Wellness Plans: Good Health is Good Business

As the New Year approaches, you may be thinking about resolutions. And, as per usual, those resolutions (such as eating healthier and exercising more) seem like distant memories as the year goes on.

What we fail to realize is that most major lifestyle changes like those mentioned above are easier to make when someone is beside us for support. Resolutions have a better chance of working when we work on goals together.

Businesses need resolutions too, and if you want your business to be successful in 2015, there’s one resolution you may want to consider – one that will make you an ally (albeit an unlike one) in helping your employees to keep their fitness resolutions: wellness programs.

According to a survey of employers by Fidelity Investments and the National Business Group on Health (NBGH), some nine out of ten companies now offer wellness programs as part of their benefit packages to encourage their employees to lead and maintain healthy lifestyles. The survey indicates a growing understanding on the part of employers that healthy employees are good business.

Wellness programs lower insurance costs

Towers Watson found in its survey that businesses pay over $9,000 on average for each employee’s health insurance. Group health insurance works like other types of insurance: if their employees are deemed high risk due to unhealthy lifestyles, their employer will pay more for group health insurance.

Consider this example: Employees battling depression can raise employers’ costs by up to 70 percent. Exercise is a proven way to treat depression and a major component of most wellness programs. The conclusion: It’s cheaper to insure healthy employees, and wellness programs can help employees achieve and maintain good health. Therefore, wellness programs virtually pay for themselves.

Fewer sick days equals increased productivity

Those living healthy lifestyles aren’t as susceptible to illness, and wellness programs help reinforce and maintain this. Productivity losses resulting from absenteeism due to illness is costing employers billions of dollars each year; the impact of unhealthy lifestyles is taking its toll on individual employers and on the country as a whole.

Return on investment

Not only are there savings on healthcare premiums, but a multitude of companies are also seeing additional benefits from wellness programs and healthy employees. For example, depending on the state you live in, you could be eligible for a tax credit, possibly reducing your company’s taxable income.

Additionally, you could see savings on workers compensation insurance premiums, as fewer workers compensation claims are filed. The numbers are certainly attractive – businesses that implement wellness programs may see an average decrease of up to 30 percent in workers comp claims, as well as in long-and short-term disability claims. And you may avoid many potentially expensive lawsuits.

These are just a few ways wellness programs will work for you. It’s not just about becoming a caring employer, it’s also good business.

Your insurance agent can help you determine what kind of wellness program is right for your company.

Help the SHOP Floor…Without Breaking the Bank

Small businesses may be the backbone of America, but how do they protect the backs of employees who help run them?

Companies and non-profits with 50 or fewer full-time equivalent (FTE) employees can do just that with the Small Business Health Options Program (SHOP), under the Affordable Care Act (ACA). It’s quality health care without breaking the bank. To determine your number of FTE employees (and if you qualify) check out the calculator at FTE employee calculator

Depending on the state you live in, 70 percent of employees must enroll in your SHOP plan. If you have 25 or fewer employees, you also might qualify for a Small Business Health Care Tax Credit that could reimburse you for up to 50 percent of your premium.

As of January 1, 2015, employers will have more options for employee health insurance plans. These fall into four categories: bronze, silver, gold, and platinum. All levels provide the ACA essential health benefits as well as pre-existing condition coverage and some free preventive services. However, the different levels offer different out-of-pocket premiums, and the cheapest is not always the best. Bronze plans, for example, might offer a lower premium, but while platinum plans will cost more monthly in the end, platinum plans may have the lowest out-of-pocket costs for individual services.

While you aren’t required by law to provide health insurance to your employees, it’s one of the most competitive benefits you can offer prospective employees. Talk to your insurance agent to see which plan is right for you.

Buying Car Insurance? Avoid These 5 Mistakes

When buying car insurance, many people think they know what they’re doing, but are unaware of some of the misconceptions they hold that may lead to some serious mistakes. This is particularly true when buying coverage without professional guidance. Your agent is a great resource in helping you avoid the following five common mistakes made when buying auto insurance.

Assuming state minimum liability limits are sufficient: Everyone likes to save money, but you need to balance that with ensuring you are getting adequate protection. State minimums are not enough. For the extra, say, $10 you save by paying only for state minimum coverage, you may risk being underinsured and facing $300,000 in out-of-pocket costs as a result.

Raising deductibles to $1,000 to save $10: Unless you’re a high-risk driver who is paying thousands of dollars for full coverage, increasing your deductibles – particularly comprehensive deductibles – won’t pay. Reserve that major choice in case you should have a major violation or a series of accidents and tickets.

Leaving out information about household drivers: Sometimes you just don’t think: You might believe you can save by not mentioning household drivers who would likely generate higher premiums. In fact, you’re actually opening yourself up to denied claims or a felony charge for insurance fraud.

Buying collision coverage for a 10-year-old car: Unless it’s a stated value classic or custom car, you don’t need to pay full coverage for damage to your vehicle. Effectively, you may be paying more in premiums than the car’s worth. The best rule of thumb: Once annual premiums for full coverage are over 10 percent of current value, drop your collision coverage.

Not insuring custom parts or modifications: If you’ve sunk $10,000 on rims, tinted windows, top-of-the-line stereo systems and chrome, you need to protect your investment. Some policies may cover up to $2,500 in custom parts, but that’s obviously insufficient.

Ensure Your Special Items Receive Special Coverage

Even though your homeowners insurance allows you to pick an amount of coverage for personal property – your personal belongings inside the home – you may be surprised that your policy includes limits on certain items; most are higher-end items, such as cameras, electronic equipment, guns, and jewelry.

So, if you buy a policy with $50,000 in personal property coverage, there are still limits on what your insurer will pay to replace or repair these items. Often the limits read as, “$500 limit on guns” or “$1,000 limit on computers.” So, if you experience a total loss and file a claim, your $50,000 in personal property coverage still only covers up to the policy’s limits on these specific items.

The peace-of-mind solution

Talk to your agent and make sure you feel comfortable with the policy you’re buying.

You should discuss with him or her additional riders that are available and describe or show any special items you own, such as collectibles, jewelry, or artwork. With some insurers, the rider can be added so you can obtain more coverage, or you can schedule the items at a stated value or appraisal cost. For special items, it may be best to buy a special policy, which is like a spin-off from a homeowners policy and provides coverage for just those items you choose.

Be aware that you’ll have to provide appraisals to ensure adequate coverage, and that you should always have your special items appraised regularly to maintain adequate coverage in the event the items increase in value.

Could You Pay the Bills if Your Spouse Died?

In the wake of the economic downturn, most American families have less to fall back on financially than in the past, but at the same time, ownership of individual life insurance has fallen to a 50-year low. Does your family have enough to live on if you die?

Fewer have life insurance…

LIMRA raises the question in the latest of its Trends in Life Insurance Ownership study conducted every six years. LIMRA, a trade association representing the insurance and financial services industry, noted the following in its most recent study comparing life-insurance ownership in 2010 versus 2004: In 2010, 30 percent of households had no life insurance coverage, compared to 22 percent in 2004.

…But would have challenges paying bills

Many of those interviewed for the study reported that they didn’t have life insurance because they had other financial priorities. At the same time, 40 percent of respondents with children under age 18 acknowledged that they would immediately have trouble paying everyday living expenses if the primary breadwinner died.

Indeed, according to the LIMRA study, life insurance is the single most-relied-upon source of income that Americans expect to use to pay bills in the event of the primary breadwinner’s death.

People know life insurance is important; around 50 percent said they think they need more life insurance – the highest level ever.

So why the gap? According to the study, information may be the obstacle. Many people just don’t know where to turn: Around 80 percent of those surveyed didn’t have a personal life insurance agent or broker. And approximately 25 percent said they didn’t know how to reach their financial goals, including buying life insurance.

If you’re in that situation, help is easy to find: An insurance advisor, who will become familiar with your individual financial circumstances and goals, will help you obtain the life insurance you need at a cost you can afford.

Freelancers Risk All Without the Right Coverage

More companies are outsourcing jobs to freelancers or independent contractors (ICs). According to the Bureau of Labor statistics, the number of freelancers and ICs has grown dramatically in the last few years and is expected to continue rising.

Many freelancers and ICs themselves have failed to keep up with the times; these days you need commercial insurance more than ever, but few realize that without it, they’re setting themselves up for big risks. Contractors and freelancers essentially share the same risks as small businesses. Consider yourself a type of small business, and protect yourself as such.

As soon as you start freelancing or work as an IC, you need insurance. Essentially, every freelancer and independent contractor needs professional liability insurance, even sole proprietors, such as writers or accountants. Depending on your job, you may need other types of commercial insurance as well.

Freelancers and ICs are often considered experts. Most projects involve working for another business or individual, meaning that if a business loss results from a project done by an IC, he or she is financially liable for that loss and other resulting damages.

Several types of commercial liability policies are available for both ICs and freelancers, although what is needed depends on your line of work, job functions, and other factors (such as whether you see customers at your own place of business or drive a vehicle solely for work). These factors help determine what coverage is needed.

Types of insurance:

  • Professional Liability Insurance:
    Often referred to as professional indemnity insurance, and sometimes as independent contractor liability insurance, this policy protects against possible claims from clients, such as a costly mistake that the contractor may be liable for. It provides liability coverage in different amounts, and helps cover costs of liability claims should the claimant prove contractor liability.
  • Product Liability Insurance:
    If you create products or items others will use, purchasing product liability insurance is a must. For example, a freelance computer software consultant is hired by a company to build software programs for them. Shortly thereafter, the software crashes, deleting all the information in the company’s database and potentially leading to multiple lawsuits on a number of grounds.
  • Cyber Liability Insurance:
    Cyber liability essentially provides protection against losses related to electronic storage – something not usually covered under regular commercial policies. This protects you if one of your clients and/or the client’s customers experience losses due to unintentional or purposeful negligence on your part.

For example, a freelance computer software developer builds a database for a company that stores sensitive, personal information on their customers. It’s hacked, and a customer’s identity is stolen. The customer could sue the company, and the company could, in turn, sue the freelancer for a number of things, such as loss of business, costs of obtaining new databases and security features, and more.

If you’re an IC or freelancer, discuss liability policies, as well as commercial auto insurance, physical premises liability, and other types of coverages with your agent, for your own peace of mind.

Home Childcare Providers Need a Commercial Policy

In the U.S., there are more than 280,000 regulated “home daycares” (also known as “family daycares”) that are run out of residences. It seems that in-home daycare is a popular choice for parents . . . and a booming business. Whether you operate a daycare center or simply provide childcare for family or friends, if you receive compensation for it, the operation becomes commercial, with the attendant risks and legal concerns. All childcare providers are potential lawsuit targets, so at minimum, you’ll need liability protection. Here are some facts you should be aware of:

Homeowners insurance: As of 1991, homeowners insurance excludes liability protection related to home-based commercial activities. Furthermore, the majority of homeowners insurance policies specifically exclude liability coverage for claims arising from home childcare businesses. Homeowners insurance endorsements may provide limited protection, but few insurers offer it. When it is available, it’s often restricted, limiting you to the care of three or four.

Coverage: Business liability insurance is the best choice. There are a range of commercial childcare policies, many offering protection for professional liability claims, which homeowners insurance endorsements don’t cover. These policies differ greatly in coverage and exclusions. Usually, there are exclusions for claims dealing with the administration of medicine, field trips, transportation, pets, or “attractive nuisances,” such as pools or trampolines.

As for liability limits, you should have at least $1 million of coverage on a per-claim occurrence.

Car Repair Insurance or Extended Warranty?

There’s a saying that one can either make monthly payments on a new car, or pay an equivalent amount for repairs on an older vehicle. Often true. So if you’re buying a new car, you might be thinking about getting mechanical breakdown insurance or an extended warranty for repairs needed outside of car accidents. But which?

Both help cover vehicle repair costs and operate similarly, both require repairs to be carried out at one of several pre-authorized repair shops, and both offer plans with different coverage levels, addressing various parts and repair types.

But that’s where the similarity ends. If you’ve bought a new car and are considering which to buy, here’s how they differ.

Who offers coverage? Mechanical breakdown insurance is an actual insurance policy offered by insurers who specialize in auto insurance policies. Extended warranties are offered by auto manufacturers or independent companies.

When and where to buy: Mechanical breakdown insurance may be available through your regular auto insurer as well as dealerships and auto lenders. Often purchased for new vehicles, most policies won’t be needed until the bumper-to-bumper manufacturer warranty period is up. Therefore, it’s often wiser to buy coverage once the vehicle is nearing the end of its manufacturer warranty.

Extended warranties are typically bought through dealerships at the time of purchase, but again, they usually don’t become useful until the manufacturer’s warranty is up. Some dealerships may sell them after the time of purchase.

Costs: Like auto insurance, mechanical breakdown insurance is paid over a determined period of coverage time, such as six months, and can be renewed, providing you continue to pay the premiums. Payments are spread out, and coverage can be dropped any time.

Extended warranties are paid for upfront at a negotiable rate. The rate can also be included in car loans. This may spread out costs, but you’ll typically be paying interest for it.

Coverage Protects You Against Uninsured Drivers

Have you ever looked at your insurance policy and wondered what these two lines mean?

  • Uninsured/Underinsured Motorists Coverage Property Damage (UMPD/UIM-PD)
  • Uninsured/Underinsured Motorists Coverage Bodily Injury (UMBI/UIM-BI)

It’s not as it seems – you’re not paying for coverage for people who can’t afford it, you’re paying to protect yourself. UMBI pays for your injuries, and UMPD, for your vehicle’s damages if you’re involved in an accident with another driver who either doesn’t have insurance coverage or doesn’t carry sufficient insurance to pay for the damage. It also kicks in if he or she commits a hit-and-run. For example:

Jack doesn’t have insurance. He crashes into you, leaving you with $50,000 in medical bills and $15,000 in vehicle damages. Your policy’s UMBI/UMPD would pay for both, up to its UMBI/UMPD limits.

You live in Delaware, which requires $15,000 per person/$30,000 per accident in bodily injury coverage, and $10,000 in property damage liability. Jack only carries state minimum liability limits. He crashes into you, resulting in $50,000 in your medical bills and $15,000 in vehicle damage. His policy would pay $30,000 of your medical bills, $10,000 towards your car’s damage, and your UIM-PD/UIM-BI would pay the difference.

Always match UMBI/UMPD limits to your liability limits – don’t insure someone else for more (or less) than you insure yourself.

Health Insurance and MedPay Play Well Together

If you’ve purchased auto insurance, and you’ve declined the option of medical payments coverage (MedPay), or selected the bare minimum because you have health insurance, you may want to discuss the issue with your insurance advisor.

Your health insurance may be comprehensive, but when it comes to injuries sustained in an auto accident, health insurance and MedPay offer a one-two punch that works to your benefit. Some states require MedPay, but whether legally required or not, here are a few ways MedPay coverage can dovetail with personal health insurance.

Medical payments coverage: Medical payments coverage on your auto insurance policy covers medical expenses for you and passengers in your vehicle if injured in a car accident, regardless of fault or who was driving.

MedPay works as secondary insurance: Like all policies, health insurance policies have caps on how much they’ll pay out. With MedPay coverage on your auto insurance policy, if you reach your health insurance policy’s maximum payout, MedPay can kick in as secondary insurance. It can also be used towards your health insurance policy’s co-payments, and MedPay will cover items not offered by health insurance, such as

  • loss of income due to injuries from a car accident;
  • replacement services if you’re severely injured in a car accident and can’t do things like household chores or day-to-day activities.

Insurance gaps: MedPay fills health insurance policy gaps. Some health insurance policies may not pay for any medical expenses related to auto accidents. MedPay will cover you if this should happen, and it also covers your passengers, which health insurance policies don’t under most circumstances.

Limits apply to passengers: Additionally, the MedPay limit on your auto policy applies to you and all passengers. If, for example, your MedPay limit is $1,000, and you and two other passengers are injured in an accident in your car, each person has $1,000 in MedPay coverage.

Understanding the Various Parts of Medicare

Medicare coverage, administered by the U.S. government, can be difficult to comprehend. Here’s a simplified explanation to help you understand the parts of Medicare:

“Original Medicare”: Often called “original Medicare,” this basic coverage is obtained directly through the Federal government, and consists of two parts:

Part A, or hospital coverage, is for hospital care, skilled nursing facilities, as well as hospice and some in-home care. Usually, if you’ve worked and paid Social Security taxes for 10 years, it’s free. If you’ve worked and/or paid taxes for a shorter period, you’ll likely pay monthly premiums.

Part B, or medical coverage, is for doctor visits and medically necessary doctors’ services, usually including preventive care; medically necessary supplies, including equipment; clinical lab testing; outpatient services; physical therapy; radiology services; and sometimes ambulance services. Monthly premiums are required.

Part C, or Medicare Advantage Plans (MA Plans), combines Parts A and B into a single policy, and is available from private health insurers, which provide the Medicare benefits. Although Medicare pays Part C’s premiums, you’re required to pay any additional premiums yourself.

Part D, or prescription drug plans (PDP), cover outpatient prescriptions. Part D is only available through private insurance companies that have contracts with the U.S. government, not through the Federal government as Parts A and B are. Part D can be purchased as a stand-alone policy, or combined with MA plans (Part C); in this case, they’re known as Medicare Advantage Prescription Drug Plans (MA-PD).

A Rule of Thumb for Buying Life Insurance

Households need life insurance if they don’t have sufficient savings to replace the income of a deceased breadwinner. That means most households are good candidates for coverage. But how much should you buy?

The rule of thumb used by insurers and financial advisers is 8-10 times the breadwinner’s annual income. So, a household with one member earning $100,000 a year would need between $800,000 and $1 million in life insurance.

There are exceptions to this rule. Take, for example, a household with one member earning $1 million a year. This member’s beneficiaries wouldn’t necessarily need $8 million to $10 million in life insurance, as they’re more likely to have greater financial resources to fall back on.

The problem is that it’s not the wealthier households that lack life insurance; it’s the middle classes.

According to Conning Inc., Americans have a “life-insurance protection gap” of $15.8 trillion; households with annual incomes of $38,520 to $101,582 can claim a disproportionate share of that gap.

Why the gap? Some people simply don’t think they’ll need life insurance at all. Others overestimate the coverage they have through their employers. And still others consider life insurance too expensive.

Consult with your financial advisor on whether you are currently covered, and if you have sufficient coverage. He or she can explain your options. If you’re concerned about budget, the least expensive coverage is basic term life insurance, which provides a designated amount of money if a death occurs within a specified time period.

If you’re willing to spend more, you might want to consider a permanent life policy, which combines a death benefit with a tax-sheltered savings. Then there are so-called variable life policies that can include stock market investments.

Because it’s so important for your family to live in comfort after the death of a loved one, you need expert guidance in considering your options. Call now.