The major changes in the insurance industry are due to political mandates and economic changes for small to medium business. Read more
The major changes in the insurance industry are due to political mandates and economic changes for small to medium business. Read more
Regarding the ever changing landscape of Health Care Reform, there is seemingly always news to report. To bring everyone up to speed, here are some pieces of information that have changed since the passage of the bill and are absolutely vital for businesses to understand.
Change number one falls into the, “if you didn’t know about it yet, GOOD” (because it would have driven you crazy) category. Included in the Reform legislation was something called a “Free Choice Voucher” which essentially said to employers, “whether or not a person takes your plans, you have to pay for them.” It was subject to income levels and relationship of earnings to premium cost, but basically it told employees if they decided they didn’t like the group’s coverage, the company would have to kick in a voucher that is equivalent to what they would have spent had the employee taken company coverage. The April 15th bill that repealed the “free choice voucher” also repealed the much maligned 1099 provision. As it stands, companies file a 1099 form anytime they pay contract workers $600 or more. Under PPACA’s original wording, a company would have issued endless 1099’s to Staples, Arrowhead, the landlord or any and all vendors or contractors providing $600 or more in goods or services. The obvious administrative burdens were the driving force behind removing that provision.
The other change pushes back the effective date of one requirement and comes on the heels of American employers’ moans of dissatisfaction upon hearing about discrimination testing’s inclusion in PPACA. For many, it became one of the main reasons to grandfather their health plan. The requirement applied to health insurance plans beginning on or after September 23, 2010. The consequences for failing such non-discrimination requirements included a $100 penalty per person, per day (some exceptions).
Upon further inspection, numerous people began to assert that the law was too unclear as to how the rules applied, and worried that, with such steep penalties, they may accidently cost themselves big bucks. An early holiday gift came on December 22, 2010 from the IRS which issued Notice 2011-1 providing that compliance was not required until after either regulations or other guidance has been issued. The IRS asked the public for comments which were due March 11, 2011 and they are going to issue regulations after sifting through them.
As the bill continues to morph, it is important to keep as up to date as possible. While many good insurance brokers are educating themselves and their clients too, for now, the general consensus is: buckle up, and STAY TUNED!
Tobias Kennedy is the Vice President of Account Sales & Service for Montage Insurance Solutions, a DBA of Danone Simpson Insurance Services LLC. He is a graduate of LMU’s prestigious Political Science Department and a student under the Center for the Study of Los Angeles. For more information, or to contact Tobias, email him at: [email protected]
Understanding the California Family-School Partnership Act
With an ever-changing world, education becomes essential to one’s business. At DSI, we truly understand the value of knowledge and staying up to date on the various changes in the healthcare, insurance and human resources world. Consequently, we work with highly-esteemed and experienced labor law attorneys and HR consultants in order to keep our clients up to date with rules and regulations. For example, as the school year is now back in session, we wanted to serve all of our clients, especially those in the education sector about laws that will affect their organization and their employees. We believed it would be a great time to work with our labor law attorney, Karen Dinino, to learn more about the California Family-School Partnership Act.
As per Karen Dinino, Esq., “Just when you thought vacations are over, the kids are back at school, and work can begin, you may be faced with another reason for absences from work: school visits, teacher meetings, and day care center activities. California’s Family-School Partnership Act requires a work-school partnership, and California’s children benefit. Here’s how it works:
What employers are covered? Employers of 25 or more employees.
What employees are covered? Of employers with 25 or more employees, the act covers parents, grandparents, and guardians of children in grades K-12, or in licensed child day care facilities.
How much leave can be taken? Employers must permit up to 40 hours maximum per year, and up to 8 hours maximum per month, for employees to participate in a child’s school or day care facility activities.
What types of activities are covered? Any activity that is sponsored, supervised, or approved by the school, school board, or child care facility is covered. Examples might be volunteering in your child’s classroom; participating in parent-teacher conferences, Back-to-School Night, Open House, field trips, or extracurricular sporting events sponsored by the school, school board, or child care facility; and assisting in community service learning activities.
Is it paid time off? No. The time is unpaid unless the employee chooses to use accrued paid time off (such as vacation time).
Can the employer say “no”? NO. Employers must comply with the law and allow employees to take off up to 8 hours a month/40 hours a year to participate in a child’s school or child care activities. Employers cannot discriminate or retaliate against an employee for seeking or taking time off for this reason.
My employee works a night shift, so the law doesn’t apply, right? WRONG. Night shift employees could seek time off their shift so they can be rested and awake to participate in a school activity in the day time.
Must both parents be given time off from the same employer? If both parents of a child are employed by the same employer at the same work site, the employer may permit only one parent to attend an activity (the one who asks first). The employer also may permit both to attend.
Are school suspension meetings special? YES. All employers must provide unpaid time off for employees to address certain matters related to a child’s suspension from school. Although no specific amount of time off is specified in these statutes, Education Code section 48900.1 states that parental attendance for a “portion” of a school day may be required for any given suspension. This absence is in addition to the 40-hour maximum under the Family-School Partnership Act.
Make the grade! Be careful about denying any leave request relating to school or day care activities, or treating an employee less favorably because he or she took time off to attend a school activity. Consult with employment counsel if you have questions.”
In short, we understand being an employer or HR professional is a full-time job, as there is so much information you must know. At DSI, we constantly update and educate our clients on certain laws and acts that affect them such as the one described by Karen Dinino. We are an extension of your HR team to help you navigate through constant updates to labor laws and all your insurance needs.
Article by: Karen Dinino, Esq. with Brownstein, Hyatt, Farber, Schreck LLP and President of EmployMentor, Inc. & Edwige Ligondé, Account Executive with Danone Simpson Insurance Services, LLC
Karen Dinino – with a BA in Psychology from UCLA and a Jr. Doctorate from USC Law, Karen was able to jumpstart her successful career in employment law. She is now the President of EmployMentor, Inc, which represents employers and employees in resolving employment disputes and handles litigation. She has also has been retained and testified as an expert witness and certified to train in sexual harassment, discrimination, disability discrimination, wage and hour, and wrongful termination cases. She is an expert in labor law matters and a very credible resource to any organization.
Edwige Ligondé – As a student-athlete Alumni of prestigious UCLA, Ed graduated with a BA in Economics & Sociology. He began his career four years ago in the insurance industry and is now a Cal-OSHA, CPR & First Aid certified Account Executive licensed in Life & Health as well as Property & Casualty. As an Account Executive with Danone Simpson Insurance Services LLC, he is a strong advocate for his clients and holds a high level of integrity. His whole-heartedness and warm personality makes working with Ed an undeniably enjoyable experience.
It turns out that the new way to vacation is not so new after all. Staycations – the new buzz term for vacationing locally – are gaining popularity every day. Due to the current economic climate, families have been hard hit and the Staycation concept has become an easy way to get away, without wondering too far from home.
Spending quality time with family is most important. Time doesn’t need to be spent away and doesn’t need to cost a lot of money. Check out your city’s local treasures. Here in Los Angeles, there are many State Parks with good hiking trails where a family can pack a picnic lunch and hike in to enjoy it with some spectacular scenery. With the heavy rains this year, some parks may even have small waterfalls (good for the amateur photographer). Southern California has many beautiful beaches to take advantage of. Stay for the day or camp overnight. There are many great bike paths with beautiful scenery and this is a great way to sneak in some exercise for a healthy and fun filled day. Santa Monica offers a bike path and beautiful beaches as well as family fun with games and rides on the pier. They offer fishing too!
Lancaster hosts the annual California Poppy Festival in April and the whole family can spend a day joining in the fun of celebrating our state flower. Or take advantage of the many fun and exciting theme parks that Southern California has to offer. From Valencia down to San Diego, there are ten major parks to enjoy for the day. And don’t forget to check online for discounts and coupons for Southern California residents and Auto Club members. Most parks offer a significant discount – All you have to do is provide your zip code!
While it isn’t quite summer yet, you may still be able to find snow and skiing at Lake Arrowhead or Big Bear. If you are looking for sun, Palm Springs is a two hour drive away, and you can take a ride on the Aerial Tramway and enjoy lunch with a view of the Coachella Valley.
Sun or snow, camping or beaches, theme parks or exercise, Southern California has everything to offer for the perfect Staycation!
Too many companies operate under the false belief that their organization is not a good candidate for Directors and Officers Insurance without proper knowledge of the full breadth of its coverages and protection. This can be a very dangerous supposition on the part of a company that could see its directors and/or officers held personally liable—thus risking their personal assets including family assets and estates. The statistics are alarming enough to make one consider the various reasons a claim might be brought against a company, or even an individual personally.
According to a Chubb 2004 Private Company Risk Survey, nearly 40% of privately held companies stated that is was likely their Directors and/or Officers would be sued, and 18% of those surveyed were sued during the past few years.
Beyond that, almost a third of surveyed companies reported a direct or indirect effect from the Sarbanes-Oxley (SOX) Act of 2002.
Even if a lawsuit is baseless or fraudulent, companies still have to pay to defend them. The Tillinghast Towers Perrin D&O survey of 2004 stated the average defense cost for all reported D&O suits was $370,002 with an average indemnity of $2,160,909.
After looking into it, many companies decide that, as it turns out, D&O coverage is a necessary company safeguard after all, as many of the things they thought were covered by their general liability policies, are in fact not. When that happens, it is important to note that unlike most general liability policies, which are somewhat standard, D&O policies can differ greatly. If one is shopping for a policy one must give credence to the need for understanding both the definitions of the terms below and how they factor into the policies they are considering:
With the tremendously high propensity for employers to face lawsuits, and so many aspects of coverage left out by other policies, finding out whether or not your organization needs a D&O policy may be the difference between an executive team member exhaling a sigh of relief at a policy stepping in to do its job, and seeing his car towed away after being sued for his own personal assets.
Health Care Reform is all over the news these days, and while there are many important ideas being batted around – the simple truth is we don’t know what will happen. The question is- how can we be proactive and prepare for the changes coming our way?
A possible answer may be found in programs that are readily available to us now. Long-Term Care (LTC) insurance and Health Savings Accounts (HSA’s) are strange bedfellows, but they both offer tax incentives, opportunities for savings, and flexible choices that may help to stave off some of the uncertainty surrounding the current Health Care Reform conundrum. Each of these benefits is designed to provide individuals, employers and employees with options to help them plan for the future.
Long-Term Care insurance has been around for years, but the complexity of the options and the cost associated can be daunting. Rather than working through these issues to find solutions, many people believe that their family will take care of them in their convalescent years, or that Medicare will be there to pay for nursing home coverage. However, what may not be clear is that Medicare only helps to pay for 12% of the cost of nursing homes, and even less for the cost of home care. Additionally, the emotional and financial burden that can be placed on a family caring for a seriously ill or disabled family member can be devastating.
According to a Georgetown University publication, 37% of people who actually need long term care today are working adults under the age of 65. This is typically due to unexpected events like car accidents, strokes, head traumas and neurological conditions such as Multiple Sclerosis or ALS. LTC offers tax free financial assistance with home care and/or nursing home care.
The trick is to buy the policy at an age that makes sense. Generally, LTC policies are more affordable when purchased when the buyer is 40 or under. Once the policy is purchased, the rate is typically locked in, and barring changes the insured may make to the plan, the policy premium does not change. LTC policies come with many options that can include coverage for home health care provided by family members.
Where Health Savings Accounts (HSA’s) come in is that contributions, earned interest and withdrawals are federally tax free. The best part of HSA’s is that the High Deductible Health Plans offered with these accounts are less expensive than traditional PPO’s and give employers the ability to offer flexible health benefits to employees while, at the same time, promoting wellness and tax free savings. Employees can use the funds to pay for LTC insurance premiums should the need arise or on an ongoing basis.
There are many ways employers can package their programs to benefit both the employees and the corporation. For example, employers can pay for the executive staff’s LTC plan and offer the group discount to employees on a voluntary basis. The key is to carefully consider all options and help prepare employees for the looming reform ahead.
Valerie Antillon, SPHR, is an HR Consultant & Account Manager for Montage Insurance. She has over 15 years of HR experience, specializing in employee benefits in the Finance and Technology industries.
As companies are reducing hours and wages the human resources professional may need to review the impact towards the employee benefit program. If your company has reduced the salaries of the employees and they are working the same hours then you will want to check your life and disability offerings.
At the point of adjudication of the claim, which would be the claim date, the life and disability carrier will ask for the salary earned the day before the claim date. If your employee’s life insurance benefit is a 1, 2, 3, 4 or 5 times the salary you may want to put a temporary revision in place to your contract if your company has reduced salaries.
Many companies are continuing to pay the premium based on the salary and if the salary goes down it is important to ensure the benefits are not going down as well, unless this is your intention. Some carriers will adjudicate the claim based on the premium; however it is important to ask the question, because you may be paying the higher rate and the benefit may reduce.
According to Louis Gallucci from The Hartford, these are a few questions you may want to ask your carrier representative:
If a claim was to occur during this reduction of salary period of time, would we be able to calculate the salary off an average of six months of income rather than the salary at the point of the claim?
If you believe the reduction of salary period of time will go beyond a six month period of time, then you may want to amend your plan document.
If your employee’s hours have been reduced lower than the thirty hours, or number of hours to qualify for your employee benefit plans, you may ask to amend your contract to the current number of hours worked to qualify.
Another alternative would be to inform your carrier your salary has reduced and you do not want the benefit to reduce. You can determine if you need to add 5% or 10% to the amount of benefit. So instead, if 1 x salary was $45,000 and has been reduced to $40,000, then you will add a 11% or 11.5% increase to the benefit to be paid out. This would be a change to a 2.1% or 2.2% depending on your needs. This way your employee’s loved ones will not receive less than the employer desires.
As far as the disability products, it is possible to amend your Summary Plan Document (SPD) adding the provision to 70% all source. In order to make up for the decrease in salary, the company can ask for this contract change. The carrier will not offset from other sources of income, including CASDI, until the employee has 70% of their income. Contact your carrier for your plan details.
In the current economy, Human Resources Professionals are looking for creative alternatives to layoffs. One area to consider for cost-savings is your health insurance plans. Coupling a money saving High Deductible Health Plan (HDHP) with a tax savings Health Savings Account (HSA) can help employers realize on-going savings in their annual renewal while encouraging employees to save for their future medical costs. At Danone Simpson Insurance Services LLC we helped one of our clients transition all of their employees to an HDHP/HSA and they were able to save over $300,000 in their annual premium.
High Deductible Health Plans/Health Savings Accounts
According to the 2008 Kaiser Family Foundation Employer Health Benefits Survey, there has been “an increase in the percentage of workers enrolled in high deductible health plans.”
HDHP’s are PPO plans with high deductibles. They offer participants the flexibility to use health care providers both in and out of the carrier’s network. Most importantly they usually come with a cheaper price tag than traditional HMO’s, and lower deductible PPO’s. According to the Kaiser Family Foundation Survey, “average premiums for HDHP’s are lower than the overall average for all plan types for both single and family coverage.”
The higher deductible provides an incentive for the health care consumer to shop for the best prices on prescriptions as well as encourage negotiations with their doctors since the first dollars spent come directly from the participant’s pocket. With an HDHP, participants are more likely to go in-network for their health care since the cost is less. Participants pay only the carrier’s negotiated price for services rendered. Shopping around and using in-network providers help to keep costs in check – and the carriers respond with lower renewal rates on average.
These plans not only encourage participants to shop around, but when they are coupled with Health Savings Accounts (HSA’s), they offer the opportunity to save for future health care costs. In short, HSA’s offer participants a triple tax incentive.
When coupled with the employer’s Section 125 Premium Only Plan, employees can contribute to HSA’s on a pre-tax basis. The funds, which always remain with the participant (no “use it or lose it” rules apply), grow in the account tax-free. When used for qualified medical expenses, funds are withdrawn from the account tax free.
Of course, there are some basic rules that apply to that the employer should consider before offering HSA’s to their employees:
Health Savings Accounts are intended to work alongside HDHP’s by providing tax savings when using the health plans first dollar deductibles.
Considering the savings on the HDHP and the tax savings employers can realize, these plans can be a viable long term cost savings tool.
For more information, please contact Valerie Antillon, HR Consultant/Account Manager, Montage Insurance – 1 (888) 839-2147.