PCORI Fees Due to IRS No Later Than July 31
Fees to fund the Patient-Centered Outcomes Research Institute (PCORI) are due to the IRS no later than July 31, 2017 from employers who sponsor certain self-insured health plans, including health reimbursement arrangements (HRAs) that are not treated as excepted benefits.
How to Pay PCORI Fees
Employers that sponsor certain self-insured health plans must report and pay the required PCORI fees via IRS Form 720, Quarterly Federal Excise Tax Return. For plan years ending between January 1, 2016 and September 30, 2016, the fee for an employer sponsoring an applicable self-insured plan is $2.17 multiplied by the average number of lives covered under the plan. For plan years ending between October 1, 2016 and December 31, 2016, the fee is $2.26 multiplied by the average number of lives covered under the plan.
For more information on PCORI fees, visit our PCORI Fees for Self-Insured Plans section.
2018 Health Savings Account Limits Released
The IRS has announced the 2018 inflation-adjusted amounts for Health Savings Accounts (HSAs).
Annual Contribution Limitation
For calendar year 2018, the annual limitation on HSA deductions for an individual with self-only coverage under a high deductible health plan is $3,450 (up from $3,400 for 2017). The annual limitation on HSA deductions for an individual with family coverage under a high deductible health plan is $6,900 (up from $6,750 for 2017).
High Deductible Health Plan Amounts
For calendar year 2018, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) that do not exceed $6,650 for self-only coverage or $13,300 for family coverage.
Click here to read the IRS announcement on these amounts.
Be sure to check out our Health Savings Accounts section for more on HSAs.
New OSHA Training Requirements Now Effective
Under the U.S. Occupational Safety and Health Administration’s (OSHA) recent General Industry Walking-Working Surfaces and Fall Protection Standards final rule, employers are now required to ensure that workers who use personal fall protection and equipment are trained about fall and equipment hazards, including fall protection systems.
New Training Requirements
Under the recent final rule, employers whose employees use personal fall protection equipment and work in other specified high hazard situations must provide employee training as to fall hazards, including fall protection systems. Specifically, employees must be trained by a qualified person and must be trained in at least the following topics:
- The nature of fall hazards in the work area and how to recognize them;
- The procedures to be followed to minimize those hazards;
- The correct procedures for installing, inspecting, operating, maintaining, and disassembling the personal fall protection systems that the employee uses; and
- The correct use of personal fall protection systems including, but not limited to, proper hook-up, anchoring, and tie-off techniques.
In addition, the final rule requires employers to train each employee on equipment hazards. This required training includes training as to the proper care, inspection, storage, and use of certain equipment (including, but not limited to, dockboards and rope descent systems) before an employee uses the equipment.
Both the fall and equipment hazard trainings must be presented to each employee in a manner that the employee understands. In addition, employers must retrain an employee when the employer has reason to believe the employee does not have the understanding and skill required by the initial training.
For additional information on the final rule and its training requirements, please click here.
To read more about worker safety and health, please visit our Safety & Wellness section.
IRS Offers Tips on Preparing for Natural Disasters
With hurricane season approaching, the IRS is offering advice to those impacted by storms and other natural disasters. The following tips may help businesses prepare for such events:
- Use electronic records. Businesses may have access to bank and other financial statements online. If so, their statements are already securely stored there. Businesses can also keep an additional set of records electronically by scanning tax records and insurance policies onto an electronic format. Businesses may also want to download important records to an external hard drive or USB flash drive.
- Document valuables. Take time- and date-stamped photos or videos of the contents of your business. These visual records can help prove the value of lost items, which can help with insurance claims or casualty loss deductions on a tax return. Businesses should store these records in a safe place.
- Contact the IRS for help. Businesses that fall victim to a disaster may call the IRS disaster hotline at 866-562-5227 for special help with disaster-related tax issues.
- Get copies of prior year tax records. If a business needs a copy of its tax return, it should file IRS Form 4506, Request for Copy of Tax Return. While the usual fee per copy is $50, the IRS is expected to waive this fee if a business is a victim of a federally declared disaster. For information that shows most line items from a tax return, call 1-800-908-9946 to request a free transcript. Alternatively, businesses may file IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, or IRS Form 4506-T, Request for Transcript of Tax Return.
The IRS offers many resources to help employers plan for and recover from disasters, including IRS Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook, and web pages devoted to preparing for a disaster and tax relief in disaster situations.
Visit our Planning for Workplace Emergencies section for more on how to protect your business from natural disasters.
Tips for Hiring New Graduates
At colleges all across the country, the Class of 2017 is graduating. Thinking of staffing up your business by hiring a new college graduate? Learn some tips on how to prepare these hires for your workplace by watching the video below.
For more hiring best practices, visit our Recruitment & Hiring section.
Cybersecurity And Identity Theft Coverage: The State of the Industry
Insurers Report Cyber Insurance Data To NAIC
Annual information about the U.S. cyber insurance market has been hard to come by until now, but new reporting requirements developed by the National Association of Insurance Commissioners (NAIC) now enable insurers to better track cyber insurance policies issued in the marketplace.
This preliminary analysis of the data, as reported on the Cybersecurity and Identity Theft Coverage Supplement for insurer financial statements, gives us an understanding of the size and shape of a rapidly growing market.
For the year ended December 31, 2015, direct written premiums in the U.S. cyber insurance market totaled $1.2 billion, based on data reported to the NAIC as of April 25, 2016, and sourced from S&P Global Market Intelligence.
Two types of coverage are included in the supplement: cybersecurity and identity theft, so totals are for the combined market. Cyber policies generally cover commercial risks. Identity theft is a personal lines coverage that addresses the risk that an individual’s identity is stolen.
The data was gathered from U.S. property/casualty insurers writing cyber liability coverage nationwide only. Since a significant amount of cybersecurity insurance is written via Lloyd’s and other international insurance markets, it is likely that actual U.S. premiums are considerably higher than $1.2 billion.
Both stand-alone coverage and packaged policies are included in the data request. Packaged policies are cybersecurity and ID theft policies that may be included as part of a commercial multi-peril package; stand-alone policies offer specialized cyber risk coverage that is tailored to the individual needs of a company.
The types of losses and liabilities that cyber risk policies may cover include: damage to, and/or destruction of, valuable information assets due to viruses, malicious code; expenses and legal liability resulting from a data breach including defense costs, settlements and judgments; regulatory investigations, fines and penalties; business interruption resulting from an attack that disables company operations; losses arising from an extortion threat against a company’s network; and expenses incurred as a result of an identity theft, such as providing access to identity theft call centers.
Cyber Insurance Market: 2015
Of the total $1.2 billion in direct written premiums in the U.S. cyber market (cybersecurity and ID theft) in 2015, packaged policies accounted for $733.3 million, or 59 percent, making up slightly more of the combined market. Stand-alone coverage accounted for $501.9 million, or 41 percent.
The total number of policies in force in the U.S. cyber insurance market amounted to 18.5 million in 2015.
Packaged policies made up the majority of total combined policies in force, accounting for 97 percent (almost 18 million policies), while just 3 percent (561,182) were stand-alone policies.
If the U.S. cybersecurity business being written via international markets were included in this data, the number of stand-alone policies for cyber risks would probably account for a greater proportion of the overall market.
By type of coverage, cybersecurity insurance accounted for 81 percent of the combined cyber/ID theft market with $995.8 million in direct premiums written in 2015. Packaged cybersecurity policies accounted for $515.1 million, or 42 percent, of the combined market, while standalone cybersecurity policies accounted for $480.7 million, or 39 percent.
In contrast, ID theft accounted for 19 percent of the combined market, with $239.4 million in direct premiums written in 2015. Packaged ID theft policies accounted for $218.2 million in direct premiums written in 2015, or 17 percent of the combined market, while standalone ID theft policies accounted for $21.2 million, or 2 percent.
However, by far the majority of combined policies in force were ID theft coverage, reflecting the greater volume of policies issued in this line of business.
Some 17 million ID theft policies were in force in 2015, accounting for 92 percent of the combined market, while the number of in-force cybersecurity policies totaled 1.5 million, making up just 8 percent of the market.
While cybersecurity business accounts for a small slice of the combined market based on the number of in-force policies, it represents four times the value of the ID theft market ($995.8 million vs. $239.4 million) by direct premiums written in 2015.
This is a reflection of the higher values at stake in cybersecurity insurance policies, which are more frequently purchased by medium- to large-sized corporations with cyber risk needs that require tailored solutions. By contrast, ID theft is a high volume, small premium business.
Both lines seem likely to grow as the world becomes more interconnected via the Internet.
Filing a Business Insurance Claim
- It’s tough to face a situation that sets back your business. Imagine if:
- An electrical fire damages your offices, equipment or inventory—and temporarily shuts down your business.
- A burglary results in stolen merchandise or specialized equipment.
A customer is injured on your business property.
- You are denied access to your property due to a hurricane, wildfire, flood or other catastrophe.
Fortunately, if you’re adequately insured, you can recover from these events and keep your business operating. Once you’ve responded to any immediate onsite emergency, follow the steps below to file your claim so you can get your business back on track quickly.
Contact Your Insurance Professional and Insurer as Soon as Possible—Your insurer or insurance professional will provide assistance with responding to your loss and filing your claim. If damage is extensive, your insurer may send an adjuster to inspect the property.
Contact the Police if Necessary—If your business loss is due to a crime, you’ll want to contact the police and obtain a copy of the police report.
Review Your Insurance Policy—Your policy may specify steps that you need to take when an insurable loss occurs.
Prepare an Inventory—To substantiate your loss, prepare an inventory of damaged or destroyed items and give a copy to your insurance company and/or adjuster along with copies of any receipts.
Provide Proof of Loss—You’ll be asked to send a signed, sworn proof of loss containing the information requested to investigate the claim. This must be done within 60 days after the initial insurer request.
Be Ready for the Adjuster—If your insurer sends an adjuster, be prepared to have him or her inspect the property and examine books and records.
Document Damage to Your Property—Identify damage to your building and other structures and make a list of everything you want to show the adjuster, for example, cracks in the walls or missing roof tiles. You may want to consider taking photos or video of the damage.
Make Temporary Repairs if Needed—Take reasonable steps to protect your property from further damage—provided the area is safe to access. For instance, if your roof is damaged, placing a tarp over the exposed area will provide a short-term patch to prevent further wind or water losses. If immediate repairs to equipment are necessary, save the damaged parts in case the claims adjuster is interested in examining them. Save receipts for what you spend so you can submit them to your insurance company for reimbursement—and remember that payments for temporary repairs are part of the total settlement.
Get at Least Two Bids for Repairs—Repairs or replacements should be bid competitively in order to provide options and hold down costs.
Stay Organized—Keep copies of all the documents you submit to your insurance company, as well as any paperwork your insurance company provides you. And record the names and phone numbers of everyone you are in contact with during the claims filing process.
Additional Steps for Business Income and Extra Expense Claims
If your business is forced to close temporarily or relocate, you will want to file a business income and extra expense claim, if you carry this type of coverage. To receive a business income settlement, you must be able to show your business’s net income and continuing normal operating expenses incurred, including payroll, both before and after the event that disrupted your business. Your insurer may also look at your financial records over several years to determine income. In addition to locating and organizing records from before the event, keep detailed records of:
- Ongoing business activity and transactions, if any, while you recover from the event.
- Expenses associated with operating in a temporary location.
- Ongoing expenses that you must pay even if your business is closed, such as utility or advertising costs.
Filing Civil Authority Claims
If government action—e.g., closure of an area for inspection following a hurricane—prevents you from accessing your company’s premises and running your business, you can receive insurance reimbursement for expenses and lost business income, provided you have appropriate coverage. Your Business Owners Policy (BOP) or Commercial Package Policy (CPP) may include coverage for this type of business interruption.
Civil authority coverage for business income usually begins 72 hours after government action first prohibits access to your premises; this coverage then lasts for up to four weeks. Coverage for related expenses will start immediately when civil action is taken and generally lasts up to four weeks.
Civil authority coverage is triggered only if all of the following elements are met:
- Government authority prohibits access to the insured property.
- The prohibition is issued as a result of physical loss or damage caused to property within a one-mile radius of the insured property.
- The time element deductible (“waiting period”) is met.
Troubleshooting an Inadequate Settlement
If you’re unhappy with the handling of your claim or the amount of the settlement, take the following steps to try to win an adjustment:
- Talk to your insurance professional or claims manager to explain your point of view.
- Contact the claims manager at your insurance company and share your story and why you think you deserve a larger settlement. Provide a written explanation of your problem with copies of supporting documentation.
Contact your state department of insurance about your problem.
Eight Auto Insurance Myths
When purchasing car insurance, it’s important to understand the factors that affect your car insurance premium rates and coverage. But how do you differentiate between truth and fiction? A good place to start is by puncturing some common myths about auto insurance:
Myth 1 – Color determines the price of auto insurance
“Arrest-Me Red”? “Hide-in-Plain-Sight-White”? It doesn’t matter. What does matter is the type of car you select. What you pay for insurance is based on make, model, body type, engine size, the age of the vehicle and the age, driving record and credit history of the driver. Premiums are also based, in part, on the car’s sticker price, the cost to repair it, its overall safety record, and the likelihood of theft. For more: What Determines the Price of My Auto Insurance?
Myth 2 – It costs more to insure your car when you get older
Quite the opposite—many drivers over 55 years of age can, in fact, qualify for a reduction in auto insurance rates if they successfully complete an accident prevention course (available through local and state agencies as well as through the AAA and AARP). Insurance companies will usually provide up to a 10 percent discount on car insurance, but check with your provider before you sign on. If you are retired or are not employed full time—therefore driving less—you may also be eligible for a discount of up to 5 percent off your car insurance. Age requirements for this type of discount vary by state and insurance carrier.
Myth 3 – Your credit has no effect on your insurance rate
Your credit-based insurance score does matter. Why? An insurance score is a measure of how well you manage your financial affairs, not your financial assets. Many insurance companies take your insurance score into consideration when you want to purchase, change or renew your auto insurance coverage. Because the majority of people have good credit, and insurance scores are derived from a person’s credit history, most people end up paying less for insurance when insurance scores are factored into the pricing equation.
Myth 4 –Your insurance will cover you if your car is stolen, vandalized or damaged by falling tree limbs, hail, flood or fire
Here’s where you’re in control—by opting for comprehensive and collision coverage along with your standard liability policy. Lenders frequently require drivers to buy comprehensive and collision coverage as a condition of a car loan agreement. If a car is worth less than $1,000 or less than 10 times the insurance premium, purchasing the optional coverages may not be cost effective. But bear in mind that you need to purchase both collision and comprehensive coverage in order to fully protect your vehicle from all types of damage.
Myth 5 –You only need the minimum amount of auto liability insurance required by law
Almost every state requires you to buy a minimum amount of auto liability coverage. Chances are that you will need more liability insurance than the state requires because accidents often cost more than the minimum limits. Buying only the minimum amount of liability means you are likely to pay more out-of-pocket for losses incurred after an accident—and those costs may be steep. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.
Myth 6 – If other people drive your car, their auto insurance will cover them in the event of an accident
In most states, the auto insurance policy covering the vehicle is considered the primary insurance, which means that the owner’s insurance company must pay for damages caused by an accident, regardless of who is driving. Policies and laws differ by state, so make sure you understand the rules before allowing another person to drive your car.
Myth 7 –Soldiers pay more for insurance than civilians
If you are in the military—regardless of which branch—you actually qualify for a discount on auto insurance. In some situations, you might be able to have your commanding officer make a phone call on your behalf, but for most auto insurance companies, you will need to supply documentation that lists your name, rank and the time that you will be enlisted in the service. This allows insurance companies to determine how long you will be eligible to receive a military discount. Shop around to find auto insurance companies that provide discounts for former members of the military as well as their families.
Myth 8 –Personal auto insurance covers both personal and business use of your car
If you are self-employed and use your vehicle for business purposes, personal auto insurance may not protect you. While commercial auto insurance can be more costly than a personal policy, one of the best ways to keep your auto rates down in any situation is by having a good driving record. If there are others, such as employees, using your car check regularly to make sure they also have good driving records.
Remodeling Your Home
If you plan to remodel your home, make sure that the house, the contractor and the subcontractors have adequate insurance coverage.
Don’t make the mistake of waiting until an addition or extra room is completed to increase the insurance coverage on the structure of your home. If the new addition is destroyed or damaged before insurance coverage has been increased, you may be responsible for the cost of repairing or rebuilding the addition.
Contact your insurance agent or representative before—or shortly after—construction begins in order to increase the insurance coverage on your house to an amount that reflects the higher value of the rebuilt structure.
When hiring a general contractor, find out if the contractor has workers compensation and ask to see a copy of the policy. Workers compensation pays for medical and rehabilitation expenses and covers lost wages if the workers sustain injuries on the job. Injured workers may sue you if the contractor does not have proper insurance.
In most home improvement projects, the contractor subcontracts the builders, electricians and plumbers. The workers hired may not be full-time employees of the contractor and therefore not covered under the contractor’s workers compensation policy. While some independent builders, electricians and plumbers may carry their own workers compensation coverage, others may not.
You should verify the insurance coverage of the contractor and the subcontractors. If the coverage is insufficient, you may need to fill in the gaps by extending the limits of the liability portion of your homeowners policy.
If you purchase additional items, such as furniture, exercise equipment or electronics, you may need to increase the amount of insurance you have on your personal possessions. Keep receipts and add them to your home inventory.
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