Insurance Programs – Page 5 – Setnor Byer Insurance & Risk

Department of Health Issues Final HIPAA and HITECH Act Rules

On January 25, 2013, the Department of Health and Human Services (HHS) published its omnibus Final Rule regarding the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH) and the Genetic Information Nondiscrimination Act (GINA).

According to HHS, the Final Rule “greatly enhances a patient’s privacy protections, provides individuals new rights to their health information, and strengthens the government’s ability to enforce the law.” Here is a brief summary of some of the Final Rule’s provisions.

Breach Notification Standard

Previously, an incident involving the impermissible use or disclosure of protected health information (PHI) was generally not considered a breach unless an internal risk assessment revealed a significant risk of harm to those whose information was compromised. Under the Final Rule, an impermissible use or disclosure of PHI is presumed to be a breach unless an internal risk assessment demonstrates that there is a low probability that the PHI has been compromised.

Although the Final Rule keeps the risk assessment requirement, it is more structured and objective than before. It requires a covered entity to consider:

The nature and extent of the PHI involved, including the types of identifiers and the likelihood of re-identification;
The unauthorized person who used the PHI or to whom the disclosure was made;
Whether the PHI was actually acquired or viewed; and
The extent to which the risk to the PHI has been mitigated.

Modifications to HIPAA Required by the HITECH Act

The Final Rule implements previous proposed and interim rules regarding HIPAA modifications required by the HITECH Act. These modifications:

Make business associates of covered entities directly liable for compliance with various requirements of HIPAA’s Privacy and Security Rules.
Strengthen the limitations on the use and disclosure of PHI for marketing and fundraising purposes, and prohibit the sale of PHI without individual authorization.
Expand individuals’ rights to receive electronic copies of their health information and to restrict disclosures to a health plan concerning treatment for which the individual has paid out of pocket in full.
Require modifications to, and redistribution of, a covered entity’s notice of privacy practices.
Modify the individual authorization and other requirements to facilitate research and disclosure of child immunization proof to schools, and to enable access to decedent information by family members or others.
Adopt additional HITECH Act enhancements to HIPAA’s Enforcement Rule that were not previously implemented, such as the provisions addressing enforcement of noncompliance with HIPAA due to willful neglect.

Genetic Information

The Final Rule modifies the HIPAA Privacy Rule as required by GINA to prohibit health plans, but not long-term care policies, from using or disclosing genetic information for underwriting purposes. It also clarifies that “health information” includes genetic information.

The effective date of the Final Rule is March 26, 2013, and the compliance date for covered entities and business associates is September 23, 2013. Since much of the Final Rule merely implements previously issued non-final rules, many covered entities and business associates should find that they are already in compliance.

Covered entities and business associates should consider insuring against the substantial costs associated with a security breach. Various insurance products protect against privacy injuries resulting from security breaches, such as identity theft. Insurance may also help cover the significant cost of complying with applicable breach notification laws like those discussed above. Given the variety and complexity of these products, an experienced insurance agent should be consulted to ensure that proper coverage is obtained and that no gaps remain.

If you would like to learn more about insuring against data security breaches, contact us.

Additionally, clients of Setnor Byer Insurance & Risk enjoy access to various risk management services such as our affiliate’s HIPAA Standards Training which has been approved by the HR Certification Institute as well as the Florida Bar.

If you’d like to subscribe to our weekly newsletters please click here.

Affordable Care Act Notice Requirement Delayed

To help individuals understand their health insurance options under the Affordable Care Act (Act), employers are required to give employees written notice about Affordable Insurance Exchanges. The Act’s March 1, 2013 deadline for employers to start giving this notice to all employees was recently pushed back by the Department of Labor (DOL).

Under the Act, the DOL is required to define the scope of the notice requirement and provide guidance on how the requirement can be satisfied by issuing regulations. Unfortunately, these regulations aren’t finished yet, and the DOL has taken the position that employers should not be required to comply with the Act’ notice requirement until the regulations are done.

According to the DOL, “the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.”

So what is the reason for the delay? According to the DOL, efforts need to be coordinated with the Department of Health and Human Services and the Internal Revenue Service. The DOL is considering the possibility of including model, generic language in the regulations that could be used to satisfy the notice requirement and also allowing employers to satisfy the notice requirement by providing employees with an employer coverage template. Regardless of their final form, the DOL expects the regulations to provide employers with flexibility and adequate time to comply.

Until the Act’s notice requirement becomes effective, Setnor Byer Insurance & Risk can be your source of information about health insurance. Be sure to check back with us periodically for future updates. In the meantime, if you have specific questions about your health insurance or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, please contact us.

Insurance Agent Experiences the Need of Insurance Firsthand

One of the most common phrases you’ll hear from an insurance agent is don’t wait until it happens to you to get coverage.

On Sunday, February 3rd our very own agent, Pamela Malfavon, noticed smoke coming from the balcony below her 6th floor apartment at Midtown 24. When she looked down and saw that there was a fire, she immediately called 911 to report it. Afterward, she went downstairs to alert a Midtown 24 employee that there was a fire in the building.

The fire was put out before causing any severe damage, and fire fighters speculated that it may have been caused by a cigarette or a candle. Even more of a mystery to all tenants is who will pay for the damage to the building and is the property that was lost in the fire covered?

The damage to the exterior of the building would be covered by Midtown 24’s Property Insurance. However, this policy does not cover any damage to an individual’s property. That would have to be covered under a tenant’s insurance policy IF they opted-in for coverage.

Most apartment complexes require their tenants to purchase renter’s insurance to protect the landlord against injuries to visitors and guests. Additionally, these policies will reimburse the landlord for damages sustained to the interior structure of the tenant’s unit. Let’s hope Midtown 24 secured appropriate proof of insurance for the tenant on the 4th floor!

This still leaves the question of the property lost in the fire. Many tenants overlook or minimize the value of their personal belongings, such as furniture and electronics, and decline the option to protect their contents. These belongings, if insured, will be protected against:

Water Damage
Fire Damage
Vandalism or Theft
Falling Objects
And many more

If you’d like to subscribe to our weekly newsletters please click here.

Finding Safe Harbor from the Employer Mandate

Under the Affordable Care Act’s Employer Shared Responsibility provisions, “large” employers with at least 50 full-time equivalent employees may be subject to an annual $2,000 or $3,000 penalty (tax) per qualifying employee. An employer may avoid the penalty by offering health coverage to at least 95% of its full-time employees (and dependents) under an “affordable” plan that provides “minimum value.”

A plan will generally satisfy the “minimum value” requirement if it covers at least 60% of health care costs. To be considered “affordable,” the employee’s required contribution for employee-only coverage cannot be more than 9.5% of the employee’s household income for the taxable year.

In the context of determining whether a plan satisfies the affordability requirement, the Internal Revenue Service recognized the likely inability of employers to ascertain the household income for each of its employees. As a result, the proposed regulations recently published by the IRS allow employers to take advantage of three safe harbor provisions.

Form W-2 Safe Harbor

Application of the Form W-2 Safe Harbor, which is determined after the calendar year on an employee-by-employee basis, takes into account the employee’s Form W-2 wages and the employee contribution.

An employer will not be assessed a penalty for an employee if the required annual contribution for the employer’s cheapest employee-only coverage plan is not more than 9.5% of that employee’s Form W-2 wages from the employer. If an employee is not offered coverage for an entire calendar year, the Form W-2 wages can be adjusted to reflect the period for which coverage was offered.

To avoid manipulation, the proposed regulations provide that the employee’s required contribution must remain consistent during the calendar year and that an employer cannot make discretionary adjustments to the required employee contribution for a pay period.

Rate of Pay Safe Harbor

Under the Rate of Pay Safe Harbor, an employer:

takes the rate of pay for each hourly employee who is eligible for coverage under the plan as of the beginning of the plan year; and
multiplies that rate by 130 hours (the benchmark for monthly full-time status) to compute the employee’s monthly wages.

If the employee’s monthly contribution amount for the cheapest employee-only coverage plan is not more than 9.5 percent of the computed monthly wages, then the coverage is considered affordable. For salaried employees, the monthly salary would be used to determine affordability.

The Rate of Pay Safe Harbor allows employers to prospectively determine affordability without having to analyze every employee’s wages and hours. However, it may only be used for those employees who did not have their hourly wages or monthly salaries reduced by the employer during the year.

Federal Poverty Line Safe Harbor

Under the Federal Poverty Line (FPL) Safe Harbor, coverage is considered affordable if the employee’s cost for the cheapest employee-only coverage plan is not more than 9.5% of the FPL for a single individual. Under the regulations, employers may use the most recently published poverty guidelines for the first day of the plan year.

These safe harbors are optional. Large employers may use one or more of these for all employees or for any reasonable category of employees, provided they are used uniformly and consistently for all employees in a category.

The IRS will be accepting comments on these proposed regulations until March 18, 2013.

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

If you’d like to subscribe to our weekly newsletters please click here.

IRS Softens Affordable Care Act’s Penalty Provision

On January 2, 2013, the Internal Revenue Service published proposed regulations regarding one of the Affordable Care Act’s more controversial provisions–the Employer Shared Responsibility (penalty) provision. Under this provision, an employer may face an annual $2,000 or $3,000 penalty (tax) per qualifying employee depending on whether health coverage is offered to full-time employees.

Starting in 2014, a “large employer” may be subject to the Employer Shared Responsibility provision if:

the employer does not offer health coverage to at least 95% of its full-time employees, and at least one of the full-time employees receives a premium tax credit for purchasing individual coverage on an Affordable Insurance Exchange, or
the employer offers health coverage to at least 95% of its full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on an Exchange.

A full-time employ will typically be entitled to a premium tax credit if the employer did not offer coverage to that employee or if the employer’s coverage was either unaffordable to the employee or did not provide minimum value.

A “large employer” under the Employer Shared Responsibility provision employs:

at least 50 full-time (30 hours per week) employees, or
a combination of full-time and part-time employees that equals at least 50 full-time employees. For example, 40 full-time employees plus 20 part-time employees working15 hours per week are equivalent to 50 full-time employees.

The number of employees in a given year will be used to determine whether an employer will be considered a large employer for the next year. In other words, if an employer has 50 full-time employees in 2013, it will be considered a large employer for 2014.

Significantly, the proposed regulations give large employers a welcome margin of error. Citing the lack of flexibility or margin for error, the proposed IRS regulations provide that the penalty will not apply if large employers offer coverage to at least 95% of their full-time employees. Note that after 2014, the 95% requirement will apply to full-time employees and their dependents.

The IRS will be accepting comments on these proposed regulations until March 18, 2013.

If you’d like to subscribe to our weekly newsletters please click here.

What is “No-Fault” Auto Insurance?

No-Fault Automobile Insurance is designed to reduce the overall cost of insurance by making quick payments to individuals injured in an accident regardless of fault and by limiting the right to file lawsuits after the accident. Though relatively straightforward, the concept of No-Fault insurance is commonly misunderstood because there is a lack of uniformity among the minority of states that operate under a No-Fault system.

In its purest form, No-Fault Automobile Insurance, which is also known as Personal Injury Protection (PIP) or First-Party Benefits, allows policyholders to recover damages directly from their insurance companies even if the accident was their fault. In exchange for automatic insurance benefits, those injured in the accident cannot sue for damages under tort law.

This “pure” form of No-Fault insurance does not exist. Instead, approximately a quarter of the states adopted their own laws by adding No-Fault type provisions into their traditional insurance system.

In these states, individuals injured in an accident can typically recover damages from their own insurance company even if they were at fault, but the amount they can recover is limited by statute. The kinds of damages are generally limited to medical reimbursements, lost wages and other out-of-pocket expenses. Non-pecuniary damages, such as pain and suffering, cannot be recovered.

These states also allow lawsuits if the injuries meet a minimum threshold of severity. The minimum severity required to file a lawsuit, which can vary by state, can be expressed as a verbal threshold that defines the seriousness of the injury (“severe and permanent”) or a monetary threshold based on medical costs incurred.

Other states have their own variations of No-Fault Automobile Insurance, such as:

Add-On: Some states allow drivers to add insurance coverage allowing them to receive benefits from their own insurance company regardless of fault while preserving their right to sue in tort.
Choice: In these states, drivers may choose a No-Fault Automobile Insurance policy or a traditional policy.

With all the possible variations, including changes to existing laws, it is easy to see why No-Fault Automobile Insurance is often misunderstood. Nevertheless, when it comes to automobile insurance, it is important to know what the law requires and what the law provides.

If you would like more information about No-Fault Automobile Insurance, or if you would like to discuss your insurance needs, contact us.

For an online auto insurance quote please click here.

Health Care Reform by the Numbers

As Health Care Reform makes its way through the health insurance landscape, many employers are finding it difficult to keep up. Unfortunately, the size and complexity of the Affordable Care Act (Act) doesn’t help. Nevertheless, a general understanding of the Act’s more significant provisions can help employers adjust to past changes and prepare for future ones.

Since numbers play a big part in determining how the Act will impact a particular employer, here are some figures that employers can use to see where they fit in the big picture.

0 Number of employers explicitly required by the Act to offer employee health care coverage

50 Number of full-time equivalent employees required to trigger the Act’s tax on employers

$2,000 Annual tax large employers must pay for each full-time employee (in excess of 30) if the employer does not offer health benefits to its employees

$3,000 Annual tax that large employers must pay for each full-time employee receiving a credit for purchasing health insurance from an Exchange if the employer offers health benefits to its employees

30 Average number of hours an employee must work to be considered a full time employee for purposes of determining large employer status

$0 Annual tax that large employers must pay for each part-time employee, regardless of whether the employer offers health coverage to employees

85% Minimum percentage of premium revenue that a large group health insurance issuer must spend on health care claims and quality improvement to avoid issuing a rebate to enrollees

80% Minimum percentage of premium revenue that a small group or individual market health insurance issuer must spend on health care claims and quality improvement to avoid issuing a rebate to enrollees

200 Maximum number of full-time employees that an employer may have before the Act’s automatic enrollment requirement is triggered

9.5% Maximum percentage of employee’s household income that the employee’s self-only health plan contribution may be to qualify as affordable under the Act

60% Minimum percentage of costs that must be covered by an employer’s health plan to be considered adequate under the Act

249 Maximum number of W-2 Forms an employer may file during the previous calendar year to avoid reporting the cost of coverage under an employer-sponsored group health plan on Form W-2

35% Maximum tax credit available to eligible small employers through 2013

24 Maximum number of full-time equivalent employees an employer may have to be eligible for the Act’s small employer tax credits

$49,999 Maximum average annual wages an employer may pay to be eligible for the Act’s small employer tax credits

50% Minimum percentage of employees’ premium cost for single (not family) health care coverage an employer must pay to be eligible for the Act’s small employer tax credits

100 Maximum number of employees an employer may have to be eligible to purchase insurance through Small Business Health Options Program (SHOP) Exchanges

TBD Number of newly insured Americans

TBD Affordability of health insurance under the Act

TBD Effect of Act’s provisions on employers and employees

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

Protecting Your Business from Cyber Liability Risks

Almost every business relies on computers, networks and electronic data to support their business operations and serve their customers. What most business owners don’t realize is the substantial exposure associated with their use of electronic platforms and the data those platforms host. Today, Cyber Liability insurance is available to business owners for the exposures associated with their use of electronic platforms.

Most businesses are not aware that standard Commercial General Liability policies do not contemplate these types of claims, leaving companies with significant gaps in coverage for cyber-related perils. Any business that collects or handles confidential information, stores client data, uses email, generates revenue online, relies on the internet for transactions or uses a network to conduct its business is in need of this important coverage.

Cyber Liability insurance is designed to protect the insured against direct and indirect loss to the Company’s assets as well as third party claims of negligence. Losses can be caused by hazards such as the transmission of virus/malicious code, denial of service attacks, physical theft of a computer/device, accidental release of an insured’s confidential data and attacks by hackers. First party coverage under the Cyber Perils policy includes:

Loss of data
Loss of business income
Electronic theft
Cyber extortion
Security event costs

Third party claims of negligence can include allegations that an insured:

Permitted the unauthorized disclosure of confidential information
Failed to secure a Network against attack
Committed an act of defamation

Of particular interest to many businesses are data breach security concerns. Recent studies have shown that over 70 percent of all data security breaches are experienced by small to medium sized businesses and the cost of a breach can be staggering. The average cost for a data breach claim is over two million dollars. These damages include the cost of data reconstruction, customer/client notification and credit monitoring. This leaves small businesses most at risk because they are unlikely to have the time and resources necessary to handle a data breach security event.

Given the variety and complexity of these occurrences, an experienced insurance agent should be consulted to ensure that proper coverage is obtained and that no gaps remain. If you would like to learn more about insuring against data security breaches, contact us.

Insurance Designed for Self Storage Facilities

When considering insurance, owners and operators of self storage facilities often focus on traditional coverages despite facing risks that are unique to the self storage industry. As a result, some of the biggest risks faced by self storage facilities remain uninsured.

To avoid this problem, owners and operators should consider obtaining specialized coverages designed to protect against the risks that come with operating a self storage facility.

Sale and Disposal Liability Coverage

Sale and Disposal Liability Coverage will pay for damages caused by a self storage facility’s sale and disposal operations involving the lock-out, sale, removal or disposition of a customer’s property. Even if everything was done by the book, the defense coverage can be used to respond to frivolous lawsuits filed by tenants.

Customers’ Goods Legal Liability Coverage

Owners and operators of self storage facilities are usually blamed when a tenant’s property is damaged. Customers’ Goods Legal Liability Coverage will pay for damages to their property that occurs at the self storage facility and will cover defense costs if a lawsuit is filed.

Business Interruption Coverage

A temporary closure due to a loss does not mean that business expenses stop. Business Interruption Coverage can prevent a temporary shutdown from becoming permanent by covering reductions in net income and providing the funds needed to pay normal operating expenses. Extra expense coverage is also available to cover expenses over and above normal operating costs, such as temporary relocation costs.

Ordinance and Law Coverage

Building codes are regularly changed to improve a structure’s resistance to various risks. Ordinance and Law Coverage covers the extra expense of rebuilding to comply with updated building codes, which, in the case of older structures, can be very expensive.

Employee Dishonesty Coverage

It is estimated that employee fraud costs the average American business six percent of its total annual revenue. Employee Dishonesty Coverage, which is also known as Employee Theft Coverage, can protect a self storage facility from financial loss due to the fraudulent activities of an employee or group of employees, including crimes involving embezzlement and internal theft.

Hired and Non-Owned Automobile Coverage

Owners and operators commonly overlook automobile insurance simply because the self storage facility does not own a vehicle. But, what if the self storage facility rents a truck to pick up equipment or sends an employee on a business errand in the employee’s own car? Hired and Non-Owned Automobile Coverage applies to bodily injury or property damage arising out of the business use of a hired or non-owned automobile.

Equipment Breakdown Coverage

Equipment Breakdown Coverage a/k/a Boiler and Machinery Coverage pays the cost of repairing and replacing damaged equipment covered under the policy. Any resulting loss in business income, as well as additional costs incurred in trying to restore operations quickly, may also be covered under such a policy.

When shopping for these coverages, owners and operators of self storage facilities should consult an insurance agent with an established history of experience and expertise in the field of insuring self storage facilities. Otherwise a self storage facility may be left with costly duplicate coverage or dangerous gaps in coverage.

If you would like more information about how Setnor Byer Insurance & Risk’s Self Storage Insurance Program can help protect your facility, please contact us.

New Health Insurance Notice Requirements for Employers

Thanks to the Affordable Care Act, the Fair Labor Standards Act (FLSA) is moving beyond its traditional role as the nation’s principal wage and hour law. In addition to establishing minimum wage, overtime pay, recordkeeping and youth employment standards, the FLSA now deals with health insurance.

Under the amended FLSA, employers must notify employees that:

Affordable Insurance Exchanges exist, along with a description of the services provided by Exchanges and how to request assistance from an Exchange
If their employer’s health plan pays less than 60% of allowed costs the employee may be eligible for a premium tax credit and a cost sharing reduction if the employee purchases a qualified health plan through an Exchange
If the employee purchases a qualified health plan through the Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer

Employers must distribute this notice to every current employee by March 1, 2013. Employees hired after this date must receive their notice upon being hired.

The precise form and content of the notice, as well as acceptable means for providing the notice, are not yet certain. The law states that employers must provide notice “in accordance with regulations promulgated by the Secretary.” Presumably, these regulations will clarify what should be included in the notice and how it can be provided to employees.

Despite the current lack of regulations, it is reasonable to assume that the FLSA’s broad definition of “employer” means that most employers will need to comply with the new notice requirement. Similarly, the FLSA’s broad definition of “employee” means that every employee, regardless of status, will likely be entitled to receive this notice.

Consequently, employers need to be ready to comply with the notice requirement by March 1, 2013, especially since the penalty for violating this requirement is unknown.

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates about health care reform. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.