The Prices For Prescription Drugs Are Rising Beyond Normal Inflation Rates

In a recent study, the American Association of Retired Persons examined retail prices of prescription drugs. According to their research, prescription prices have risen about six times faster since 2006 than the rate of inflation. State chapters of AARP want to remind seniors to check with their individual state chapter to see what programs exist for prescription assistance. In many states, there are assistance programs that cover some or all of the cost of certain medications.

In a recent report from the AARP’s Public Policy Institute, the average full cost of an annual supply of just one prescription drug is over $11,000 and this is equal to about 75 percent of the average Social Security beneficiary’s income. It is easy to see why many seniors cannot afford their medications. As the prices of prescriptions continue to climb, the out-of-pocket costs and monthly insurance premiums also rise for seniors everywhere. Since the prescription-to-inflation rate shows no signs of evening out or slowing down in favor of medications, more seniors will need financial help as time passes.

Of the prescriptions analyzed in the study, 280 were generic drugs, 227 were brand-name drugs and 115 were specialty drugs. For prescription drugs that were widely used, there was an annual cost increase of almost 9 percent. However, the inflation rate was less than 2 percent. For brand-name drugs, the average yearly cost increase was almost 13 percent. The increase was about 11 percent for specialty drugs and 4 percent for generic drugs.

Researchers said that these disappointing statistics show how they can no longer rely on decreasing costs of generic drugs as a way to offset the high prices of specialty drugs and brand-name drugs. In addition to having negative implications for America’s aging population, these startling cost increases will negatively affect the entire health care system. For now, prescription drug plans from private health insurance plans, Medicare and state-sponsored programs offer some relief to seniors who are paying hefty prices for their necessary prescriptions.

State programs usually offer comprehensive coverage to state residents of a specific age group. Funds may come from a variety of sources, and the amount of coverage depends on the program and available funds. Seniors who have not learned about state-sponsored plans in their specific state of residence may discuss this option with an agent. Some plans are supplemental to an existing one while with most plans, seniors pay discounted prices when they buy generic medications. There may also be somewhat of a discount on many brand-name drugs.

Eligibility for state programs usually requires proof of income. Seniors should have documents such as bank statements, tax forms or other income statements to support an application. Limits are usually in accordance with the average annual Social Security income rate for singles and married couples. Many programs also work in accordance with Medicare Part D coverage, which provides seniors with significant discounts.

Since older adults are especially prone to suffering from the rising prices of prescription medications, it is important for anyone who is 60 or older to start exploring options for the near future. People who have limited savings and extensive health problems will need as many supplemental aids as possible. To learn more about coverage options and qualification criteria, discuss concerns with an agent.


No One is Immune: Why Your Business Needs Employee Dishonesty Insurance

A credit union employee pockets $40,000 over three months as she restocks ATM’s. The accounts receivable manager of a Georgia hair products distributor allegedly embezzles $2.5 million. A manager for a paint manufacturer creates a fictitious company that bills his employer more than $1 million for work that was never done. A Vermont man faces up to 20 years in prison for stealing computer networking gear from his employer and selling it below cost over the Internet.

When people become desperate, they may succumb to temptation and turn to crime. Retailers are hit especially hard. According to one study, U.S. retailers lose $18 billion each year to employee theft, more than they lose to shoplifting. However, retailers are not alone. One out of every five employee thefts is in the financial services industry. Half of all embezzlement losses exceed $280,000.

Most business property insurance policies cover losses resulting from some types of crime. For example, they will cover the cost of cleaning up graffiti that vandals spray paint on an exterior wall or the value of merchandise burglars steal, plus the cost of repairing the damage they did breaking into the store. However, insurance companies did not design these policies to cover money stolen from a cash register or deposits never made to a bank; in fact, the policies almost never cover employee crime. For this reason, every organization should consider buying crime insurance.

Employee dishonesty insurance, often called fidelity coverage, pays for losses due to employee theft of money, securities, and other property. It covers property the organization owns or leases, property of others in the organization’s custody, and property for which the organization has legal liability. Insurance companies can provide one amount of insurance that applies separately to each loss, regardless of how many employees were involved in the theft and regardless of whether the employer can actually identify the responsible employees. Alternatively, the policy can contain a list (known as a schedule) of either employee names or positions with a separate amount of insurance listed next to each one. The policy can cover permanent, temporary and leased employees for up to 30 days or more after they terminate employment. Some companies will extend coverage to certain non-employees who may have the opportunity to commit theft, such as equipment support technicians, consultants, and vendors.

Many policies include a “prior dishonesty” clause. This immediately cancels coverage for an individual employee if the organization discovers that the employee has committed a dishonest act, including acts other than theft and acts he committed prior to his current employment. Even relatively minor dishonest acts will eliminate coverage for that employee. Some insurance companies will amend the policy to cover certain individuals on a case-by-case basis, so the employer should work with the insurance agent and company to arrange coverage.

Insurance companies offer this coverage either as a separate policy or as part of a package policy. If it comes as part of a package, the employer should carefully review the policy to determine whether the amount of insurance provided is adequate. Package policies often come with certain insurance limits built in, and they may or may not be enough for a given situation. For example, a package policy that automatically provides $100,000 coverage may be fine for the smallest of businesses, but it would have been way too small too cover the losses described at the beginning of this article.

Employees can either make a business successful or drag it down. No organization wants to believe that its workers would steal from it, but unfortunately some of them will. To make sure that they have adequate protection, all employers should work with a professional insurance agent and purchase employee dishonesty coverage. With the right insurance, the organization and its trustworthy employees will survive a large loss caused by the untrustworthy few.


How to Identify and Prevent Health Information Theft

Almost 35 percent of Americans experienced health record breaches in 2015 through IT problems or computer hacking. Medical identity theft is still on the rise. These thieves may break into a person’s computer or email to steal personal information. However, they usually break into third-party sites to steal troves of confidential medical information. With this information, they can make medical appointments, obtain prescription refills, make insurance claims or order medical equipment without the victim knowing about it. Some people sell the information to others for misuse instead.

To make matters worse, medical information thieves can falsify medical records. They may be tested and treated for conditions that are only partially covered, and they may use up valuable benefits that come with limitations. For example, they could use the one free cancer screening that a policyholder is entitled to and needs. These fraudsters cost the United States about $320 billion every year, and that number will only rise if consumers and health companies do not make a bigger effort to protect sensitive information. Since the increasing costs are passed on to consumers in the form of higher premiums, it is important for everyone to make information protection a top priority.

Most people wonder how to find out if their information has been compromised. The Federal Trade Commission suggests using the following tips to determine if information has been compromised:

  • Receiving a bill for a service that was not performed or for medical equipment that was not received.
  • Receiving a call from a company asking for payment of a medical bill that was never incurred.
  • Seeing medical collection accounts on a credit report that are not recognized.
  • Having an insurance claim denied because of medical records showing a condition that does not exist.

If any of these signs present themselves, it is important to act quickly and report them. Identity thieves may continue using benefits for months. These are some important tips to remember about identity thieves and scams.

“Free” services may not really be free at all. When receiving offers for free services, read the fine print. In most cases, they come with costs or are just scam setups. Fraudsters usually ask for health plan identification numbers and other personal data to misuse.

Never share personal information by email or phone. If someone calls and requests this information, do not provide it or any information about a health plan. The only time when this is acceptable is when the policyholder makes a call to a verified health provider and gives personal data for necessary services.

Keep health records in a safe place. Keep all records from doctor visits in a locked file cabinet. When discarding insurance statements or old medical papers, always shred them. Never throw away anything with a plan number or personal information printed on it. Also, remove labels from prescription bottles before discarding them.

Ask for files if information may have been stolen. When information theft is suspected, ask for medical files. Every patient has the right to request these from their health providers. Check them for errors, and report any errors to the insurance company immediately.

With the constant threat of cyber attacks, keeping health information secure is a task that only grows in importance. While a great deal of the burden is on third-party health providers and insurance companies, consumers must also take steps to safeguard their information at home. Using best practices for Internet safety and storage or disposal of medical data is essential. To learn more about preventing or reporting medical identity theft, discuss concerns with an agent.

How To Pay for Doctor Services under Medicare

If you want Medicare to pay for your doctor bills – as most do – then you must enroll in Medicare Part B. You should be automatically enrolled in Part B if you are age 65 and you have applied for Social Security benefits. Premiums are normally deducted from your Social Security check.

Enrollment is voluntary – you can withdraw at any time. But if you reenroll at a later date you will have to pay higher premiums.

Participating Versus Nonparticipating Doctors

For Medicare purposes, there are three basic kinds of doctors: Participating, non-participating, and opt-out. Participating doctors are doctors who accept Medicare patients and who always take assignments. Non-participating doctors are doctors who do not always take Medicare assignments. Opt-out doctors are doctors who operate fully outside of Medicare. Each category is handled differently for Medicare Part B beneficiaries. Knowing the difference is critical if you want to ensure Medicare will pay for their services.

Participating Doctors

If you are seeing a participating doctor, you will normally need to pay a 20 percent co-insurance, but your doctor will bill Medicare for the rest. Medicare will process the claim and send the money directly to your doctor. The doctor agrees to charge you only the deductible and 20 percent co-insurance amount.

Non-participating Doctors

If you are seeing a non-participating doctor, you must normally pay the full cost of care that you receive. Your doctor must invoice Medicare, and then Medicare will reimburse you 80 percent of the charge, up to the maximum Medicare guidelines for the services received.

In some cases you may pay a limiting charge of up to 15 percent for seeing a non-participating doctor. This is on top of the 20 percent coinsurance you normally pay. So all told you could possibly be responsible for up to 35 percent of the total charge. The allowable limiting charges vary by state.

The limiting charge only applies to certain services and does not apply to certain supplies and durable medical equipment.

In some instances, you will have to submit your own paperwork in order to get Medicare to reimburse you. You can download Form CMS 1490S to start your claim process.

Note: These doctors cannot charge you for submitting a claim. If they do, you can call Medicare officials at 1-800-MEDICARE.

Opt-out Doctors 

If your doctor has opted out of Medicare entirely, it means they simply don’t accept Medicare. In these cases, you will be responsible for the entire payment. These doctors won’t be submitting any invoices to Medicaid, and they are not limited as to how much they can charge.

There are exceptions, in the case of medical emergencies.

Part B Premiums

You must pay a premium to be enrolled in Medicare Part B. For 2016, the Part B standard premium is $121.80 per month. However, you may be required to pay a higher amount if your income is higher. If you file a single tax return and your income is above $85,000 up to $107,000, or your joint income is between $170.000 and $214,000, you will have to pay $170.50 per month.

The costs increase gradually until they are capped at $389.80 per month for single individuals with incomes above $214,000, or joint incomes above $428,000.

You must also be enrolled in Part A and Part B in order to enroll in a Medicare Supplement (Medigap) insurance plan or a Medicare Advantage Plan under Part C.

What Every Parent Should Know About Teen Drivers And Car Insurance

If a teen driver does not chip in for insurance, the parents may wind up paying a large amount of money to add the teen to their policy. This is because many insurers consider anyone under the age of 25 a risk. These tips will help minimize the impact of adding a teen driver to an insurance policy.

Know the facts about accidents. According to the American Academy of Pediatrics, more than 33 percent of deaths among people between the ages of 16 and 20 resulted from auto accidents. Although this is a grim statistic, it is a good incentive to enforce the idea that teen driving is a privilege.

Set and enforce rules. Although parents cannot control the cost of insuring a teen driver, they can control how well a teen respects the privilege of driving. It is important to set some rules for teens to follow before they get behind the wheel. The following are some examples of rule topics:

  • When the teen is allowed to drive or when driving is prohibited.
  • How many friends are allowed in the vehicle at one time.
  • The number of miles allowed per week.
  • In a big city, the areas of the city to avoid.

When teens are new drivers, limit their passenger allowance to one person. Distracted driving is a major cause of auto accidents for teens. Consider drafting a contract for the teen to sign. If the teen breaks the rules, he or she loses driving privileges for a specific amount of time. Also, parents should consider installing an app that disables or limits a teen’s mobile phone capabilities while the vehicle is running.

Compare costs of adding a driver or buying a vehicle. While not all parents want to buy a vehicle for a teen driver, it may be cheaper on a long-term basis. Adding a teen driver to a policy can be very costly. In some cases, it may be easier and less expensive to buy an economy car, put the teen on that policy and choose liability coverage. Always consider options before paying a large sum to add a teen driver.

Provide detailed information for a quote. To receive an accurate insurance quote, be sure to provide complete information. The year, make and model of vehicle will affect the premium. For parents who plan to purchase a car for a teen, it is good to research economical vehicles that cost less to insure.

Ask about discounts. Some insurance companies offer different discounts. However, not all companies offer the same type of discounts or the same terms. Some companies offer discounts for taking a driver’s education course, honor roll credentials, multiple cars on a policy, additional bundled insurance products and certain vehicle safety features.

Look for coverage modifications. This should be a last resort for parents who decide not to buy their teen an older economical vehicle and are facing the cost of adding the teen to their own policy. Those who have high coverage limits may lower them, and increasing the deductible will lower the premium. Parents should not skimp on coverage. Keep in mind that a state’s minimum coverage requirements will not always cover the cost of hospital care for other drivers and passengers if the teen is responsible for an accident. For example, a coverage limit of $50,000 for bodily injury with a maximum of $25,000 per person will not be enough if four passengers are injured with bills exceeding $25,000 each for extended hospital stays. The key idea to remember is to revise coverage wisely and only if it is absolutely necessary.

Update insurance information as needed. If a teen driver is added to a policy or has a separate policy for his or her own vehicle, it is important to keep the insurance company informed. Tell the insurer about any grade or education changes that may affect premiums. Also, update age information when the teen turns 18.

With these simple tips, parents can make this confusing process easier and avoid some costly mistakes. To learn more about teen drivers and auto insurance, discuss concerns with an agent.

Directors & Officers Insurance: A Must for Businesses that have a BOD

For the last several years, stories of wrongdoing and bad judgment by corporate managers have filled the headlines. Enron, Worldcom, and Countrywide are just some of the companies that became household names because of mistakes or criminal acts their leaders committed. These stories became big news because they were exceptional; the vast majority of companies do not fail in such a spectacular fashion. However, all corporate managers have the potential to make mistakes, and some mistakes can lead to significant losses for the company, its shareholders, employees and vendors. When this happens, having the appropriate insurance coverage can make all the difference between survival or corporate and personal bankruptcy.

Most businesses carry commercial general liability insurance that covers the business’s legal liability for bodily injury, property damage, and personal and advertising injury suffered by others. However, this insurance probably will not cover claims against corporate officers for their errors in running the company. These claims often involve allegations of monetary losses, such as falling stock prices or loss of capital. While real, these losses do not meet the CGL policy’s definition of “property damage,” which is physical injury to tangible property, including resulting loss of use, or loss of use of property not physically injured. In these claims, people lose money but their property is intact. Therefore, companies that rely solely on their CGL policies will have no insurance in these cases.

Directors and officers liability insurance covers a business’s legal liability for “wrongful acts” of its directors and officers acting within their capacity for the business. A typical policy defines “wrongful act” as including errors, misstatements, misleading statements, acts, omissions, neglect, or breaches of duty actually or allegedly committed or attempted by an individual in her capacity as a director or officer of the insured business.

Directors and officers are subject to lawsuits from many sources, including the entity they work for, shareholders, employees, government entities, competitors, vendors, and other third parties such as consumer groups or groups that represent segments of the population. Leaders of all types of organizations are vulnerable, though the source of a legal claim will vary by the type of entity. Most claims against public companies come from shareholders, while employees file most of the claims against non-profit organizations and half the claims against private companies. Customers and competitors are also frequent sources of suits against private companies.

D&O insurance covers many types of claims, including:

* A lawsuit by one shareholder against the majority owners, claiming that the company lost money because the majority gave themselves excessive compensation.

* A key employee leaves one company and joins a competitor as a director. His former employer sues him and the competitor, claiming that he violated his contract and used confidential company information with his new employer.

* Shareholders sue a company and its directors and officers, claiming that they misrepresented the quality of a potential new product when they sought funding for its production.

* A shareholder sues the president of a company for failing to promptly notify shareholders of a major pending transaction and for not pursuing litigation against a partner company that did not live up to its agreement.

* A lender sues a company for allegedly failing to repay a loan.

* Members of a private company’s board of directors are sued for allegedly using their positions for personal gain.

* The government sues a company for alleged anti-trust activities.

Even though courts dismissed some of these lawsuits, the legal defense costs were still significant; D&O insurance covers these costs. Because all organizations and their leadership are vulnerable to these types of claims, they should work with professional insurance agents to identify companies that can provide the coverage they need at a reasonable cost. Businesses face many different risks today; consequently, D&O insurance is a necessity.


7 Things Today’s Retirees can Teach us about Our Own Retirement Preparation

“Experience is the best teacher,” says an old Romanian proverb, “But only a fool learns by no other.”

With that in mind, today’s crop of retirees – those older citizens who are now actually living through retirement, and in some cases paying the price of poor decision-making earlier in life – have a lot of wisdom to pass on to the rest of us.

According to a recent survey by the Transamerica Center for Retirement Studies, some aspects of the reality of retirement don’t quite match with expectations. If they could go back in time to their youth, knowing what they know now about their retirement years, what would they tell themselves? What would they tell you, even now, as you prepare for your own retirement?

Well, thanks to Transamerica’s researchers, we now have a pretty good idea.

  1. Retirement May Come Early

First, don’t count on being able to retire on your planned timeline. The strong majority of those current retirees surveyed reported that they retired sooner than expected – and only 16 percent reported that they had saved enough by that time.

For example, most retirees reported that they didn’t get to choose the date they left the work force. Six in ten reported that retirement came sooner than they had planned. But only 16 percent of them reported that they were ready to retire. The rest were forced into retirement by poor health, the need to care for an ailing family member, layoffs or other structural changes, or just sheer unhappiness with their employment and career situations.

Only 1 retiree in 100 waited until age 70 to be eligible to receive their full maximum monthly retirement income. Most had to take benefits starting at age 62 – and receive much less income as a result.

  1. Save More.

The vast majority of current retirees surveyed reported that they didn’t save enough while they were working. 61 percent of current retirees report that Social Security is their primary source of income. Furthermore, only 16 percent of those who are currently retired report that they had built enough savings to have a secure and successful retirement.

76 percent of retirees wish they had saved more on a consistent basis.

  1. Get Professional Advice.

Most retirees – 53 percent, would have liked to have received more information and advice from their employers, while 68 percent wish they knew more about investing and retirement saving.

41 percent report they should have relied more on outside experts to monitor and manage their retirement savings.

Getting professional advice is especially important because beginning at about age 55 and lasting through their 70s, Americans have to make a series of very important decisions about whether and how to tap their retirement accounts, when and how to take Social Security benefits, whether to enroll in Medicare Parts B, C, D or in Medigap insurance and the like. Some of these decisions have far-reaching and even permanent consequences. Having professional advice in your corner is critical to making sound and timely decisions.

  1. Plan on Being Retired for Decades.

On average, retirees report themselves to be in good health, and expect to live a median average of 28 years into retirement. 41 percent expect to live for 30 years or longer. Many of them plan to live to age 90. Plan accordingly.

  1. Stay Married.

When it comes to retirement income, the “marriage dividend” is huge. Married retirees report a median retirement income of $48,000 per year, while unmarried retirees report a median income of $19,000.

  1. Get out of debt.

42 percent of retirees report that their financial priority is just getting by on their newly limited incomes, while paying health care expenses is a priority for 37 percent of them. But 25 percent of them say they are prioritizing trying to get out of credit card debt, and another 21 percent report they are prioritizing paying off their mortgages. The combination is going to crimp anyone’s lifestyle on a limited retirement income.

  1. Start planning now.

Nearly half of respondents – 48 percent – report wishing they had started thinking about retirement earlier. Nobody reported they were glad they didn’t consider retirement until the last minute.

“People are living longer than at any time in history, yet the age at which we stop working has remained relatively unchanged,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Mathematically, the notion that people can work for 40 years to save enough and accrue sufficient benefits to fund a 30-year retirement does not add up. Solving this equation requires changes in how we think about aging, employment, and retirement itself. It also requires the highly coordinated efforts of employers, policymakers, nonprofits, the private sector, and individuals and families.”


Do Employees Have Free Speech Rights at Work?

The topic of free speech rights at work came to the fore recently when Colin Kaepernick, a quarterback for the San Francisco 49ers National Football League Franchise, began taking a knee for the pregame National Anthem performance in a preseason game last August. 

In the wake of Kaepernick’s actions, a number of other NFL players followed suit, and the protest spread to members of marching bands, high school players, and in at least one case, a singer sang the final lines of the Star Spangled Banner on one knee at a Sacramento Kings basketball game. 

He also got a lot of employers and employees alike wondering to what extent the First Amendment protects employees from adverse consequences from their employer if they make a protest, or engage in political speech, social criticism or any other form of protest or expression on the job. 

The short answer: In the private sector, it doesn’t. 

Private Sector Employees Have Little Protection 

The First Amendment protects us all as individuals from negative action or prosecution by government officials on the basis of speech restrictions. However, this particular amendment does not protect employees from negative actions, up to and including termination of employment, because of their exercise of free speech. 

As Oliver Wendell Holmes Jr. put it, an employee may have a constitutional right to talk politics, but he has no constitutional right to be employed. 

An employer is free to set policies prohibiting most forms of political or artistic or other potentially controversial expression by employers in the workplace or while on the clock. 

There are, however, some notable exceptions, though, which have got some employers in hot water. 


The most important exemption involves overly broad protections on speech. Federal law and many state laws prohibit employers from restricting employee free speech for the purpose of forming a labor union, for example. So a careless employer could potentially blunder into a violation of the National Labor Relations Act of 1935. Section 7 of the NLRA protects employees’ rights to discuss working conditions, wages and hours and organizing a union and/or entering into collective bargaining. 

Under the NLRA, employers cannot issue blanket restrictions prohibiting all speech that is critical of the company. Employers’ authority to extend speech restrictions to break rooms and smoke areas, where employees are frequently off duty is also somewhat attenuated under federal law. 

Some states – California, Colorado, Montana, New York and North Dakota, also expressly prohibit employers from punishing or discharging employees for legal off-duty activities not in conflict with their employment. Another nine states protect employees from being fired for off duty political expression, more narrowly construed. So before you discipline or fire an employee for an embarrassing Tweet, check the laws in place in your jurisdiction. 

Protecting yourself 

This is a rapidly evolving area of employment law, as jurisprudence works to catch up with the reality of social media. Meanwhile, however, employers must take steps to protect themselves and their company from liability arising from efforts to keep employees focused on their duties and on serving the customer. 

That’s why it’s important to have some protection in place, in the form of employment practices liability insurance. This form of insurance covers employers against claims by workers and former workers that the company has violated their legal rights. 

The number of lawsuits filed over employment rights disputes has been rising, and the average cost of simply mounting a defense can cost tens of thousands of dollars. 

Employment practices liability insurance (ELPI) can help protect you against clams arising not just from improper restriction of employee free speech, but also against such claims as unlawful discrimination, sexual harassment, wrongful discipline or termination, breach of contract, failure to employ or promote, and mismanagement of employment benefit plans and much more. 

For information on how employment practices liability insurance may help you and your business, contact your business insurance professional. 


Disability: It Can Happen to You

If you and your family rely on your continuing ability to earn an income in order to pay the bills, then disability may be the biggest threat to your financial well-being. 

According to the Council for Disability Awareness, the average 35 year old male of typical height and weight working in an office job has a one in five chance of becoming disabled during his working years for three months or more. Of those people, four in ten will face a disability that lasts for three months or more. 

For the average 35 year old female, the chances of encountering a disability are even higher: one in four. 

That’s what happened to Kristen, a 35 year old dentist in great health. Smart, educated, and physically active, Kristen was doing quite well professionally, but thought it was time to start a family. 

She chose in-vitro fertilization, but the IVF treatments caused her ovaries to become inflamed – a condition affecting between 3 and 6 percent of all women going through IVF called Ovarian Hyperstimulation Syndrome 

In the vast majority of cases, the condition resolves quickly, and with minimal medical treatment necessary.  

But Kristen was among the unfortunate and very rare cases that developed a blood clot – resulting in long-term paralysis on her left side, and confining her to a wheelchair for months. Even with decent medical coverage, her medical bills were piling up, just as she was no longer to earn a living as a dentist. 

“I was in perfect health and had my life planned out one day, and the next I was partially paralyzed and my life turned upside down,” she says. 

After spending months in rehab, she finally regained partial use of her left arm – but the financial damage was devastating. 

Another case involved Monica, a successful mid-career woman in the financial services industry. Monica was 37, in excellent health, and enjoying both her career and the rewards of motherhood until one day in 2003 when she happened to step off a porch onto a slippery patch of ground. She braced her fall, but shattered her right arm in twelve places – requiring surgery to repair. 

But the surgery wasn’t enough. As a result of the fall, she developed a condition called osteonecrosis, or “dying of the bone.” Her bones became quite fragile and started to crumble, and she was forced to use a wheelchair. She also had trouble taking care of herself and engaging in basic activities of daily living (ADLs), including bathing, eating and dressing herself.

Soon she had to hire a caretaker – a long-term care expense most major medical insurance policies don’t cover. Monica was forced to spend down her retirement savings in order to pay for the care she desperately needed. 

In both cases, these women would have benefitted from individually-owned disability insurance policies. These are policies that kick in when the insured becomes disabled and unable to work. Most disability insurance policies will replace between 50 percent and 65 percent of pre-disability income – generally enough to pay the mortgage or rent, food and take care of other basic living expenses while giving you time to recover. 

Very likely, both women would also have benefitted substantially from long-term care insurance. This coverage pays for skilled or unskilled nursing assistance and support with activities of daily living that are not covered by major medical insurance or by Medicare or Medicaid. 

“Who would have expected to become permanently disabled from a broken arm?” she says. 

Eventually, Monica was able to qualify for SSDI – a small monthly disability stipend that’s part of Social Security. But it took her two years to qualify and actually receive benefits – and by that time much of the financial damage had already been done. 

“Everyone needs to prepare for the financial impacts that come when the unexpected happens,” advises Kristen, the dentist in the first story mentioned above.


Risk Management is Vital For Your Small Business

Every organization has risks; they are unavoidable. Therefore, every organization, whether it realizes it or not, practices risk management. Those who do it well reduce their costs, particularly for insurance premiums.

The first step in risk management is to identify the organization’s loss exposures. They could be any buildings or property it owns, such as furniture or goods held for sale. They could be cars, trucks or heavy equipment used in the business. They could also be activities the organization performs, such as consulting, running a store, or paving a road. Finally, they could be products it makes or sells or its finished work.

The next step is deciding how to control the exposures. These are the options:

  • Deciding not to take on the exposure. For example, the organization may decide not to manufacture a certain product.
  • Taking on the exposure and trying to keep losses from happening. The organization decides to make the product but designs it with safety features to prevent injuries.
  • Taking steps to make losses that do happen less severe. The manufacturer designs the product to automatically shut off under certain conditions.
  • Signing a contract with someone else who agrees to take on the risk. The manufacturer requires companies that install the product to assume the liability for any resulting injuries or damages.
  • Absorbing the cost of some losses. The manufacturer decides to pay the first $5,000 of the cost of any injury the product causes.
  • Buying insurance to cover the cost of losses the organization does not want to retain. The manufacturer buys liability insurance to cover the costs of losses above $5,000.

The next step is to implement the risk management options chosen. For example, the manufacturer might design the product following industry safety standards; use lightweight materials to prevent crushing injuries; set up a toll-free phone number for end users to call for assistance; draft contracts with installers that transfer liability to them; and buy general liability and umbrella insurance policies. The last step is to monitor the risk management program’s effectiveness and make any needed changes.

Organizations that practice good risk management can realize several benefits. One of the foremost is reduced insurance premiums. An organization that actively controls its risks is very attractive to insurers. They will actively compete for its business. Also, the more losses the organization retains, the less the insurer has to pay. The insurer will lower the premium to reflect its own reduced risk. Some insurers offer dividend programs under which a business may get part of its premium back if its losses are less than a certain amount.

Beyond that, risk management creates safe workplaces that attract good workers. Safe workplaces are also less likely to be penalized by regulators for violations. They are more productive because managers do not spend as much time investigating accidents and doing associated paperwork.

In short, risk management helps an organization generate more revenue and hold down its costs. Even the smallest businesses can reap the benefits of sound risk management.