Insurance – SmallBusiness.com

Small Business, Self-Employed Will Soon Have Access to Association Health Plans | 2018

Rex Hammock — Wed, 20 Jun 2018 11:26:19 +0000

Tuesday (June 19, 2018) at the opening session of the 75th anniversary of the National Federation of Independent Business (NFIB), President Donald J. Trump released the finalized version of a new rule that enables self-employed individuals and more small businesses to band together to buy healthcare insurance through “association health plans.”

See our previous overview of association health plans

Lamar Alexander, chairman of the Senate Health, Education, Labor and Pensions Committee, lauded the plans:

Large companies have always had an advantage because they have more employees, which means they can provide health insurance at a lower cost. Expanding association health plans will give more small businesses and self-employed Americans a chance to get a similar bang for their buck because they’ll be buying health insurance for a larger group of people. They can spread administrative costs, allow employers to bargain for better deals and create ways to bring more people into the market, which brings down costs for everyone.

Hey, wait! Wasn’t the healthcare battle in Congress over?

After Republicans failed to repeal the Affordable Care Act (Obamacare), the Trump administration has sought regulatory actions to loosen ACA requirements and try to lower premiums for individuals and small businesses. Today’s rule expands the definition of employer under the Employee Retirement Income Security Act of 1974, or ERISA. The new definition will enable more groups to form association health plans and bypass rules under the Affordable Care Act. Its enactment does not need legislative approval. Its costs may require more funding at some point, which would require congressional approval.

Aren’t businesses with less than 50 employees excluded from requirements to provide insurance to employees?

Yes. Businesses with less than 50 employees are not required to provide insurance to employees, nor will they under this new rule. According to the White House, association healthcare plans will level the playing field to be more like plans available to large corporations.

Are individuals mandated to purchase healthcare coverage?

As part of the Tax Cuts and Jobs Act passed in December 22, 2017, the penalty associated with the Affordable Care Act’s (ACA’s) individual mandate — also known as the act’s individual shared responsibility provision — has been reduced to $0 beginning Jan. 1, 2019. The change essentially repeals the ACA’s individual shared responsibility provision.

Will association health plans cover preexisting conditions?

According to the Department of Labor, association health plans will be required to comply with protections like those at larger companies or via Healthcare.gov, including:

Prohibitions against charging more or denying coverage because of a preexisting condition
Canceling plans because you get sick
Imposing annual or lifetime limits on benefit coverage
The requirement to offer coverage to dependent children up to age 26
The requirement to provide preventive health coverage free of charge to the patient.

Who opposes association health plans, and why?

Critics say it will draw healthy people away from the current health law’s insurance markets, raising the cost of coverage, which is subsidized by taxpayers.
Currently, healthcare insurance is regulated at the state level. Association group plans that can cross state lines can be viewed as a threat to the status quo.
The plans may not all provide comprehensive benefits offered by some of the Obamacare options
Some similar plans in the past had problems with financial solvency
See also our previous association health plan pros and cons

Photos: iStock, SmallBusiness.com

What Millennial Business Owners Are Doing That Makes Their Workplaces Safer | 2018

SmallBusiness.com — Thu, 07 Jun 2018 15:27:38 +0000

With nearly 13,000 American workers injured each day, establishing a safety program should be a priority for every business. But most small business safety efforts lack formal planning and training, according to Nationwide’s fourth annual Business Owner Survey released on Wednesday (June 6, 2018).

The use of emerging technology to improve workplace safety is significantly more prevalent in businesses with Millennial-age owners

32% | Percentage of all business owners using various types of technology to improve workplace safety
71% | Percentage of Millennial-age business owners using various types of technology to improve workplace safety

Comparative (all business owners vs. Millennial-age owners) look at specific types of technology for improving workplace safety

Building sensors | Devices that detect humidity, temperature, water leaks and equipment failure

16% | Percentage of all business owners using this technology
36% | Percentage of Millennial business owners using this technology

Wearables | Watches, belts and other personal sensors that can detect physical strain

13% | Percentage of all business owners using this technology
32% | Percentage of Millennial business owners using this technology

Drones | Commercial drones used to reach or inspect areas that otherwise are dangerous for workers

7% | Percentage of all business owners using this technology
21% | Percentage of Millennial business owners using this technology

Vehicle telematics | Technology that can help reduce distracted driving

11% | Percentage of all business owners using this technology
20% | Percentage of Millennial business owners using this technology

Ways to improve workplace safety programs and reduce overall expenses

Employ or identify a person who is charged with the company’s safety and implementing safety-related initiatives.
Provide formal safety training to all employees on a regular basis.
Implement a formal return-to-work program to help injured employees get back to meaningful work as soon and as safely as possible.

“While technology can enhance workplace safety, it’s not a panacea,” said Mark McGhiey, associate vice president of Nationwide’s Loss Control Services, the sponsor of the survey. “There’s always going to be an element of human-driven effort to ensure workers can do their jobs safely and efficiently.

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How the On-Demand Economy is Changing Insurance Coverage | 2018

SmallBusiness.com — Mon, 09 Apr 2018 18:08:56 +0000

The rise of the on-demand (or “gig”) economy (like drivers who provide rides via Uber or Lyft) is not only changing the way its participants work, it is also changing how companies provide insurance to those participants.

A recent article in the Economist provides this example: A courier hits and injures a pedestrian.

If the courier company employs the driver and provides the worker a van and salary, the accident would be covered by a standard commercial insurance policy.
But on-demand “gig” couriers, who use their own cars and work whenever they choose, must often insure themselves. Even if the courier has personal insurance coverage, it will not usually pay out for accidents that happen while they are driving for work. If the coverage is available, it can be expensive.

This isn’t a problem, it’s an opportunity

Insurance by the hour | The UK startup, Zego, brokers third-party liability insurance for couriers who pay for the insurance by the working hour. Coverage starts when they activate the courier’s smartphone app and stops when they sign off.

Insurance by the mile | Uber drivers, through the insurance broker Aon, can purchase coverage against illness, disability, and death for as little as $0.04 for each mile they drive. If local regulations allow, Uber will raise the rate it pays drivers by the same amount, making it look like an employment benefit but in the context of an independent worker approach.

Insurance by stages of risk | In Ontario, Uber and Lyft both have brokers who have packaged a “three-stage” approach.

Stage 1 | Kicks in when a driver launches the Uber (or Lyft) app.

Stage 2 | Higher coverage, starts once a ride is accepted.

State 3 | Even higher coverage when passengers are picked up until they are dropped off.

Insurance by the user | Since 2011, Airbnb has offered a “host guarantee” against theft and vandalism. While it works like insurance, no third-party firm is involved. Airbnb makes payouts itself.

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A Dozen Benefits Employees Value Most

SmallBusiness.com — Fri, 21 Apr 2017 12:55:55 +0000

Nearly one-third of an employee’s compensation can come in the form of benefits. While most benefits are optional for small businesses, so important are benefits to employment, Atrium Staffing, a New York City-based employment agency, surveyed its database of job seekers and found 91 percent would accept a different job if better benefits were offered, according to U.S. News in an article listing these 12 benefits valued most by employees.

1 | Health Insurance

The Kaiser Family Foundation found the average annual cost for an employer-sponsored family health insurance plan was $18,142 in 2016. Of that, employers covered $12,865 of the cost.

2 | Retirement Plan

The standard company retirement plan is a 401(k). Although these are funded largely by workers, some firms make an automatic contribution to the fund as part of a compensation package.

3 | Health Savings Account

Health savings accounts are still underutilized but provide a great value for employees. Money deposited into the account is tax-deductible. It then grows tax-free, and withdrawals used for qualified health care expenses are tax-exempt.

4 | Company Equity

Google made hundreds of people instant millionaires when the company went public in 2004. These people were workers who had been awarded stock options as part of their employment at the then startup.

5 | Employee Health Care and Assistance Services

Some companies offer screenings for early cancer detection, resources to treat chronic conditions or free gym memberships. Other employee-assistance programs offer free counseling, legal services or financial planning.

6 | Parental Leave

Parental leave can be a significant benefit both financially and emotionally. Current U.S. maternity leave policy is regulated by the Family and Medical Leave Act of 1993 (FMLA) which includes a provision mandating 12 weeks of unpaid leave annually for mothers of newborn or newly adopted children. Some states have additional requirements. Small businesses are typically not covered by these regulations or guidelines.

7 | Paid Time Off

While paid vacations are not required, companies who need skilled workers have determined the return-on-investment in vacations can be worth it. In fact, some companies like Netflix have placed a high emphasis on individual performance, they let employees determine their own work and vacation schedules. With such freedom comes accountability, however. At Netflix, employees earn the perks they enjoy.

8 | Career or Personal Development

Career development sessions give workers the chance to gain skills and knowledge needed to further their careers.

9 | Tuition Reimbursement or Loan Repayment

Talent experts say loan repayment will be increasingly rolled out. Forward-thinking companies are doing that because they see young people suffocating under their student loans.

10 | College Savings Accounts

Although employers don’t often make contributions to “529” college savings accounts on behalf of workers, merely offering payroll deductions for the plans can be valuable.

11 | Parking

In Los Angeles, parking can cost up to $400 a month.

12 | Food

Complimentary meals have long been a mainstay at startups. Others have food brought in weekly.

VIA | USNews.com

Photos: istock

How the American Health Care Act (AHCA) Could Impact the Self-Employed

Steve King — Wed, 22 Mar 2017 14:50:50 +0000

Update: As we noted when first posting this article, the American Health Care Act had a long journey before becoming law. As of March 24, 2017, it’s even longer–and more doubtful.

As we’ve noted numerous times, under the Affordable Care Act (Obamacare), businesses with fewer than 50 employees are not required to provide healthcare insurance to workers. We have also noted that the ACA has helped grow the on-demand economy because it gives one-person businesses (also called, “self-employed,” “freelancers,” “sole proprietors,” etc.) access to healthcare, even if they’ve had a prior health condition that would have, in the past, prevented them from obtaining affordable insurance. Currently (March, 2017), the House of Representatives leadership is striving to pass by April a plan to replace the ACA. Known as the American Health Care Act, the legislation still has a mountain to climb to become law as it must pass, in addition to the House, the U.S. Senate. Here is a snapshot summary (and it has to be a snapshot because the legislation keeps changing) from Steve King, a partner at Emergent Research and a regular contributor to SmallBusiness.com.

Preview of self-employed insurance coverage under the AHCA

No doubt, the AHCA legislation (or, as some are calling it, Trumpcare) will change before it is finalized. And then, any legislation passed by the House must also pass the Senate. But there is enough information in the core proposal to gain a general sense of it impact on self-employment. Here are two top points:

Self-employed individuals who are older or have lower incomes will likely see a negative impact on their coverage.
The law will likely not have a major impact on the total number of people who are self-employed, at least over the next 3-5 years.

Why? Obamacare provisions that are important to the self-employed are included in the AHCA (as currently outlined). In particular, the Obamacare rules requiring insurance companies to cover pre-existing conditions are still included in Trumpcare. Also, the “no lifetime coverage cap” will still apply.

How Obamacare has been good for freelancers

Based on data from the MBO Partners State of Independence study, the percentage of full-time independent workers with health insurance has increased significantly since passage of the Affordable Care Act. Also, before Obamacare, many potential independent workers may have stayed with a large company in order to have access to healthcare coverage.

64% | Percentage of independent workers in 2014
83% | Percentage of independent workers in 2016

Three major differences between Obamacare and Trumpcare that impact the self-employed

1 | Tax subsidies

As the Kaiser Family Foundation chart below shows, there are winners and losers under the ACHA as currently proposed. Younger and higher income people tend to do better, older and lower-income people tend to be less subsidized.

The group most negatively impacted–as indicated in the chart–will be older self-employed workers who have a relatively low income. Many of these people will unlikely be able to afford health insurance. However, lower premiums will likely encourage younger self-employed to sign up. The proposed legislation allows insurance companies to charge up to five times the premium amounts for older people than younger people. This is a big shift from the three times currently allowed under Obamacare.

2 | Reduction in Medicaid support

This potentially has a negative effect on the self-employed with low income. This provision kicks in after 2020 and will vary by state, so it’s too early to predict the extent to which it will impact self-employment. But it’s hard to imagine a scenario where this shift is good for the self-employed with low incomes.

3 | Elimination of the health insurance mandate

According to the assesment of the AHCA by the Congressional Budget Office (CBO), this provision will result in larger numbers of younger and healthier self-employed choosing not to buy health insurance. The non-partisan CBO is forecasting 14 million fewer people will be covered by health insurance in 2018 if the ACHA passes.

Resource | The Kaiser Family Foundation provides this interactive chart that looks at the ACHA by income, age and state.

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Only 40% of Owners Have a Business Succession Plan | 2017

Rex Hammock — Tue, 07 Feb 2017 17:26:58 +0000

According to a survey released today (Feb. 7, 2017), only two in five small business owners have a business succession plan in place.

60% | Percentage of small businesses without a succession plan in place

Nationwide Small Business Owner Study
Conducted by Harris Poll, February 7, 2017

“Business owners spend so much time and energy building a successful business, they need wise counsel to prepare for transferring a business, establishing a true value for the business and identifying how the seller should be paid for his or her interest,” Kirt Walker, president and COO of Nationwide Financial, told SmallBusiness.com. “The time to do succession planning is not in the middle of a crisis when you have zero leverage,” he said.

Why business owners neglect succession planning

According to Nationwide’s survey, here are the leading reasons why business owners neglect succession planning

“Business owners function at such a rapid pace to remain competitive, it’s no wonder that developing their exit plan and replacement doesn’t seem like today’s priority,” said Walker, “Yet, there isn’t a more critical component of an operational plan than a solid business succession plan for providing seamless continuity in a time of crisis or transition.”

Younger business owners are more likely than older owners to have a succession plan

Here is a survey finding you might find surprising. One might think owners who are older would be more likely to focus on succession planning, but the opposite is true. “According to our research, Baby Boomers believe they’ll work in their current position, driving the company’s success until they retire, while Millennials hope to run multiple companies and show how they’ve successfully positioned the company before they leave,” Walker told SmallBusiness.com.

What age span of business ownership is more likely to have a succession plan?

32% | Generation-X business owners (born 1965-1981)
61% | Millennial business owners (born 1982-2004)
32% | Baby Boomer business owners (born 1945-1964)

Now is the time to put together a succession team

Walker recommends that business owners put together a team of advisors to develop a succession plan. At a minimum, the team should include your attorney, your accountant, and your financial advisor. Key employees and family members, both those who work in the business and those who don’t, should have a seat at the table at different points in the process.

48% | Percentage of business owners who have discussed succession plan with a lawyer
40% | Percentage of business owners who have discussed succession plan with a financial advisor
48% | Of those who have not discussed a plan with advisors, the percentage whose reason is, “because they do not think it is necessary”

According to Walker, your advisory team can help you create a plan that can potentially:

Solidify a market for the business
Create certainty about the price, terms, and financing
Identify triggering events and potential leaders for succession
Establish retirement income for the business owner
Provide a sense of security for surviving family members
Facilitate a smooth and controlled transition
Establish funds for the purchase of the businessReduce the potential for future litigation

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Checklist: Items to Keep (and NOT Keep) in Employee Files

SmallBusiness.com — Thu, 03 Nov 2016 13:00:55 +0000

It is important–and sometimes, required by law–to set up and manage a personnel (or employee) filing system. However, it’s important to remember there is not just one file per employee.

Some personnel files are used for helping managers make employee-related decisions.
Other files are highly confidential and can contain information protected by privacy laws.

Therefore, a personnel filing system can’t be a one-size-fits-all approach, as there are certain types of information related to employees that are highly personal (medical, for instance) that should be maintained in a system separate from that which is used for personnel decision purposes.

Another factor in determining what types of files to manage relates the size of the company. For instance, some companies with less than 50 employees may not be required to maintain a specific type of form, what those with 51 are.

So think of a personnel filing system as being several types of files.

Certain employee files contain information that laws and regulations require; and that they require confidentiality. This protected information can only be seen by personnel who are designated to see it for specific, government-approved reasons. Such files can relate to benefits, salary, medical conditions, and legal issues.
The other file, and the one most typically referred to as the general “personnel file,” contains information related exclusively to the employee’s performance on the job that can be seen by the employee’s supervisory personnel.

Why have records at all?

There are several basic reasons for maintaining files related to each employee:

They aid in promotion or layoff decisions
They provide a means to track activities related to such things as training, vacations, accolades, conflicts
They are necessary to comply with various local, state and federal laws and regulations
They provide records of activities, conversations, reviews, etc., that can be important in reducing the potential liability if an employee is laid off

What stays and what goes?

The following should, and should not, be included in a basic employment file.

Should be included

Job description (present, past positions)
Resumé
Records relating to job offers, promotion, demotion, transfer, layoff, rates of pay and other forms of compensation, and education and training records
Records relating to other employment practices (including policy acknowledgments and agreements)
Letters of recognition
Disciplinary notices or documents
Performance evaluations and goal setting records
Termination records
Employment Application
Orientation Checklist
Emergency Contact Information
Employees Withholding Allowance
Certificate W-4
State Specific Employees Withholding Allowance Certificate, if applicable
Copy of Driver’s License, if required for the position
Signed Receipt of Employee Handbook and Employment-at-will Statement
Change in Personal Data Form
Performance Evaluations
Position/Rate Change Forms
Record of Disciplinary Action (Verbal and Written Warnings), if applicable
Absentee Record
Requests for Time Off
Training Requests
Documentation of Training
Documentation of Certification and/or License (if applicable)
Requests to Review Personnel File
Resignation Statement

Should NOT be included in a basic employment file

| There should be one file per employee. DO NOT mix together into a shared file the payroll file documents for more than one employee.

| The following documents belong in a SEPARATE file(s) and SHOULD NOT BE accessible to supervisors who are seeking information about the employee’s work performance. The information found in these documents are protected under privacy laws and belong with other guarded, confidential documentation.

EEO/invitation to self-identify disability or veteran status records.
Interview notes and employment test results.
Reference/background checks.
Drug test results.
Immigration (I-9) forms.
Medical/insurance records (medical questionnaires, benefit enrollment forms and benefit claims, doctors notes, accommodation requests, and leave of absence records).
Child support/garnishments.
Litigation documents.
Workers’ compensation claims.
Investigation records. (Only any relevant disciplinary action, counseling or other direct communications would be placed in the employee’s personnel file.)
Requests for employment/payroll verification.

Benefits File (Confidential)

( | There should be one file per employee. DO NOT mix together into a shared file of benefits documents for more than one employee.)

Benefits Declination Form
Health, Dental, Vision, and/or Pharmacy Insurance Enrollment Forms
Other Insurance Enrollment Forms (Life Insurance, STD, LTD, etc)
Flexible Spending Account Forms
Election Form/Compensation Reduction Agreement
Employee Direct Deposit Signup Form
Claims
Enrollment Form, Retirement Forms, Profit Sharing Forms
S125 Premium Only Plan Forms
Beneficiary Designation Form
COBRA or State Continuation paperwork, if applicable

Payroll File (Confidential)

( | There should be one file per employee. DO NOT mix together into a shared file the payroll file documents for more than one employee.)

Direct Deposit Authorization
Payroll Deduction Authorization Forms
Overtime Requests, if applicable
Time Sheets
Employee Expense Report
Auto Mileage Reimbursement Vouchers
Garnishments/Income Executions
Requests for Pay Advances

More Confidential Files

( | There should be one file per employee. DO NOT mix together into a shared file the payroll file documents for more than one employee.)

Documentation of Investigations
Lawsuit or DOL/EEOC investigation correspondence
EEOC and Affirmative Action Data
Background Check and Drug Testing Results
OSHA Forms
Employee Incident Report
Medical Information
FMLA Forms
Employee Request for Family Medical Leave
Certification of Health Care Provider
Family Medical Leave Periodic Reports
Family Medical Leave Return to Work Certification
Disability and/or Workers’ Compensation Claim Forms
Accommodation Requests

Sources: SHRM.org, Nolo.com, Paychex.com (PDF).

ACA Insurance Marketplaces to Offer ‘Simple Choice’ No-Deductibles Plan in 2017

SmallBusiness.com — Tue, 18 Oct 2016 22:03:09 +0000

As we’ve noted many times before, the Affordable Care Act (ACA) does NOT require small businesses with fewer than 50 employees to provide healthcare insurance. However, you do have to make employees aware that they (and you) can purchase insurance through a health insurance marketplace. One of the complaints about the consumer insurance offered through such marketplaces is the confusing variations in coverage.

The NYTimes.com today (Oct. 18, 2016) is reporting that when ACA insurance marketplaces start open enrollment in two weeks (Nov. 1, 2016-Jan. 1, 2017), many consumers (including small business owners) will have a new option: standardized health plans that cover basic services without a deductible.

Quote via NYTimes.com

With many health plans on the marketplace coming with deductibles in the thousands of dollars, consumers have complained that they were getting little benefit beyond coverage for catastrophic problems. The new standardized options are meant to address that concern — to ensure that “enrollees receive some upfront value for their premium dollars,” as the Obama administration said.

The new plans could still be costly. While the federal government specifies deductibles, co-payments and other out-of-pocket costs for the standardized options, it does not limit premiums, which in most cases are still regulated by state insurance commissioners. The administration has said it does not expect the standardized options to have a significant effect on premiums in 2017.

“This is one more tool that will make it easier for consumers to select the right plan,” said Marjorie K. Connolly, a spokeswoman for the Department of Health and Human Services, told the Times.

(More information on NYTimes.com.)

Also on SmallBusiness.com

Answers to Health Insurance Questions if Your Business Has Less than 50 Employees

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Disaster Planning and Recovery Resources for Small Businesses

SmallBusiness.com — Fri, 07 Oct 2016 11:13:27 +0000

Take time to bookmark the SmallBusiness.com Guide to Disaster Planning and Recovery. It contains links to federal and state resources we hope those who own, work or shop at a small business will never need to use. Here are some of the helpful–potentially life-saving or business-saving–information you’ll find there.

Here’s Where Your Employee’s Pay Raises Have Gone Since 1970

Rex Hammock — Thu, 29 Sep 2016 16:44:24 +0000

If you provide employer-paid healthcare insurance for your employees, show them the chart below the next time you are discussing salaries with them, suggests Barry Ritholtz writing for Bloomberg.com. It demonstrates that real (inflation-adjusted) compensation has risen 61 percent since 1970. Yet despite that increase in compensation, when it comes to wages–the cash portion of compensation that goes into the pockets of employees–have only increased less than 3 percent during that period.

How can compensation increase 61 percent but wages less than 3 percent?

The answer can be seen in the Federal Reserve chart below. It shows two ways to measure employee compensation.

TOTAL COMPENSATION 61% | The blue line tracks total compensation (adjusted for inflation) and shows that between 1970 and today, total compensation rose 61 percent. Total compensation includes wages, various worker benefits such as matching 401(k) contributions, health insurance, disability insurance, paid vacation and leave plus any employer-paid taxes. By far, the largest share of the increase in total compensation has been healthcare insurance.

WAGES 3% | The green line tracks wages–or the cash portion of compensation. Barry Ritholtz says, “it isn’t a stretch to surmise that most employees don’t really appreciate how substantial this non-wage compensation is; nor do they realize how much healthcare costs, the biggest part of their non-wage compensation, have risen. So while the total amount companies spend on compensation has increased a good deal, it sure doesn’t feel that way to many workers.”

What are the ramifications?

If healthcare insurance were not tied to employee compensation, much of that 61 percent increase in compensation would have gone into the “wages” line. As it is today, the total compensation approach masks much of the compensation growth workers have received. Moreover, because the payments of healthcare-related costs are handled by a third-party payor (the insurance company), employees (patients) do not always recognize the significance of the value they are receiving.

Bottom line

Obamacare is making a hard “perception” issue even greater. Employers must balance the perception that compensation is growing while wages are stuck. But in the midst of political discord and misinformation (from all sides of this issue), finding a way to improve, reform or replace our healthcare insurance system–or even tweaking it–seems an impossible challenge.

VIA |Bloomberg.com

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