What is Your Plan to Cover Your Bills if You Become Disabled?

In 2007, International Communications Research conducted a study for the National Association of Insurance Commissioners to see if American adults would be able to pay their bills if they were unable to work. The study showed that more than 55 percent of working American adults would not be able to cover their living expenses if they became disabled and could not work for more than a year. However, about 45 percent of the survey participants said that they had long-term disability insurance. From that group, about 70 percent said that their insurance was offered through their employers. This meant that they would face the financial difficulties of paying their own living expenses if they became unemployed.

Slightly more than 10 percent of the survey’s participants believed that they may become disabled at some point. Although these statistics were collected several years ago, the numbers have not changed for the better. In their survey report, the NAIC stated that people did not see the full financial impact of a disability. When people become disabled, they may receive up to 60 percent of their prior income through government benefits. However, a loss of income is not the only costly factor involved in a disability. If the disability stems from a long-term illness, there may be additional medical expenses that insurance does not fully cover. There may also be expensive medications. People who have limited mobility may need to hire people to help with tasks such as child care, household chores, grocery shopping and transportation.

Recent data from the Council for Disability Awareness shows that about 25 percent of people who are 20 years of age or older will suffer from a disability at some point before retirement. They said that about 12 percent of Americans are living with a disability today, and over 50 percent of disabled Americans are under the age of 65. Since so few people think that a disability may affect them in the future and reality’s statistics show the opposite, it is important for people to be proactive about protecting their financial futures from disability limitations. Employers can help their workers do this by adding disability coverage to their benefits packages. However, individuals who do not have access to employer-sponsored coverage should seek private insurance. To help Americans do this, the NAIC provided some useful guidelines.

Make a list of current and future expenses. Decide how much money is needed to make mortgage payments, cover utilities and cover other necessary monthly expenses. If investments and savings cannot cover a person’s lifestyle for more than a few years, long-term disability insurance is a must.

Research qualification criteria. For most individual long-term disability insurance policies, there are qualification criteria relating to an applicant’s medical history. Insurers may charge more or deny applicants who have chronic and permanent health issues.

It is never too early to start shopping. Young workers in their 20s and 30s often think that disabilities are only possible as they near retirement age. However, disabilities can happen to anyone regardless of age. Buying a non-cancelable disability policy at a younger age means paying a lower premium. There are also guaranteed renewable plans. These plans must be renewed despite health status but may come with increased premiums.

Understand the waiting period. Many policies come with waiting periods. This is the amount of time that a person must wait before benefits are paid. If a claim is filed before the waiting period is over, the benefits are not payable. Longer waiting periods often come with considerably lower premiums.

If a policyholder is unable to work and is deemed disabled, he or she must file a claim and provide the supporting documentation required to start receiving payments. Insurers require supporting documentation that verifies a disability. This is usually something a physician must assist with and is an essential part of being approved after filing a claim against the disability policy. To learn more about disability coverage for the workplace or for an individual, discuss concerns with an agent.

Employees Rely on Workplace Benefits for Financial Preparedness

In a recent survey conducted by Guardian Life Insurance, almost 65 percent of workers said that their employers should be responsible for offering retirement and health insurance benefits. However, less than 20 percent of employers said that they should be responsible for providing these benefits to their workers. While employers and their workers may not agree on this topic, employers know that benefits are vital for helping employees and the families of their employees maintain financial security.

Guardian established a value index, which was used to measure the perceived value of workplace benefits by employees. The scale ranged from one to 10. Their research showed an increase on that scale to slightly over the seven mark. In 2012, the number was less than seven. Researchers also found that nearly 35 percent of workers were extremely satisfied with their employer-sponsored benefits. However, less than 20 percent of employers guessed that their workers were extremely satisfied with the benefits they offered in the workplace.

More than 40 percent of workers said that all or the majority of their benefits came from workplace sources. Nearly 70 percent reported relying on benefits for more than 50 percent of their financial preparedness. Since there is inadequate communication or education about benefits overall, many workers said that they did not take advantage of the benefits available to them. Experts at Guardian emphasized the importance of employers clearly and regularly communicating benefits options and the importance of using benefits to their employees.

The recent study from Guardian showed how benefits built a solid financial foundation for workers across the United States. However, experts were concerned that many people were still not taking advantage of the available benefits. They pointed out that in addition for it being helpful to offer benefits for health and financial reasons, it is important to offer them to help workers make smart and informed choices for their futures. By offering benefits that are easily accessible and are more personalized, employers can help their workers achieve happiness and financial security.

Guardian said that total compensation statements are also helpful tools. If workers receive these statements, they are more likely to understand and appreciate the proper value of their benefits. In addition to this, they are more likely to consider communication about benefits more effective. More than 85 percent of respondents in the previously referenced survey reported feeling more confident in making decisions about their benefits. About 75 percent said that seeing the true worth of their benefits was better for establishing a value for them. Only about 30 percent of employers reported sending total compensations statements to their workers.

In addition to these benefits, Guardian experts pointed out that human resource management research showed the importance of communicating the value of benefits to employees and how it could result in a positive impact on a company’s bottom line. By using benefits workshops, total compensation statements, self-service benefits options and employee meetings, companies can improve their workers’ understanding of how valuable workplace benefits are. To learn more about communication and how to portray the value of workplace benefits, discuss concerns with an agent.


New Injury Coding System May Save Employers Money

The way employers code and report workplace injuries has changed, and it might help them save money. The US Centers for Medicare and Medicaid Services (CMS) required all entities covered by the Health Insurance Portability and Accountability Act (HIPAA) to adopt the International Classification of Diseases, Modification, and Procedural Coding Systems, Revision 10 (ICD-10) to report injuries and illnesses. The requirement, which took effect October 1, 2015, also applies to claim administrators and workers’ compensation insurers.

Previously, injuries and illnesses were reported using the ICD-9 system. However, ICD-9 failed to capture medical progress made in the past few decades. It has been modified over the years to keep up, but ultimately was not flexible enough.

The new codes are structurally different. The ICD-9 codes had three to five characters. ICD-10 codes have five to seven characters. It has two sets of codes — diagnosis codes used in all health care settings, and inpatient procedure codes used in hospital settings. The new system has more than 14,400 unique codes. It is expected to permit authorities to track many new diagnoses. In addition, the new codes will more specifically describe conditions. Each code will convey more information than did the previous system.

The specificity of the new system may give employers who use utilization management systems some advantages. Because each code contains more information, pre-certification of treatments and nurse case management may be more effective. Employers may be better able to measure health outcomes, report and track injuries and illnesses, and obtain more accurate reimbursement for payments.

For example, the ICD-9 code for atrial fibrillation could increase a particular case’s severity of illness (SOI). The ICD-10 system has a specific code for chronic atrial fibrillation, which does not increase the SOI. The difference in codes has implications for appropriate treatments, with accompanying differences in costs.

The CMS delayed implementation of the new system multiple times. However, the system now applies to injuries that occur on and after October 1, 2015. It can be used for injuries that occurred before that date, but each claim must use one system or the other only. It might not make sense to use ICD-10 for minor injuries that occurred before that date. However, employers may decide to use it for earlier injuries that they will be tracking for several years ahead.

Employers transitioning to the new system can make the process smoother with a few steps:

  •  Test reporting systems for compliance before they go live.
  •  Train staff, including risk managers and others involved in workplace safety, on how to use the new codes.
  •  Use tools that make it easy for staff to look up the new codes or convert the old ones to the new ones.
  •  Have network connections between a bill-review agent’s system and the employer’s reporting system to eliminate coding discrepancies for pre-October 1 injuries.

Every changeover from one system to another comes with bumps in the road. The long-term improvements that come with ICD-10 should outweigh the short-term headaches.

Using Ride Services to Your Holiday Party Can Save You Thousands

With the widespread availability of ride services, such as Lyft and Uber, there is no reason to drive to your holiday party, especially if you drink. Nowadays, with lower limits on blood alcohol levels than in the past, driving while being above the threshold doesn’t take much. The cost of driving under the influence can be well over $10,000, and it can also cost you your career. Worse yet, if you seriously injure or kill someone, you can spend time in jail. It’s just not worth it-the cost of a ride or taxi service is a drop in the bucket compared to what an alcohol-related conviction can cost you.

Ride sharing services are easy to use if you have a smartphone. All you need to do is download the apps for Lyft or Uber or an app that dispatches to taxi companies. You need to program your credit card information, which makes the system efficient, as no money changes hands and your credit card is billed. You then program in your home or location address and your destination address, and with a push of a button, the first nearby driver to respond will pick you up. The apps typically will tell you about how many minutes it will take for the driver to arrive, and you should get a text message when your driver is approaching. Most systems are transparent; they provide you with your route map and total cost. It also will be difficult for a driver to manipulate the system to charge more. You are also prompted to rate your driver; drivers with low ratings will, in most cases, lose their contract.

There are additional benefits: there is no need to park your car, pay for parking, or park at a distance; these services take you to the front door. In some cases, you can choose to upgrade to a black car or an SUV, such as with Uber; these services typically cost more, but if you want to go in style or have a number of people in your party and need a bigger vehicle, this may be an option. In some locations, these apps offer a car pool system where you share the ride with another party. These are typically limited to two people per party and two parties per car; they use the service to match parties who are picked up nearby and are going to nearby destinations. Those who choose this car pool option pay a fraction of what the actual ride cost due to sharing the vehicle.

With the availability of these services, it is unwise to even think of drinking and driving. At some point, drinking and driving will catch up with you. You already purchased your smartphone; you can now use it to your advantage to safely enjoy yourself, stay out of serious trouble, and easily get around. 


More Employers Report Leveraging Benefits to Attract Top Talent

The sluggish economic recovery is getting curiouser and curiouser. While real wages have pretty much remained stubbornly stagnant, with no significant advances for wage earners since 1964, human resources workers across the country are also reporting that competition for talent is heating up. In fact, according to the recently-released 2015 Society for Human Resources Management Strategic Benefit Survey, 4 in 10 HR professionals report that their organizations were having a hard time recruiting workers for all levels in the organization.

For highly-skilled positions, it was even tougher to attract talent: More than half of those surveyed (55 percent) reported that they had difficulty recruiting high-skill workers.

To deal with the increasingly competitive market for new talent, about 38 percent of all those surveyed reported that their organizations leveraged their benefits in order to recruit employees at all levels of the organization. Again, that figure represents a significant increase over 2012 (29 percent) and 2013 (26 percent).

“While the competition for talented workers has heated up, there has been little change in base salaries. So HR has strategically turned to benefits to attract – and keep – skilled professionals,” said Evren Esen, director of SHRM’s survey programs, in a statement. “From unlimited vacation to unusual perks such as electric car charging stations, companies are using benefits to set themselves apart from the competition.”

Health Care Benefits are Key                                                                                          

Two out of three human resources professionals surveyed expected health care benefits would become increasingly important as a recruiting and retention tool for employees at all levels over the next three to five years. More than half also expected the same for retirement benefits, flexible working hours, career development benefits, and of course direct cash compensation.

Survey respondents reported that, on average, their organizations were paying 76 percent of employees’ total health care premiums. However, 46 percent also reported that the percentage their employees paid had increased over the past year.

“Health care is the benefit mostly highly valued by employees,” Esen continued. “Maintaining coverage is an effective tool for recruitment and retention. In coming years, retirement savings, compensation, flexible work and career development also will play increasingly important roles in recruiting strategies.”

42 percent of those surveyed also expected wellness and preventative health benefits would also become more important. That’s down substantially compared to 2014’s results, when 63 percent of those surveyed expected wellness benefits to become more important when it came to recruiting hard-to-land talent. About two-thirds of those surveyed reported their organization provides a wellness program of some sort as an employee benefit.

Only one out of five expected a substantial increase in the role of family-friendly benefits – a big decrease compared to the years 2014 and 2015 (50 percent and 47 percent, respectively.)

The figures comprised HR professionals from a cross-section of industries.

The survey was based on 461 HR professionals who responded, from a randomly-selected SHRM membership sample in May and June 2015. The margin of error for the survey is +/- 5%.

The Strategic Benefit Survey is a follow up to the annual Society of Human Resource Management Employee Benefits Survey, which, among other things, found that one employer in three was strengthening its employee benefits package over the 12 months ending in March 2015 – a significant increase from the 28 percent that reported increasing benefits the year prior. In contrast, only 7 percent of employers reported they were rolling back employer-sponsored benefits for their workers.

Disability vs. Workers Compensation

Many workers are unclear on the difference between disability insurance coverage and workers compensation insurance. Often, workers will decline optional disability insurance coverage, however badly needed – because they think they are covered under their employer’s workers compensation plan. This is usually a mistake.

Workers Compensation is designed to protect both businesses and workers from the devastating potential consequences of work-related injuries and fatalities. Under workers’ compensation plans, covered workers are guaranteed access to a substantial pool of money that can cover lost income, pay medical expenses (generally with no deductibles or out of pocket costs) and provide for job retraining and physical and occupational therapy services that would be beyond the ability of many employers to pay out of their own pockets. In return, workers give up the right to sue their employers for damages arising from covered incidents. This also helps protect workers, because if they had to resort to lawsuits, the courts could take months or years to resolve claims – and meanwhile the worker may have nothing to live on.

Most state laws require employers to carry workers compensation insurance.

Disability insurance, on the other hand, is designed to protect the insured from loss of income arising from a disability from any covered cause, except for exclusions for disabilities arising from criminal activity or acts of war that would normally be covered by VA or military medical insurance (Tricare).

In the event of a qualifying disability, the disability policy will provide a percentage of pre-disability income, which is normally between 50 and 70 percent. (This benefit is taxable if the employer pays the premiums, and tax-free if the premiums are paid by the insured with after-tax dollars).

Why Workers Need Private Disability Coverage

According to the Council for Disability Awareness, only about 1 disability in 20 is the result of a workplace injury or work-related illness. Fully 95 percent of all disabled individuals would not be covered under workers compensation rules. They became disabled because of chronic illnesses and accidents not related to the workplace.

Common causes of disability include musculo-skeletal and nervous system diseases like muscular dystrophy, multiple sclerosis, rheumatoid arthritis, as well as things like biking and ski accidents, complications from pregnancy, schizophrenia and other mental illnesses – none of which would ordinarily be covered under workers compensation insurance.

In the absence of disability insurance coverage, the average worker has little or no protection in place to safeguard the worker or his or her family from the devastating effects of a disability that robs the worker of his or her ability to earn a living.

Furthermore, even where workers compensation insurance is in place, benefits may not be sufficient to cover wages for higher earners. Some states have cut back on wage replacement benefits available under workers compensation in order to reduce costs. Employers pay substantial sums in workers compensation premiums. Where benefits are high, premiums must also be high, and this can make it difficult for states to attract business. This creates economic and political pressure to reduce benefits and premiums. According to ProPublica, 33 states have moved to reduce workers compensation benefits to workers since 2003. This is another reason workers need private disability insurance, whether owned individually or as part of a group employee benefit plan.


The Facts About Environmental Insurance

Which of the following commercial operations uses or may produce pollutants?

  • A factory
  • An apartment building
  • A condominium building
  • A school
  • All of the above.

In fact, virtually any commercial enterprise has the capability of causing pollution. Factories use chemicals and produce hazardous waste. Schools have fuel storage for buses and chemicals in labs. Apartments and condos may produce mold and other types of bacteria. Older apartment buildings may also contain lead paint.

The potential for pollution damage is pervasive across industries and operations. Because of this, everyone in business should consider buying environmental insurance.

Environmental insurance has been around since the late 1970s and has evolved. Today, coverage is available from many insurance companies. However, choosing a policy may be daunting. Unlike with other types of commercial insurance, there are no standard environmental insurance policy forms. Consequently, there are more than 100 different products on the market today. None of them are exactly alike. The coverages provided by two policy forms may be very different.

In addition, unlicensed (or “excess line”) insurance companies provide most of this insurance. It is legal for these companies to sell insurance. In fact, most of them are part of large insurance groups with familiar names. However, state insurance departments do not regulate their policy forms. Therefore, it is important to carefully review each policy’s terms and conditions. This is the only way to determine whether it fits an organization’s needs.

There are three basic types of environmental insurance policies:

  • Environmental impairment liability, which covers pollution incidents at locations listed on the policy;
  • Contractors environmental liability, which covers pollution incidents that arise out of the policyholder’s operations;
  • Professional liability, which covers the policyholder’s accidental wrongful acts.

All environmental policies should cover the policyholder’s legal liability for:

  • Bodily injuries to others resulting from pollution incidents
  • Damage to others’ property
  • The cost of cleaning up escaped pollutants
  • The cost of legal defenses.

Some policies may also cover:

  • The costs of damage to the policyholder’s reputation;
  • Losses resulting from fungi and bacteria;
  • Lost rents;
  • Loss of income from having to temporarily shut down; and
  • Extra expenses incurred to keep from having to shut down.

Depending on the nature of the business, there are some important things environmental insurance buyers should watch for:

  • Make sure the policy is the right fit. A policy designed for a manufacturer will not provide the coverage a hotel needs.
  • Contractors should verify that the coverage applies to their completed operations.
  • Make sure that the policy fills in the coverage gaps left by commercial general liability and property insurance.
  • Ensure that it covers losses caused by fungi and bacteria.
  • Make sure that it covers any contamination that the business may accidentally cause. Pollutants come in more forms than just hazardous waste.

Environmental insurance is complicated. Organizations should seek out insurance agents who have expertise in this area. The time it takes to review the coverages and options is well spent.

Every organization has some vulnerability to contamination losses. The costs of these incidents can be catastrophic. With the proper insurance, they do not have to be.

Cyber Crimes: Now and in the Future

Cybercrime has grown into a massive expense for businesses and organizations around the world. According to a recent report by Allianz Global Corporate & Specialty, it costs the global economy an estimated $445 billion annually. It costs the world’s four largest economies – the US, China, Japan and Germany – more than $200 billion. And the cost is expected to grow.

Because businesses are increasingly interconnected across the globe and cybercrime has become highly profitable, the frequency and severity of attacks has grown rapidly. To combat this, Asian and European governments are following the lead of the US in implementing strict data protection laws. Proposed laws call for harsh fines for data breaches.

An increasing concern is business interruptions resulting from data breaches. In the spring of 2015, hackers took down a French TV station and grounded 10 Polish airliners. Theft of intellectual property and “cyber-extortion,” combined with business interruption, may prove more costly than the breaches themselves.

In addition, industrial control systems, many of which were designed before cybercrime emerged as a serious threat, are vulnerable to attacks. Fires or explosions at utilities or shutdowns of assembly lines could result.

How can businesses fight this? The Allianz report offers several tips:

  •  Make cyber security a priority for everyone in the organization.
  •  Identify key assets and vulnerable points.
  •  Implement, test and refine plans for responding to data breaches. Speedy responses and the use of outside experts can reduce the cost of a breach.
  •  Decide which cyber risks to accept; avoid; control through loss prevention and reduction; and transfer to third parties.

Transferring risk likely means buying cyber insurance policies. Traditional liability and property insurance policies often do not cover cyber losses. Organizations will need separate policies from insurers with expertise in this area. Many of the policy forms are new and have yet to be tested in court. The products will evolve as those tests occur.

Lack of knowledge is a challenge. Many businesses do not understand either their own exposures or the available insurance products. Also, insurers face a shortage of knowledgable underwriters.

Despite this, Allianz predicts that the worldwide cyber insurance market will grow from $2 billion in 2015 to more than $20 billion in 2025. Much of that growth will be driven by demand for business interruption coverage. While businesses are focused on their internal controls now, their interconnection with partners will lead them to pay more attention to protecting supply chains. Allianz also expects a catastrophic cyber loss to eventually occur, possibly large enough to destroy a major corporation.

Several trends point to greater risks in the future. Some experts think there will be one trillion connected devices by 2020. Aging hardware, lacking modern safeguards, will become inviting attack targets. Criminals will go after weak points in supply chain connections. The “Internet of Things” will present new access points. Hackers have already infiltrated household appliances and used them for spam attacks. Increased reliance on cloud computing may make data more vulnerable.

Cybercrime will remain a large and growing threat to all organizations for the foreseeable future. How they respond to that threat may well determine their futures. If you would like to discuss your Cyber protection, please contact ACBI at 203-259-7580 or visit our website.