How to ID and Deal with Jerks in the Workplace

We all know them: Employees who make life miserable for their colleagues – an organization’s adult bullies.

It’s a fact that one workplace “jerk” can wreak havoc on morale and generate employment claims that can cost thousands to defend. This jerk and his or her wingmen can also bring a regulatory scrutiny you’d prefer to avoid.

One study published in McKinsey Quarterly found that one particular workplace jerk -unfortunately, the company’s star salesperson – cost his organization more than $150,000 in one year in terms of legal costs, anger management programs, overtime and burned-out assistants, thanks to his toxic tactics. Was he worth it? And are you prepared to expose your organization to that kind of loss?

Studies show that intimidation, verbal abuse and bullying are increasing in the American work force. Partly driven by increased recognition of the problem, and possibly by increased regulatory pressure, some companies are starting to consider the TJC (Total Cost of Jerks, as described in the McKinsey Quarterly) in the work force.

These companies are listening to a host of voices – consumers, regulators, academics and the media – telling them that they need to do something about the proliferation of bullies in the work environment.

Robert Sutton, a professor of management science and engineering in Stanford University’s School of Engineering, authored a bestseller that took readers through the steps required to quantify the cost of jerks, and eliminate them. Sutton lists the “dirty dozen” top actions by those who use organizational power against weaker coworkers or subordinates. Here are some of the top jerky behaviors:

  • Throwing tantrums and yelling.
  • Publicly disparaging employees.
  • Physically intimidating employees by invading their personal space, throwing items or hitting inanimate objects.
  • Making demeaning and denigrating comments.
  • Staring, glaring, or other inappropriate behavior.

If you want to prevent jerks from damaging your carefully nurtured work environment, here are some steps you can take, as recommended by the experts:

  • Develop a policy that institutes a “no-jerk” rule.
  • Consider a zero-tolerance policy so that offenders get one chance to change their ways, or they’re shown the door.
  • Nip jerky behavior in the bud. By delaying dealing with bad behavior, you’re making it more difficult to confront, thus causing more collateral damage to your organization and other employees.
  • Institute 360-degree performance reviews where employees are encouraged to honestly assess their bosses and coworkers.
  • When there are serious conflicts, assign employees to new supervisors as appropriate. But beware of transferring subordinates, because Equal Employment Opportunity Commission investigators may perceive this as an adverse employment action.
  • Institute an exit interview that is meaningful and take action when exiting employees report problems.

It’s not just workers who are directly affected by jerky behavior; studies show that employees who merely witness the behavior are also deeply troubled. And eliminating toxic employees can improve more than morale. After all, if an employee treats coworkers badly, how is he or she treating your customers?

Dependent Eligibility Audits Cut Costs and Restore Fairness

Many companies are asking whether dependent eligibility audits (DEAs) are still appropriate, given the Patient Protection and Affordable Care Act (ACA). According to industry experts, the answer is “yes” – many companies believe that DEAs still represent a good way to save on benefit costs, and with good reason. A recent article in Employee Benefit Adviser’s newsletter indicates that a DEA can provide savings of 10 percent or more.

Many companies are confused about the impact of the ACA on employee health benefits. For the most part, large companies with 50 or more employees are required to offer health insurance coverage. However, according to a recent study, almost 50 percent of small- and medium-sized businesses plan to keep their coverage but will look for ways to save. A DEA is a good option.

A DEA will identify ineligible dependents. Whether they’re there as a result of an oversight or by design, it’s obviously unfair to other workers. Ineligible dependents also create unnecessary liability exposures should they be adversely affected by a medical decision gone wrong.

Conducting a DEA can be disruptive to employees; however, there are ways to make it more palatable. Communicate, communicate, communicate. Convey the message that an audit will benefit everyone, not just the company. Provide details on your benefit costs and translate that into cost per employee. Then point out that ineligible dependents reduce the benefit dollars available to everyone who is obeying the rules. In the final analysis, a DEA, sensitively conducted, can restore fairness to your benefit plan and save you money.

Insuring at Replacement Cost Value = Peace of Mind

Many insurance experts recommend insuring your home at replacement cost value rather than actual cash value. And many home owners (and renters) believe it also makes sense to insure their contents at replacement cost value; your personal property is worth it, and so is your peace of mind.

To understand both forms of coverage, let’s look at their differences:

Actual Cash Value (ACV)

When you insure your home and personal belongings at ACV, your coverage reflects the current fair market value. If your home is currently valued at $300,000, then that is the amount you’d receive in a total loss claim. But, while the low premiums for ACV are attractive, rebuilding a home typically costs more than fair market value. You may be hit with penalties for being underinsured. Note that insuring your home for less than 80 percent of its value will reduce your claim benefits because your coverage is based on a depreciated market value.

Replacement Cost Value (RCV)

To avoid unexpected penalties and out-of-pocket expenses, insure your home for 100 percent of its replacement value. The premium will be more expensive, but if your home is totally or partially damaged, you’ll have peace of mind and, as important, an intact savings account as compensation.

Consider RCV for your personal belongings as well. Insurance companies will require that you actually replace the damaged items, but after your deductible, you’ll receive the full replacement value. If you have expensive personal property, consider scheduling it separately. Experts recommend you choose coverage at 200 percent of the total value of your personal property.

To determine RCV of your home, consult your insurance company or consider conducting a professional appraisal. To make sure you’re covered no matter what, opt for Extended RCV coverage. There are requirements to meet, but when it comes to everything you own, it’s always better to safe than sorry.

Keep your New Teen Driver Safe With These Apps

While your teenager is dreaming of the open road; you’re just plain scared. But when D(rive) day arrives, nothing is more important than keeping your teen safe.

The Centers for Disease Control and Prevention report that the top cause of all teen deaths is vehicle crashes: Teens 16 to 19 years old are three times more likely to be involved in a fatal accident than someone 20 or older. These days, one of the main causes of accidents is distracted driving, thanks to cell phones and other devices. According to online magazine Laptop, research shows that “texters-and-drivers” are 23 times more likely to be involved in a crash. And teens are particularly vulnerable to the lure of the smartphone.

Thank goodness you can keep your teen safe and paying attention while driving. These apps make it easy…and fun. BTW, don’t miss the Gas Buddy app, for forgetful teens (and their parents) who are always running out of gas.

Drive Scribe

While in motion, this app stops texts, calls, Internet use and keeps track of vehicle speed. To delight your teen, safe driving will earn him or her points, which can be used to buy gift cards. Pro

This clever app reads text and emails out loud so your teen can keep both hands on the wheel. An option is available to handle replies, which are sent automatically while driving. The Pro feature that is especially popular with teen drivers is its ability to read text message shorthand. LOL.

Need Health Insurance? Here are Some Options

For many of us, 2014 is coming up faster than expected, leaving we procrastinators with the need to find health insurance quickly. So, where do you find health insurance? It may be easier than you think.

Group Plans. If you have coverage through an employer or a network of businesses, no action is required on your part. Your employer, however, will need to take action. While businesses with fewer than 50 employees (more than 90 percent of America’s companies) aren’t required to offer health insurance, those with more than 50 employees must provide affordable healthcare for no more than 9.5 percent of your income. Note that small businesses get a tax break if they offer health insurance to employees.

Individual Plans. Insurance companies will continue to sell plans directly to individuals. The ACA may result in more opportunities to purchase health insurance, but with such a diverse market, you may need guidance from a knowledgeable and reputable insurance professional.

State Exchanges. One of the biggest changes implemented by the ACA, is that every state is required to have an exchange website in place by October 1, 2013. On this site, individuals and small businesses can shop for health insurance plans in their area. For individuals seeking help in accessing and navigating their way around the new state exchange websites, you may want to contact your insurance professional or access online support.

Medicaid. Depending on what state you live in, the expansion of Medicaid may provide you with a health insurance option. This program is geared towards families living below a certain percentage of the poverty line.

As of 2014, anyone without a health care plan will have to pay a penalty. Initially, this is $95 for an individual, $285 for a family of three or more, or 1 percent of taxable income, whichever is greater, but they rise steadily until 2016. Avoid penalties. Don’t wait for 2014; do it now.

Seniors, the ACA and Medicare: For Most the News is Positive

The Patient Protection and Affordable Care Act (ACA) affects every U.S. citizen, including seniors on Medicare. The changes it has brought and will bring are significant, but there remains a lot of confusion over the impact of the ACA on Medicare and seniors.

The good news: Medicare benefits are not only secure, but the majority of seniors will also view the ACA’s impact as positive. Here are some important facts seniors should be aware of:

Medicare coverage is protected. It cannot be reduced or removed, and you can still choose your own doctor.

Through coordinated care, your doctor, hospitals and other health care providers work together to ensure you receive necessary care at the right time.

Preventive services are free. Tests like mammograms and colonoscopies are covered, as well as yearly wellness exams.

The prescription drug donut hole will eventually be closed. The donut hole is the gap between the end of coverage and beginning of out-of-pocket maximums. In the hole, you now receive a 47.5 percent discount on brand-name drugs, and a 79 percent discount on generic drugs. Discounts will increase through 2020. Visit Medicare Prescription Drug Coverage for more information on prescription drug costs.

The Medicare Trust Fund is extended through 2029.

Bonus payments are now being provided to Medicare Advantage plans based on quality ratings, and in 2014, the ACA will require Medicare Advantage plans to reduce the share of premiums used for administrative expenses, meaning more costs will be directed to patient care. Ultimately, premiums are expected to decline as a result.

How Long do you Really Need Life Insurance?

Many people who buy life-insurance policies believe they’ll need coverage their entire lives. In fact, that isn’t always the case. There are a number of instances where your life insurance needs pre-date your death; you may not need life insurance until you die.

How do you determine how long you’ll need life insurance?

First, ask yourself why you’re buying life insurance in the first place. You’ll likely come up with a main reason why you are buying insurance.

If you have young children…

As an example, you may be buying life insurance to protect your children in the event you die early. In that case, you won’t need the life insurance policy forever; you’ll only need it until your children are out in the world – supporting themselves on their own and no longer in need of your financial assistance.

In this case, you may want a policy that is in effect until your youngest child reaches age 22. So, if you have two children aged three and five, you may want to consider a policy with a 20-year term.

To protect your spouse…

Another example: If you’re buying life insurance to protect your spouse in case you die early, you would want the policy to cover your lost income until the year you would have reached retirement age. After this date, your spouse would be covered by Social Security and retirement savings. So, if you’re 55 now, you’ll only need a 10-year policy.

Bear in mind that these are only general guidelines. Individuals may want to use life insurance to provide “bonus” income to a child or spouse, or to address complex estate-planning issues.

When considering life insurance, as is the case with any financial instrument, it’s best to consult your advisor for advice. He or she can help you determine which financial instruments best meet your individual financial circumstances and goals.

Insure Your Hot Summer Ride With Seasonal Insurance

Winter, spring, summer and fall. Each season has its unique characteristics. But depending on where you live, one season may last longer than the others. Do you tough it out through a long, harsh Vermont winter? Or do you escape to the beaches of sunny Florida? Either way, you quite possibly will need a vehicle that you may not use the rest of the year. Whether you’ve got sand in your tires – or snow – seasonal auto insurance is an affordable way to insure a car that has limited seasonal use.

Coverage Options

A seasonal auto insurance policy can be as minimal or as comprehensive as you want. You still must meet legal minimum liability requirements, but after that it depends on the primary purpose of your vehicle. If you’re tooling around in a summer Jeep, you may not need as much coverage as for a four-wheel drive used as a snow plow. It’s a good idea to obtain collision as well as uninsured/underinsured coverage.


Short-term coverage is typically more affordable, but your premiums are still subject to normal factors, including your driving history, the vehicle make and model, and location. Compare the cost of a temporary policy with a full-year policy to see which one would provide the most protection at the best price.

You also might consider using a temporary policy when transporting a car you just purchased or when borrowing a vehicle from a friend for an extended period of time. Remember, if you’re driving, make sure you’re insured.

Puppy Shopping? Avoid the Insurance Doghouse

Dogs may be man’s best friend, but when you introduce your new friend to your home insurance company, watch out. Some breeds make the unofficial “Bad Dog” list – which may mean higher premiums, or even worse, difficulty in obtaining insurance coverage.

While you see your dog as a family member, your insurance company sees him or her as a liability. According to the Centers for Disease Control and Prevention (CDC) more than 4.7 million people are bitten by dogs each year. Insurance companies must look at the bottom line and gauge the risk your dog poses. Below are five breeds that make insurance companies howl.

Pit Bulls

Owners claim this breed is unfairly judged; insurance companies are wary. One study reports that Pit Bull type dogs were responsible for 32 percent of deaths from dog bites.


Originally bred as herding dogs, Rottweilers are calm and confident, but very protective. Their strength and bark can intimidate strangers.

German Shepherds

Known for their intelligence, German Shepherds are one of the most common breeds used for police work. As a house pet, they must have proper socialization training.

Doberman Pinschers

Dobermans were originally used as protection, so their size and inherent need to protect and defend make them easy targets for shady breeders and dog fight promoters.

Chow Chows

Originating in China, Chow Chows are one of the oldest dog breeds around. These dogs are fiercely protective and dislike strangers, a combination your insurance company doesn’t like.

To some owners, the companionship offered by a dog outweighs a potential premium increase; for others, it’s a deciding factor when picking out a puppy. Regardless, the worst thing you can do is not change your policy. So, be honest with your insurance company, and you won’t end up in the dog house.

Maximize Your Pension Using Life Insurance

Life insurance is effective for more than the traditional use, which is to provide a cushion of liquidity for your loved ones when you’re no longer around.

Alternative life-insurance strategies can help achieve a number of goals, including replacing pension income.

Consider the case of a couple who plan to live their retirement on one spouse’s pension, not taking into account that when this spouse dies the pension will stop, and the remaining partner is left with little to live on.

In this case, the couple can purchase life insurance that will provide a similar level of income for the survivor after his or her partner’s death. The death of a spouse is traumatic enough for the survivor without the added burden of financial worries.

This is such an effective strategy, you may wish to make retirement decisions – such as when to take Social Security benefits – with a life insurance policy in mind; knowing that both spouses will receive an insurance payout upon the other’s death allows the couple to make decisions that maximize their benefits.

This life insurance strategy is not just for the wealthy.

To pay for their insurance premiums, many average couples are using reverse mortgages – loans available to homeowners that allow them to access a portion of their home equity; couples who take out reverse mortgages can use a portion of this money to pay for a life insurance policy.

It’s a win-win. The couple has the remainder of the money to use in their lifetime, and in the event of one spouse’s death, the survivor can pay off the reverse mortgage and still hold on to the family home.

The price of an insurance premium is small compared to the peace of mind it can give both partners.

But ensure you consult your advisor to be certain this is the right strategy for you.

Can I Self-Direct my HSA…and Should I?

There’s a lot in the news these days about self-directed retirement accounts, such as real estate IRAs, gold IRAs, and the like. Some people with health savings accounts (HSAs) have been wondering if HSAs can be self-directed, and if they should be moving in the same direction.

What is a self-directed HSA?

It is possible to self-direct your health savings account. You aren’t limited to investing it in conventional bonds, stocks, mutual funds and CDs.

In fact, just like self-directed retirement accounts, it’s possible for you to be more aggressive with your self-directed HSA and put your money in a whole variety of investment vehicles, including real estate, precious metals, closely-held businesses, and more.

Is it right for you?

That doesn’t mean it’s always a good idea.

The primary purpose of a health savings account is to pay for medical expenses that happen before you reach your deductible. Therefore, you need income, and you need to maintain liquidity in the account. You either may need to quickly pay up to your deductible amount for a big expense or parcel it out over the year on routine medical expenses before reaching the deductible.

Liquidity is key

If you have your HSA invested in raw land or real estate, you might not be able to sell it quickly enough; you’d have to liquidate other assets to pay your medical bills. And this defeats the purpose of the health savings account.

As a result, many don’t believe self-directed HSAs are worth it, given the liquidity issue as well as the limited contributions and all the special rules.

When it may work

Where it may make sense is if you are in excellent health, with no children, and every expectation of reaching age 65 without a significant health issue. At 65, you would qualify for Medicare, and then could take a longer-term view with the investments inside your HSA.

Don’t Tempt Fate Waiting for the ACA to Cover You

Some people are tempted to tempt fate by going without health insurance coverage until they get sick.

The provision in the Affordable Care Act (ACA) covering pre-existing conditions such as cancer and diabetes comes into effect on January 1, 2014. At this time, no one can be refused coverage or charged extra because of a pre-existing condition.

As a result, many people go without health insurance now, hoping they’ll stay well until 2014. And this decision may have devastating consequences.

For example, in the event of a severe accident, you may not be able to get coverage in place until after you’ve incurred thousands of dollars of medical expenses; your 2014 plan won’t help you with 2013 accidents.

Furthermore, the IRS assesses a penalty on anyone who does not have medical coverage in place in 2014. For the first year, that penalty is only $95 per adult and $47.50 per child, up to $285 for a family, or 1 percent of family income, whichever is greater.

But in 2015, it rises to $325 per adult, and $162.50 per child, up to $975 per family, or 2 percent of family income, whichever is greater. And it increases again in 2016, with a penalty of $695 per adult and $347.50 per child, or 2.5 percent of family income.

In the long run, going without health insurance does not save that much, and the chance of an injury such as a serious car crash introduces a devastating risk. Meanwhile, there are affordable solutions. Consult your advisor.

How to Reduce the Chances of Employee Theft

Your belief that “my organization is immune to fraud” may cost you thousands of dollars, or even destroy your business.

Fraud is a global problem. According to the Association of Certified Fraud Examiners’ (ACFE) 2012 Report to the Nations, the typical organization loses 5 percent of its revenues to fraud annually. In global terms, that’s $3.5 trillion in 2011 – the most recent information available. The median loss of cases reported to ACFE was $140,000, but more than one-fifth of reported cases had losses exceeding $1 million.

At the top of the list of those companies most affected by occupational fraud is small business, which, according to the report, suffers the highest median losses. Almost half of the companies who fell victim to fraud in 2011 didn’t recover any of their losses caused by fraud.

What the report doesn’t highlight is the feelings of betrayal on the part of employers who have discovered that a trusted employee has bilked them of their hard-won revenue.

Employees likely to steal

So how can you spot a fraudster in your midst?

They are usually in high-level positions, and the vast majority of those fraudsters known to ACFE worked in the accounting, operations, sales, executive/upper management, customer service, and purchasing departments. More than 80 percent were first-time offenders, and on average, the fraudulent behavior went on for a year-and-a-half or longer.

What contributes to fraud? According to ACFE, most of the companies, particularly small businesses, lacked anti-fraud measures. Those who had 16 of the most effective anti-fraud measures in place had reduced losses from fraud.

Here are several tips to help your organization combat fraud:

Institute a fraud-reporting hotline. Tips from employees, vendors, and customers accounted for 50 percent of detected frauds in 2011.

Don’t expect internal audits to catch every fraud. Only some 16 percent of frauds were identified by audits.

Don’t be lulled by background checks. Fewer than 6 percent had previous fraud convictions, and that number has shrunk over the years.

Watch for lifestyle indicators. The two most common are employees who are experiencing financial difficulties and those living beyond their means. In 36 percent of the study cases, employees were living a lifestyle far above their salaries. Employees who steal are often “control freaks.” They often refuse to allow oversight. Watch for that “Do not question me” attitude or for employees who refuse to take vacations. If you suspect substance abuse or other personal problems, heighten internal controls. Refer such workers to employee assistance programs if your organization offers this benefit.

Prohibit and monitor employees’ vendor relationships. Almost 20 percent of fraudsters had unusually close relationships with vendors or customers. Kickback-type losses can be costly.

Never assume. Don’t think your employees are too loyal or that you treat them too well for them to steal. Most employees are trustworthy. However, one worker with personal problems or a grudge can devastate your business. The best way to prevent fraud is to be aware. Most importantly, bulletproof your business with insurance coverage designed to protect against these types of losses.

BOP Offers One-Stop Property and Liability Coverage

Today’s businesses require both property and liability coverage to avoid uninsured losses. Fortunately, those small and medium-sized business that don’t provide professional services can obtain both with a Business Owner’s Policy (BOP).

A BOP provides both property and liability coverage in one package, so you can avoid purchasing separate policies. With packaged coverage, you benefit from the lower cost and avoid gaps in coverage.

Your BOP provides protection for buildings and contents, as well as for others’ personal property brought into your facility. BOPs also cover fire and theft hazards; however, certain occurrences such as floods and earthquakes require separate coverage.

The BOP premium is based on your business’s location, financial stability, the type of construction of your business premises, fire protection, and other factors. Each business has unique liability risks; with a BOP policy, you can choose how much liability insurance you need. Liability coverage provides a defense and pays damages if you are sued for business reasons, subject to certain exclusions: If a customer falls on your premises, the injury would be covered by the BOP; if an employee is injured at work, it wouldn’t be.

The BOP also provides limited business interruption coverage, as well as “personal injury” liability – such things as slander suits against you for allegedly using copyrighted material. Employee theft may also be covered, while other coverages, such as mechanical breakdown, are available for additional premiums.

If you’re interested in discussing Business Owners’ Policies, contact your advisor, who is experienced in helping businesses like yours protect themselves against loss.

It’s Vacation Time: Does Your Insurance Cover Rental Cars?

So you’re going on vacation. Great! But don’t forget, if you’re renting a car, you still need insurance protection. Don’t wait to get to the checkout counter to think about coverage; you may be pressured into purchasing unnecessary rental insurance.

If you have comprehensive auto insurance, you might already have car rental coverage, but there could be stipulations. Play it safe; check your personal policy first.

Insurance companies may provide rental coverage only up to a certain amount. If the rental car is totaled, your policy may only reimburse the rental company for actual cash value. Many rental car contracts state that reimbursement should be for the full retail value.

While you’re reviewing contracts, ask your insurance agent if possible loss of use is covered. If your insurance policy includes a Use of Non-Owned Cars endorsement, you should be covered, but it’s important to know the coverage limits. If the rental company makes a claim for diminished value, your personal policy will not cover this.

Driver coverage is an important consideration, especially if you’re traveling out of town. Anyone listed on your policy should be covered, but for others be sure to check first.

If you’re traveling abroad and don’t have a comprehensive policy or a high deductible plan, you may need additional coverage. Many agencies require a credit card for purchase and, depending on the card, your rental may be covered. If not, bite the bullet and purchase the rental insurance.

It’s better to be safe than sorry, especially on vacation.

Don’t Be a Victim of These Contractor Scams

The recent popularity in do-it-yourself repairs and renovations has many homeowners rolling up their sleeves and getting to work. Replacing a faucet may be easy, but installing a roof or dishwasher can be daunting.

These larger projects are better left to the professionals, but hiring a contractor can be a job in itself. Protect yourself from less-than-honest contractors by watching for these telltale signs of fraud.

A knock on the front door

One prevalent scam occurs when a “contractor” not known to you offers to conduct a free inspection of your home. The contractor then “finds” serious problems. Of course, you want it fixed. And not only do you have to pay the scammer, you may have to make a claim on your homeowners insurance. Seniors and people without much repair knowledge can be susceptible to this scam.

The negotiator

If a contractor offers to negotiate your insurance claims, walk away. A contractor cannot ensure that your claim will be approved and no amount of negotiating will change this.

A reputable contractor lets you handle the insurance company.

A work in progress

If a contractor is in the process of repairing your home and asks you to file another claim, you may want to get a second opinion. Many contractors will agree to fix repairs cheaply and then intentionally cause more damage. If you agree, you may be participating in insurance fraud.

Make sure you aren’t duped into making unnecessary homeowners claims; do your research before hiring a contractor.

Successful businesses don’t go door to door. Check your insurance company’s recommended contractor list and the Better Business Bureau. Ensure your contractor has proper licensing.

Avoid being scammed, and that kitchen repair that was done properly and came in on time and on budget will make you happy every time you look at it.

Now Your Adult Child is Covered Under Your Health Plan

Until recently, health insurance carriers and workplace plan sponsors were not required under federal law to cover any dependent over the age of 18.

Some states offered college students the opportunity to be part of their parents’ health insurance plans, but there was no requirement to do so.

Federal law now requires carriers and plan sponsors who offer plans with family coverage to extend health insurance to adult children up to age 26 – even if the adult child gets married. Effective January 1, 2014, adult children can remain on their parents’ plans despite qualifying for coverage from their employers.

Adult children who are about to lose their insurance coverage because they are graduating from college may re-enroll in their parents’ plan during the open enrollment period. For plans that began on or after September 23, 2010, they can also expect an offer of continued enrollment.

The young adult is entitled to the same full benefit package he or she had prior to leaving the plan; however, the carrier may still require the primary enrollee – the parent – to pay a higher premium. With workplace group plans, the employer pays at least half of the premiums. The employer’s contribution is not included in parental compensation for income tax purposes.

An exception to the rule occurs when the parent is on Medicare. Adult children will not be permitted to enroll in Medicare unless he or she is otherwise qualified – if, for example, the adult child has been diagnosed with advanced renal failure or amyotrophic lateral sclerosis.

Health Insurance Exchanges: What’s Happening?

As part of the health insurance reform package under the Affordable Care Act (ACA), each state was to create its own online marketplace (Health Insurance Exchange) to connect consumers to health insurance products.

The idea was to allow insurance carriers to compete on a level playing field, to facilitate the comparison of plans, and to make it easy for individuals to obtain coverage.

The deadline for online exchanges to become operational and begin to accept enrollees for their 2014 plans is coming up fast: The law requires them to start enrolling in October, 2013 – and that’s proving to be more difficult than expected.

To date, only 17 states, plus the District of Columbia, have thus far committed to setting up their own plans. The remaining states have elected to have the federal government set up their exchanges for them. It’s harder than it sounds.

While securities – such as stocks, bonds and mutual funds – are regulated at the federal level, insurance contracts have a long tradition of state-by-state regulation.

As a result, each state has its own diverse set of insurance laws and regulations, with different procedures for rate-setting, different mandated insurance coverages, and different licensing and authorization for carriers and agents.

Therefore, the US Department of Health and Human Services cannot create a one-size-fits-all website. Every exchange has to be customized to conform to each state’s unique set of laws and regulations.

As a result, both the federal government and the states are becoming concerned about the ACA timelines.

According to a recent report, some states have begun to approach federal officials for extensions; however, at press time it appeared the October 2013 deadlines were firm.

It’s critical to be up on what’s happening in this area: To ensure you have the most current information, discuss this and other health insurance issues with your insurance advisor.

Some Universal Life Holders Face a Conundrum

Many holders of universal-life insurance bought their policies years ago, at a time when interest rates were high. Today, many of these policyholders will have to pay more or face cancellation, according to news reports.

To understand why, you have to understand that we’re talking about permanent life insurance. Unlike term life insurance, this insurance type doesn’t limit the time period for payout: It stays in effect for the policyholder’s life.

Categories of permanent life insurance

Permanent life insurance is subdivided into two categories. Under the permanent life umbrella is whole life insurance, which generally charges set premiums, and universal life insurance, which generally comes with flexible premiums.

Universal life insurance holders often use the cash value of their policies to pay for the policy’s future costs. Now, that’s become a problem, given the low level of interest rates.

Because interest rates are so low, the cash value of many life insurance policies is rising at a rate that is less than expected.

Policyholders facing a conundrum.

As a result, many policyholders who depended on that cash value to pay the policy’s premium can’t afford to do so. The worst case scenario is that the policy, then, could be cancelled.

Those at risk are primarily consumers who bought life insurance policies before interest rates fell sharply in 2008 – and that could be a lot of people. Industry association Limra has said that, in 2008, the percentage of life-insurance premiums from universal policies totaled 40 percent.

If you’re in this predicament and interest rates stay low, you can opt to pay the premiums yourself rather than out of the cash value. Or you could accept a lower payout or abandon the policy.

Steps can mitigate the impact

However, there are some steps you can take to salvage at least part of your coverage. Discuss your options with your advisor.

Contractor or Employee? The Difference is Critical

In what has been called “The New Agent Economy,” more and more employers are opting to use contractors – or “agents” – to outsource any number of tasks that formerly were performed by employees.

For employers, this can be a real money-saver: By using outsourced labor, companies pay less payroll tax, unemployment insurance, and workers’ compensation premiums. However, in this era of increased regulatory scrutiny, it is critical that you correctly categorize your independent contractors to avoid a long list of potential problems.

Problems relating to on-the-job injuries

What many employers fail to realize is that a contractor who is hurt while working on their behalf can make a negligence claim. While it’s easy to assume an independent contractor does not fall under workers’ compensation rules, it may not be so.

It’s important that employers recognize the real costs of losing the protective shield that workers’ comp provides to employers against such lawsuits.

To start defining your employer-employee relationship, one great place to start is with the IRS rules established to classify contractors.

Note, however, that you cannot rely solely on the IRS rules to shield you from a workers’ compensation claim filed by a contractor.

State industrial commissions have been liberal in determining whether a contractor is an employee or not when that worker is injured.

Additionally, the federal government and many states are cracking down on companies’ use of the independent contractor status.

Guidelines to determine status

Here are some guidelines to use when determining the status of a worker. In general, the more “yes” answers, the more likely it is that your worker is an independent contractor.

  • Is your worker employed by another company, or his or her own business entity?
  • Does the worker generally set his or her own hours and supply his or her own tools to complete the job?
  • Is the worker licensed or has he or she devoted significant time and expense to learning the trade?
  • Does the worker advertise or offer his or her services to other companies, as well as to your organization?
  • If the worker makes mistakes, is he or she is responsible for fixing the problem or paying for any damages resulting from the problem?
  • Do you pay the worker on commission or on a per-job basis?
  • Does the worker make or lose money from the work he or she does for your company?

Whether to classify employees as contractors is not always an easy decision.

In most states, if contractors do not have their own coverage, anyone who uses their services can be charged for workers’ compensation exposure on their business policy if the carrier discovers the contractor payment; calling someone a contractor may prove wrong on audit and create problems in other areas.

If you determine you have workers who are independent contractors, ask them to furnish their current certificate of insurance so that you are not charged additional premiums at audit.

Taking the time initially to correctly classify your “agents” will save you money and heartache later.