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Apr 07
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Health Care Reimbursement Accounts

By Employment Resources

Health Reimbursement Accounts (HRAs) supplement your health insurance policy. Employer funded, they reimburse you for a variety of qualified medical expenses. Understand HRAs as you maximize your health insurance coverage.

What are HRAs?

Also known as Section 105 Medical Reimbursement Plans or Health Reimbursement Arrangements, Health Reimbursement Accounts essentially work as business expense accounts. You pay for your medical care but can then receive reimbursement for qualified expenses.

An HRA is funded from your paycheck deductions. Because you pay taxes on your gross income before HRA deductions are taken, you won’t pay taxes on the HRA reimbursements you receive.

Your employer sets the HRA dollar amount. Unlike a Flexible Spending Accounts (FSA) or Health Savings Account (HSA), an HRA has no contribution limit so your employer can deposit as much or as little money into the account as they wish.

If you don’t use all the funds in your HRA, the money rolls into the next year unless your employer has designed the HRA to limit rollover. You may also be eligible for distributions after you retire if your employer’s plan allows it.

What Expenses Qualify?

A variety of health care expenses may be reimbursed with an HRA as long as the expense is not reimbursed from another source and is not itemized on your tax return. Typically, eligible expenses include:

  • Surgery
  • Diagnostic tests
  • Co-pays and deductibles
  • Out-of-pocket expenses
  • Prescriptions
  • First aid supplies
  • Medical equipment
  • Dental expenses
  • Vision expenses

Who’s Covered by an HRA?

Your personal medical expenses are covered by an HRA. Also, it may pay for the unreimbursed medical expenses incurred by your spouse, qualifying child who is under the age of 26 or dependent parent. Check your specific HRA for additional details on who is covered.

Why Use an HRA?

If your employer offers an HRA, consider taking advantage of it for several reasons.

  • Supplement a high-deductible health insurance policy. Increasingly, health insurance policies include high deductibles of up to $10,000 and may not cover dental or vision expenses. Use your HRA to cover the gaps.

 

  • Improve your health. Instead of putting off medical treatment like diagnostic testing or surgery or not taking expensive medication, use your HRA to cover those costs. The funds help you get and stay healthy.

 

  • Save money. Think of your HRA as a savings account. When you need the funds for authorized medical expenses, they’re available, and you won’t pay taxes on the distributions. Health reimbursement accounts are valuable assets that supplement your health insurance policy and stretch your budget. Ask your employer about opening an HRA today.
Apr 07
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Salary Continuation Plans

By Life and Health

Salary continuation plans offer your company an invaluable resource for attracting and retaining key employees. Whether you work in Human Resources or are a key executive, understand salary continuation plans and how they work.

What is a Salary Continuation Plan?

Companies may offer salary continuation plans to key employees or executives as a supplement to their employee benefits package. In the event that the executive retires, becomes disabled, dies or otherwise separates from the company, the plan provides a salary to the employee or designated beneficiary.

How Does a Salary Continuation Plan Work?

After a company decides to offer salary continuation plans, they negotiate with the key executive to determine a specified benefit amount. That set amount can be contributed to the plan while the executive remains employed or paid annually during retirement.

Employees who participate in a salary continuation plan pay no out-of-pocket expenses. The plan also grows tax-free. However, the employee will be taxed on any benefits they receive.

Typically, the executive receives access to the plan when he or she retires, is disabled or otherwise separates from the company. If the executive dies, a designated beneficiary may receive the plan benefits.

The salary continuation plans may feature vested scheduling based on the employee’s position, length of employment and other arrangements. For example, a director may receive 100 percent of the annual salary while junior executives receive a lower percentage or the executive may be required to remain with the company for a certain number of years to receive the full plan amount.

How are Salary Continuation Plans Funded?

Most salary continuation plans are funded with a whole life or universal life insurance policy. The company wholly funds and usually owns the policy, pays the premiums and controls the cash value of the policy, and the key executive is named as the policy’s beneficiary. A life insurance agent sets up salary continuation plans and can make adjustments as needed.

Advantages of Salary Continuation Plans

Companies and employees gain several advantages with salary continuation plans. Weigh the advantages as you decide if this coverage is a wise choice for you.

Company Advantages:

    1. Reward and retain key executives.
    1. Use vesting schedules to “tie up” key executives.
    1. Recover costs easily.
    1. Plans are flexible, easy to understand and relatively simple to implement.

Employee Advantages:

    1. Enjoy a supplemental source of retirement income in addition to your 401(k) plan benefits.
    1. Increase the value of your executive benefits package.
    1. Negotiate the benefit amount.

Salary continuation plans benefit companies and key executives. Discuss the details with your insurance agent as you take advantage of this important benefit.

Apr 07
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Elderly Need to Be Aware of Schemes and Fraud

By Life and Health

No one likes to believe that, in our society, there are predators who take advantage of individuals who are the least able to defend themselves. However, the sad truth is that across America every year, millions of seniors are hoodwinked by fraud, scams, and swindlers. These common scams can happen in the home or at the mall. They can be carried out in person, by mail, on the phone, or over the Internet.

In reviewing telemarketing fraud, the United States Congress has stated that telemarketing schemes have become a $40 billion per year “industry.” There are approximately 140,000 active telemarketing firms in the U.S., and Congress estimates that up to 10% of these might be fraudulent. Many of these fraudulent telemarketers prey on older Americans.

The American Prosecutors Research Institute indicates that senior citizens are more susceptible to telephone fraud than others because they possess more than half of all the financial assets in this country and their assets can be converted easily into large sums of cash. Secondly, older people are more likely to be at home to receive telemarketing calls. And finally, many older Americans are too polite to hang up. Amazingly, some senior citizens are subject to fraud because they are just too nice.

But there are steps you can take to protect yourself at home, on the phone, and online. On the Internet, beware of any “free” service or product. Don’t give out personal information unless you absolutely know who the provider is. Just because your friend knows them is not good enough. Furthermore, don’t use your credit card to make purchases on the Internet. No site, not even a bank site is 100% safe.

In your home, you control access and never, ever, let anyone inside whom you don’t know. If you make the decision to purchase something from a door-to-door salesperson, which is not recommended, pay by post-dated check or ask to pay upon delivery of your item. Never pay cash. And don’t use your credit card or give your credit card number. Even better, ask the salesperson to come back tomorrow after you’ve had a chance to think about it, and then investigate to confirm they are legitimate.

On the phone, get an answering machine or caller ID to screen your calls, and only pick up the receiver if it is someone you know and trust. If a salesperson gets through, don’t accept anything they claim is free; such as sweepstakes prizes, cruises, or high-yield investment returns. If it sounds too good to be true, most likely it is too good to be true. Never give your credit card, phone card, Social Security, or bank account number to anyone over the phone. In fact, it is illegal for telemarketers to ask for these numbers to verify a gift or prize.

If you feel suspicious of any person or company, trust your instincts and hang up, close the door, or turn off your computer. Call the police or the Better Business Bureau and report the questionable activity. Or contact the National Consumers League Fraud Information Center at www.fraud.org. With vigilance and good common sense, you can help yourself as well as other potential victims avoid this insidious crime.

Be safe. Be careful, and don’t become another victim.

Apr 07
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Understanding Roth IRA

By Life and Health

Saving for retirement is important for your financial future. Consider a Roth IRA because it offers five benefits.

What is a Roth IRA?

A Roth IRA allows you to contribute up to $5,500 ($6,500 for consumers over the age of 50) per year. You receive no tax benefits when you contribute, but the contributions and earnings grow tax-free.

You may withdraw funds from your Roth IRA when you turn 59-1/2 years old and the account has been opened for five years. There are no required minimum distributions. When you do withdraw money, it’s tax-free and penalty-free.

The 5 Benefits of the Roth IRA

Carefully consider five benefits of the Roth IRA as you plan your retirement strategy.

    1. Gain tax-free income during retirement.

      You will pay no taxes on your Roth IRA contributions and earnings. That’s a huge advantage, especially if you’ll be in a higher tax bracket when you begin taking distributions.

 

    1. Receive investment flexibility.

      Retirement funds such as certificates of deposit or traditional IRAs require you to wait for distributions. Your Roth IRA offers greater flexibility.

      Withdraw funds from your Roth IRA for any purpose when you turn 59-1/2. There are no required distributions or penalties. Also, you may withdraw funds sooner than 59-1/2 years of age for these purposes.

      • First-time home purchase
      • Postsecondary education expenses
      • Permanent disability
      • Unreimbursed medical expenses of over 10 percent of your adjusted gross income or 7.5 percent if you’re over 65 years old
      • Health insurance premiums during unemployment
      • Back taxes

 

    1. Contribute after age 70 1/2.

      Traditional IRAs do not allow you to make contributions after you turn 70-1/2 years old. Instead, you must take distributions and pay taxes on those distributions.

      A Roth IRA includes no age limits for contributions. As long as you continue to earn income, you can contribute to the account and watch the total and your future financial security grow.

 

  1. Assist your heirs.

    Every Roth IRA includes an account beneficiary. Select an heir or multiple heirs who then receive tax-free income. This benefit is particularly attractive if caring for heirs or leaving an inheritance is an important part of your financial plans.

  2. Gain a back-door entry as a high earner.

    There are income limits to Roth IRA contributions that inhibit high earners from opening this type of account. However, you can open a traditional IRA and then convert those funds into a Roth IRA. A tax professional helps you make this conversion.

A Roth IRA provides five key benefits. Consider them carefully as you choose the best retirement strategy for your needs.

Apr 07
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Insuring Your Prized Flatware

By Personal Perspective

When you sit down to dinner, your eating utensils probably include a fork, spoon and knife. The fork is only a few centuries old, but knives were used by Stone Age diners, and the first man-made spoons were fashioned from horns, bones and wood. Today’s silverware has come a long way from its early predecessors, and it’s a popular wedding gifts. Protect your priceless silverware with an insurance policy.

Why Purchase Silverware Insurance?

Your homeowners insurance policy covers most of your possessions. However, it may not cover silverware, including the pieces passed down from generation to generation. If your policy does cover silverware, it may limit the amount of money it pays for valuables and antiques, limit coverage to $500 or less or not cover your silverware if carry it out of your home and with you on vacation, to an appraisal or to a family gathering.

Purchase silverware insurance to protect your collection and give you peace of mind. The coverage is typically an endorsement or rider on your homeowners insurance policy and can cover your entire collection or your most valuable pieces.

What Does Silverware Insurance Cover?

Insurance cannot prevent theft, loss, fire, or weather or other physical damage, but it can give you peace of mind. Your insurance company may reimburse your for the value of your insured silverware, whether it’s new or antique.

How to Determine the Value of Your Silverware

You can easily determine the value of household items like furniture and electronics. Silverware can be trickier to valuate, though, especially if you’re not sure of its age, value or authenticity.

Contact an antique or silver dealer for an accurate appraisal of your collection. You may try to find the value online, but you’ll need a written appraisal for insurance purposes.

Once you have that appraisal, take pictures of your collection. Include the appraisal and pictures with your policy in a fireproof safe or lock box.

How to Purchase Silverware Insurance

While you may be lucky enough to own an entire collection of rare silverware, you can also insure a single item such as a valuable piece you purchased at an estate sale or a special spoon your grandmother owned. Many insurance companies suggest you insure each piece individually. That way, each piece is appraised and listed on your policy, allowing you to receive the item’s full value if you must file a claim.

Your insurance agent will assist you in understanding the coverage options and in finding the best coverage for your needs.

Silverware insurance is valuable coverage for your precious flatware. Purchase a policy today to give yourself peace of mind and protect your valuable silverware collection.

Apr 07
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Planning a Home Party? Get Covered!

By Personal Perspective

If your Super Bowl Sunday plans include throwing a party, you’d better be sure you have adequate insurance in the event of an injury claim by one of your guests. This advice stems from a new study sponsored by Trusted Choice, the independent agent’s branding campaign launched by the Alexandria, Virginia-based Independent Insurance Agents & Brokers of America.

The study was conducted by TRC, an independent research company in Fort Washington, Pennsylvania. The researchers polled 1,009 adults in a telephone survey about their plans for a social gathering. Their research revealed that of 28.5 million Americans who plan to have parties in their home, 21 million do not have a Personal Umbrella insurance policy, making them vulnerable to lawsuits, which could result in financial ruin. The remaining seven million didn’t know what coverage they currently carried.

The importance of proper coverage cannot be underestimated because in 30 states, hosts can be held legally responsible for guests who drink, drive and cause an accident. Interestingly enough, 53% of those surveyed said the host should be held responsible; however, most of those who responded in this manner have not taken any steps to protect themselves.

The researchers concluded that people don’t buy Umbrella policies because they think enough coverage is offered by their Homeowner and Auto policies. Nothing could be further from the truth. Large jury awards coupled with substantial health care costs make it commonplace for lawsuits to exceed the liability limits on the average Homeowner/Auto policy.

The researchers made the following recommendations:

  • Discuss your insurance coverage with one of our agents before hosting a party to familiarize yourself with your state’s host liability laws, and to make sure you are insured properly.
  • Limit invited guests to people you know.
  • Host the party at a restaurant or bar that has a liquor license, rather than in a home or office.
  • Be sure that you provide filling food for guests and alternative nonalcoholic beverages.
  • Schedule entertainment or activities that draw partygoers away from drinking.
  • Arrange transportation or overnight accommodations for those who should not drive.
  • Stop serving alcohol at least one hour before the party is scheduled to end.
  • Do not serve guests who are visibly intoxicated.
  • Consider hiring an off-duty police officer to monitor guests’ sobriety discreetly or handle any alcohol-related problems as guests leave.
Apr 07
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Dangers of Confined Spaces

By Risk Management Bulletin

If you revisit some of the lessons learned in basic high school science classes, you will probably remember that 78% of the air we breathe is nitrogen gas. If you think a little more, you may also recall that nitrogen is only safe to breathe when mixed with the right amount of oxygen. That simple lesson, learned so many years ago, may save your life if you frequently work in confined spaces.

Before entering any confined work space, there are several critical points you must consider. First, is the work area defined as a confined space according to OSHA? OSHA’s definition states that a confined space is any area where an employee must squeeze in or out through narrow openings and perform their tasks while cramped or contorted. Entry and exit are difficult, and employees are not to remain in the space for lengthy periods of time.

If your work space fits this description, you must also determine if it has a dangerous atmosphere or shows the potential for you to become trapped or even asphyxiated. If so, this space will be designated as a “permit space,” and will require a permit for entry. The employer who allows an employee entry must develop a written safety program for their permit-required spaces.

Your gas monitor plays a crucial part in securing your safety when you are working in a confined space. You need to be certain that you know how to properly operate the instrument and that you fully understand the procedures for confined space monitoring. Taking these steps will lessen the risks associated with this type of work significantly. Do not allow yourself to be lulled into a false sense of security because you are working in a familiar setting. If you take unnecessary risks, you may, unfortunately, only be working in the space for a short time.

Another element of safely working in a confined area is to have an attendant who will maintain contact with you while you are working. Be certain that this person is not involved with any other tasks or distractions and that they remain outside of the confined space at all times. If you will be confined in the space for an extended period of time, this person should record additional atmospheric readings to monitor the safety of the confined space. The attendant should also know exactly what the potential hazards are, and have a plan in place in case of an emergency.

If an emergency situation does arise, the attendant needs to immediately implement the rescue plan that was developed by the employer. No matter what type of rescue situation occurs, the attendant must try to maintain contact with you during the entire rescue process. They should also attempt to gather information about the incident that may be helpful to the rescuers. Their position as “point man” between you and the rescue team can make all the difference in the success of the rescue effort.

Apr 07
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Municipalities Employment Practices Liability

By Risk Management Bulletin

Municipalities, the governing body of a district or community, employ a variety of workers. Employment practices liability insurance protects those employees and the municipality, making it an essential product. If you operate or work for a municipality, learn more about municipalities employment practices liability insurance.

What is Employment Practices Liability Insurance?

Also known as EPLI, employment practices liability insurance covers numerous employees, including municipality directors, officers, management personnel and employees. It’s designed to cover legal rights violation claims employees may make against their employer, the municipality. An EPLI policy can cover claims related to:

  • Breach of employment contract
  • Defamation
  • Deprivation of career opportunity
  • Discrimination
  • Failure to employ or promote
  • Invasion of privacy
  • Mismanagement of employee benefits
  • Negligent evaluation
  • Retaliation
  • Sexual harassment in all forms
  • Wrongful discipline
  • Wrongful infliction of emotional or other distress
  • Wrongful termination

When you file an EPLI claim, the policy reimburses your municipality for the legal costs of defending the lawsuit in court. It also covers judgments and settlements whether you win or lose the case.

In most cases, an EPLI does not cover civil or criminal fines, punitive damages or liabilities covered by other insurance policies such as workers compensation. Other exclusions typically include bodily injury, property damage or intentional and dishonest acts.

Review your municipality’s EPLI policy for coverage and exclusion details. You may be able to customize your policy based on your municipality and employees’ unique needs.

How to Purchase EPLI

When purchasing municipalities EPLI, choose a reputable insurance company with an excellent customer service reputation and reviews. The company should understand your unique needs and be available when you have questions, want a consultation or need to file a claim. The right insurance and company gives you peace of mind and valuable protection.

In most cases, your municipality can purchase EPLI in several ways.

    1. Purchase it as part of your management liability package policy.
    2. Purchase it as stand-alone coverage.

Discuss your options with your insurance company to ensure all your municipality employees’ needs are met and reduce your municipality’s liability.

How Much Does EPLI Cost?

Several factors affect the cost of an EPLI policy. They include:

  • Your type of business
  • Number of employees
  • Various risk factors, including previous employment practices lawsuits

For specifics on the cost of your municipality EPLI, talk to your insurance company or agent. They can create a customize quote for your municipality, employees and needs.

Municipalities employment practices liability insurance offers valuable protection. Understand the coverage and ensure you purchase adequate coverage.

Apr 07
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“Safe Place” for Your Money?

By Risk Management Bulletin

There is an unbendable and unbreakable law of economics that states that wealth is created in one of only two ways: People working, or money working. Many have attempted to break this law, and usually the results have violated both civil and criminal laws. These days, everyone is anxious to put their money in a safe place. This “safe place” would also preferably have low risk, high returns and tax advantages as well as be ready and waiting for them when they retire.

Does such a “safe place” exist? A respected commentator in the sports world says, “Let’s take a look.” It was not too long ago that investors were looking for returns in the 5% – 12% range. Today, those return expectations are greatly diminished, even if the willingness to take on risk has begun to come back.

As of this article, the current interest rate on a 10-year United States Treasury bond is 3.24%. High-quality 10-year municipal bonds are only paying 2.99%. Ten-year corporate bonds at the highest rating level are paying 3.6%. Keep in mind that these variables can change daily as investors vote their bond holdings up or down in response to political and economic developments, both foreign and domestic.

Meanwhile, certificates of deposit, which were once considered to be the safest of all investments among the older generations, have now sunk considerably in terms of interest payouts. One-year CDs these days are paying roughly 1.5% and five-year CDs maybe 3%. Previously CD investors could expect to see interest rates as high as 4%-6% or even higher. What’s more, even to get the highest rates, investors need to park their money for a long time, as one can see in the case of the five-year CD.

So, the basic concerns have really not changed. They are, in no particular order:

  1. Principal safety
  2. Return rate
  3. Liquidity, or access to funds on short notice
  4. Flexible term, which depends on when the investor wants the money
  5. Tax-free
  6. Reliability and trustworthiness

Taking all of these factors into account, is there an investment that can satisfy all of them? Surprisingly, the answer is yes. It is an instrument known as a fixed annuity. An annuity can guarantee the safety of both the payments and the principal by contract to the policyholder, in addition to guaranteeing that the owner will not outlive his money if he chooses to annuitize the contract. Annuities, in this respect, are unique as financial instruments. Currently, credited interest paid on an annuity is not taxable until distributed. Unlike CDs, this allows the capital to grow through compound interest without any interference.

There are many annuity programs, such as equity-index annuities, that provide even more benefits like interest rates that are double-tiered, which means that the owner has a guaranteed minimum rate while also being allowed to participate in the stock market’s returns, if any. In the final analysis, annuities can offer investors a better return than most instruments today.

Although annuities have always been attractive vehicles since their introduction, in an economic climate such as this, they are even more so.

(* Interest data from the WSJ 06/18/2010). Liquidated earnings are subject to ordinary income tax, may be subject to surrender charges and, if taken prior to age 59 1⁄2, may be subject to a 10% federal income tax penalty. Guarantees and payment of lifetime income are contingent on the claims paying ability of the issuing insurance company.

Apr 07
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Handy OSHA Resources

By Risk Management Bulletin

Safety in your everyday small business operations is essential for your employees, customers and success. Understanding and maintaining safety guidelines can be challenging, though. OSHA offers numerous resources that benefit your company. Take advantage of these resources as you ensure your small business maintains safety guidelines and stays compliant with current laws at all times.

OSHA’s Cooperative Programs

Your small business must cooperate with OSHA to maintain safety and remain compliant with laws, but you may not know where to start. OSHA offers five cooperative programs that help your small business prevent workplace injuries, illnesses and fatalities. Available programs include:

  • Alliance Program
  • OSHA Strategic Partnership Program (OSPP)
  • Voluntary Protection Programs (VPP)
  • OSHA Challenge Program
  • On-site Consultation Program’s Safety and Health Achievement Recognition Program (SHARP)

All states with OSHA-approved programs offer this cooperative program option, and you can search the website to learn more about each program.

On-Site Consultation Program

Get personalized advice with a free and confidential on-site consultation. The consultant will not give penalties or citations because the purpose of the consultant’s visit is solely to:

  • Identify workplace hazards
  • Share advice on how to become compliant with OSHA guidelines
  • Implement injury and illness prevention programs

While the program prioritizes high-hazard worksites, it’s available to all small and medium-sized businesses and is completely free.

Diverse Workforce/Limited English Proficiency Coordinators

When your workforce employs Spanish speakers or a diverse workforce, you may need education, outreach and training assistance. Schedule a seminar or workshop with an OSHA Diverse Workforce/Limited English Proficiency coordinator. Every 10 OSHA regions has one coordinator who can help you train and prepare your employees effectively.

Compliance Assistance Specialists (CAS)

When you’re ready to host a seminar or workshop on safety challenges or compliance issues, contact a CAS. In states under federal jurisdiction, the OSHA area offices have a CAS on staff who will provide training resources and promote OSHA cooperative programs.

Training Institute (OTI) and Training Education Centers

Access a variety of OSHA trainings, including technical advice, seminar and workshop speakers, or audiovisual aids, through the Training Institute and Training Education Centers. This resource provides basic and advanced safety and health courses as well as small business seminars.

Penalty Reductions

Non-compliance with OSHA guidelines can result in large penalties. However, your small business’s size and number of employees may reduce the penalties. Learn more as you assess your eligibility for penalty reductions.

OSHA safety guidelines protect your employees and small business since they reduce injuries, illnesses and fatalities. OSHA guidelines can be confusing, though. Maintain compliance when you take advantage of these OSHA resources. They help your small business remain safe and successful.

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