trump Administration has signaled its intent to propose legislation to again alter the ACA.
Here’s what you need to know about health care coverage in 2019.
The following are the reporting deadlines for the 2018 tax:
Furnish Form 1095-C to Employees
It’s imperative that you give your employees Form 1095-C by the March 4, 2019 deadline so they will have the information they need to complete Line 61 on their individual tax returns. Employees must show whether they or their family members had minimum essential coverage the year before.
You must report the following on Form 1095-C:
If you fail to file and furnish correct information on Form 1095-C, you may be subject to a $500 penalty per form.
File Forms 1094-C/1095-C if You are an ALE and Filing by Paper by February 28, 2019
Just as your employees must show they are in compliance with the Affordable Care Act, you need to show that you are in compliance with the Employer Shared Responsibility Mandate — if you are an Applicable Large Employer (ALE). An ALE is a company with 50 or more full-time equivalent employees. The ACA defines a full-time employee as one who works 30 hours or more each week.
Code sections 6055 and 6056 of the ACA requires ALEs to provide information about whether they offered affordable minimum essential health coverage (MEC) and enrollment in minimum essential health coverage for eligible employees.
You may file this form by paper or electronically if you have fewer than 250 employees.
Failure to file complete and accurate Forms 1094-C by the deadline will result in penalties equal to $250 per form, not to exceed $3 million per year.
File Forms 1094-C/1095-C if You are an ALE and Filing Electronically. Monday, April 1, 2019
Any employer with 250 or more employees must file electronically. By the way April 15 is Tax Day when Individual tax returns are due. Employees should include healthcare coverage information on their individual returns.
The Changing Landscape
The Trump Administration proposed a rule change that allows large employers to make tax-free contributions to employees who purchase less expensive short-term health plans.
Short-term health plans, which are structured like major medical health plans, can provide coverage and save consumers about 50 percent or more when compared to ACA plans. However, they also offer fewer benefits than plans sold on the federal and state Marketplace Exchanges. In addition, the plans are not compliant and individuals with pre-existing conditions can be denied coverage. The premiums, however, are substantially lower.
The proposal would revise the Obama Administration’s 2013 rule that allows employers to make a tax-free contribution to employees’ premiums for qualified ACA plans that cover pre-existing conditions and include coverage of essential health benefits. Short-term plans were not included in the rule and would not receive tax benefits.
The 21st Century Cures Act in 2016 allowed small employers to get tax deductions for contributing to employee premiums for short-term plans. If the Administration’s proposal is approved, then large employers also would get the tax deductions.
The Administration already acted to make short-term plans more appealing. It expanded the duration of the plans from 90 days to nearly 12 months, with renewal options to extend coverage to three years.
Observers say the decision to extend coverage periods makes short-term plans a viable alternative to COBRA plans. COBRA allows employees to remain on the employer’s health insurance plan when they leave the company. However, COBRA plans can be expensive.
Short-term plans also could be a good option for new employees if the company has a 90-day waiting period before health care coverage goes into effect. The plans also can help early retirees who are not yet eligible for Medicare.
According to a senior Administration official, this rule change would empower “workers and employers to make their own decisions with more options.” Detractors worry that employees will not realize that these plans — while cheaper — do not cover the 10 essential health benefits required by the ACA, and they have coverage gaps.
Another factor affecting short-term plans is the Administration’s new guidance allowing states to give subsidies to customers of short-term and association plans, which could lower the cost of the plans even more.
Employers also can take advantage of another Trump Administration change: Association Health Plans (AHPs). AHPs allow small businesses, including the self-employed, to band together by geography or industry and obtain health care coverage using the same bargaining power as large employers.
Please contact us if you need further clarification of any of these items.
The Americans with Disabilities Act (ADA) and amendments apply to employers with 15 or more employees. These employers cannot discriminate against individuals with disabilities in hiring, promoting, retaining and other aspects of employment. The ADA requires affected employers to provide a “reasonable accommodation” to allow these individuals to perform their job duties. Employers do not have to provide accommodations if doing so would be an undue hardship.
A reasonable accommodation is any change in the workplace or the way things are customarily done that provides an equal employment opportunity to an individual with a disability. While there are some things that are not considered reasonable accommodations (e.g., removal of an essential job function or personal use items such as a hearing aid that is needed on and off the job), reasonable accommodations can cover most things that enable an individual to apply for a job, perform a job, or have equal access to the workplace and employee benefits.
An employer’s obligation to provide accommodations begins at the very start of the employment process. Employers with 15 or more employees must ensure applicants with disabilities can apply for jobs. This makes employers that recruit at locations that are physically inaccessible open to possible discrimination charges. In addition, employers that have online applications should also provide alternative means for people with disabilities to apply, unless they can show that doing so would create undue hardship.
Employers must also provide accommodations when an employee needs accommodation to perform the essential functions of the job, to gain access to the workplace or to enjoy “equal access to the benefits and privileges of employment,” such as trainings and office-sponsored events.
Providing accommodations is often not as difficult as you might think. Accommodations vary with the situation and can include specialized equipment, facility modifications, adjustments to work schedules or job duties, as well as a whole range of other creative solutions.
Employers concerned about accommodations can contact the Job Accommodation Network (askjan.org). This service of the U.S. Department of Labor provides free consulting services for employers of all sizes.
Your employees will be able to save more money in their 401(k) retirement accounts this year. The big question, though, is should they save the annual maximum?
New Contribution Cap
For employer match accounts, the Internal Revenue Service raised the annual contribution cap for 401(k) and defined contribution retirement accounts from $18,500 to $19,000. Defined contribution retirement accounts include 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plans. The catch-up limit on defined contribution plans for employees who are 50 or older remains unchanged at $6,000. That means employees age 50 and older can save as much as $25,000 in their 401(k) plan each year.
An employee can defer $19,000 of pretax earnings. There also is a $56,000 limit (up from $55,000) to how much employee and employer contributions and profit-sharing contributions can be made to defined contribution plans.
Families who qualify can claim a Saver’s Credit on their tax return for the amount they save each year. The maximum amount that can be saved annually was increased $1,000 for married couples to $64,000; up $750 to $48,000 for heads of households; and up $500 to $32,000 for singles and single filers. The credit was formerly named the Retirement Savings Contributions Credit. It gives a special tax break to low- and moderate-income taxpayers who are saving for retirement.
To Max Out or to Not Max Out
Many retirement experts advise employees to “max out” their 401(k) contributions. Maxing out means contributing the maximum amount a person is allowed to save annually. This maximum amount does not include employer matching contributions, allocations of forfeitures or any mandatory contributions.
The question, then, is whether your employees should save that much. For example, assume an employee wants to contribute the 2018 maximum to their 401(k) for 30 years and they earned 7 percent returns on their investments. They would have a $1.75 million nest egg — not including matching contributions. While anyone might be thrilled to have that much money, it’s a lot to save each year and many people don’t need that much.
On the other hand, a 40-year-old with no savings might want to max out their 401(k) contributions.
For most people, contributing 10 percent of their salary to a company’s 401(k) or other retirement savings probably is enough if sustained throughout their career.
A study by the Center for Financial Security at the University of Wisconsin-Madison found that employees appreciate it when employers offer financial education as a way to make better financial decisions. According to the study, participants with access to an online financial program in the workplace increased their contributions to retirement accounts by an average of 40 percent.
Two common ways employers can provide financial assistance include offering:
Please contact us if we can be of any assistance.
DEERFIELD, IL (January 7, 2019) — Alera Group, a leading national insurance firm, today announced that it has acquired The Avon-Dixon Insurance Agency, LLC, from Shore Bancshares, Inc., effective December 31, 2018.
The Avon-Dixon Insurance Agency, headquartered in Easton, Maryland, is a full-service insurance agency that began providing insurance solutions to residents and businesses in Talbot County in 1850. Today, their team continues to provide clients in the Mid-Atlantic region with property & casualty and employee benefits solutions, with specialties in yacht and boating insurance and professional trucking coverage.
“We are thrilled to welcome the entire Avon-Dixon team, led by Rich Trippe. Avon-Dixon is a powerful addition to our presence on the East Coast. Rich and the team bring additional capabilities and provide additional geographic expansion to Alera Group’s strong presence on the East Coast,” said Alan Levitz, CEO of Alera Group. “Avon Dixon has a history of working with a partner which dovetails with our continuing desire to build on our culture of collaboration as we partner with firms to create an exceptional experience for our clients.”
“We are excited about our new relationship with Alera Group, which gives us the resources of a large national insurance firm while maintaining the personal local service our clients have come to expect,” said Rich Trippe, President and CEO of Avon-Dixon.
Avon-Dixon’s employees will continue operating out of their existing locations under the name Avon-Dixon, an Alera Group Agency, LLC.
Alera Group was formed in early 2017 and is one of the nation’s foremost independent insurance agencies. For more information on partnering with Alera Group, visit Partner With Us at www.jmjwebconsulting.com.
About Alera Group
Based in Deerfield, IL, Alera Group’s over 1,500 employees serve thousands of clients nationally in employee benefits, property and casualty, risk management and wealth management. Alera Group is the 15th largest privately held firm in the country. For more information, visit www.jmjwebconsulting.com or follow Alera Group on Twitter: @AleraGroupUS.
Rob Lieblein, Chief Development Officer
Jessica Tiller, Weiss PR