Welcome to the latest edition of the Lovitt & Touché newsletter.
In this edition:
- Future of Certain ACA Taxes & Fees
- DHS Issues Electronic Device Ban for Certain U.S. Inbound Flights
- Antique & Classic Car Insurance
- Elimination of the Anniversary Rating Date (ARD) Rule
- Ranking Arizona Recognizes Lovitt & Touché in Three Categories, Including Prestigious ‘Best Places to Work’
Since you have purchased a classic or antique vehicle, you’ll want to insure it properly, as it is an investment.
A typical classic car insurance policy includes the following:
- Agreed value coverage: Pays for the car’s full-insured value with no depreciation in the event of a total loss, less your deductible.
- Inflation guard: To compensate for how classic cars increase in value over time, the policy increases the vehicle’s value quarterly.
- Spare parts coverage
- Flexible usage: Ability to drive the vehicle up to 2,500 or 5,000 miles annually. Not limited to “parades only.”
Additional Coverage Options
You can also purchase these additional coverage options for more specific protection:
- Emergency towing in case of a breakdown.
- Roadside assistance for items such as a flat tire, dead battery or running out of gas.
- Emergency lockout
- Lost key return
- Emergency travel expenses in case your classic vehicle breaks down while away from home.
- Car show expenses: Policy will pay for expenses associated with missing a car show due to a breakdown.
- Theft reward
- Personal effects: Policy will reimburse you for items that are vandalized or stolen when reported to police.
Live in the past while protecting your vehicle for the future! Contact Lovitt & Touché, Inc today at mailto:email@example.com to learn more about all of our insurance solutions for your automobile needs.
On March 21, 2017, the U.S. Department of Homeland Security (DHS) issued a directive that bans carrying any electronic device larger than a cellular or smartphone into an airplane cabin in U.S. inbound flights that originate from certain countries. Affected devices include laptops, tablets, e-readers, cameras, portable DVD players, electronic game units (larger than a phone), and travel printers and scanners.
The ban affects only flights from 10 international airports in Egypt, Jordan, Kuwait, Morocco, Qatar, Saudi Arabia, Turkey and the United Arab Emirates. Domestic U.S. flights and flights departing the United States are not affected.
Airlines are expected to comply with this directive by March 25, 2017. The directive will remain in force indefinitely, until the threat currently perceived by DHS diminishes.
Impact on Employers
- Employers should review their travel procedures to evaluate whether their personnel may be affected by this directive.
- Employers should ensure that affected employees are aware of the directive so they can plan ahead with respect to electronic devices (such as checking luggage).
The Electronic Device Ban
The ban requires affected passengers to check affected electronic devices with their luggage. This means that affected passengers will not be able to carry affected devices with them into the cabin or simply store them in their carry-on luggage. DHS explained that the directive was issued to prevent possible terrorists from smuggling explosive devices in various consumer items.
Please visit the DHS website or consult the corresponding FAQs for more information regarding this directive.
Several steps have been taken in 2017 toward repealing the Affordable Care Act (ACA), including the introduction of the American Health Care Act (AHCA). Although the AHCA was withdrawn by Republicans, Congress may choose to pursue another ACA repeal and replacement bill in the future.
While the future of the ACA as a whole is currently unclear, some definitive changes have been made to some ACA taxes and fees for 2017.
- Implementation of the Cadillac tax on high-cost group health coverage was delayed for two years, until 2020.
- A moratorium applies for 2017 on the health insurance providers fee and the medical device excise tax.
- The reinsurance fee expired after 2016.
Employers should be aware of the evolving applicability of existing ACA taxes and fees so that they know how the ACA affects their bottom lines. Lovitt & Touché, Inc will continue to keep you informed of changes.
A federal budget bill enacted for 2016 made the following significant changes to three ACA tax provisions:
- Delayed implementation of the ACA’s Cadillac tax for two years, until 2020;
- Imposed a one-year moratorium on the ACA’s health insurance providers fee for 2017; and
- Imposed a two-year moratorium on the ACA’s medical device excise tax for 2016 and 2017.
In addition, the ACA’s reinsurance fee expired after 2016, although the 2016 fees will be paid in 2017.
Failure of the AHCA
On March 24, 2017, Republican leadership in the U.S. House of Representatives withdrew the AHCA—their proposed legislation to repeal and replace the ACA. A House vote was scheduled to take place on that day, but House Republicans could not secure enough votes to approve the legislation and, instead, canceled the vote. As a result, the ACA will remain in place at this time.
Because the House was unable to pass the AHCA, the ACA remains current law, and employers must continue to comply with all applicable ACA provisions. Both President Donald Trump and House Republican leadership have stated that they now intend to focus on other issues. Despite this, Congress may choose to pursue their own ACA repeal and replacement in the future.
Cadillac Tax Delayed
The ACA imposes a 40 percent excise tax on high-cost group health coverage, also known as the “Cadillac tax.” This provision taxes the amount, if any, by which the monthly cost of an employee’s applicable employer-sponsored health coverage exceeds the annual limitation (called the employee’s excess benefit). The tax amount for each employee’s coverage will be calculated by the employer and paid by the coverage provider who provided the coverage.
Although originally intended to take effect in 2013, the Cadillac tax was immediately delayed until 2018 following the ACA’s enactment. The 2016 federal budget further delayed implementation of this tax for an additional two years, until 2020. The 2016 federal budget bill also:
- Removed a provision prohibiting the Cadillac tax from being deducted as a business expense; and
- Required a study to be conducted on the age and gender adjustment to the annual limit.
There is some indication that this additional delay will lead to an eventual repeal of the Cadillac tax provision altogether. Over the past several years, a number of bills have been introduced into Congress to repeal this tax. Although President Trump has not directly indicated that he intends to repeal the Cadillac tax, he has stated that repealing and replacing the ACA is a main goal for his administration.
The AHCA would have delayed the Cadillac tax’s effective date even further, so that it would have applied only for taxable periods beginning after Dec. 31, 2025. However, the AHCA was withdrawn before the House vote.
Moratorium on the Providers Fee
Beginning in 2014, the ACA imposed an annual, nondeductible fee on the health insurance sector, allocated across the industry according to market share. This health insurance providers fee, which is treated as an excise tax, is required to be paid by Sept. 30 of each calendar year. The first fees were due Sept. 30, 2014.
The 2016 federal budget suspended collection of the health insurance providers fee for the 2017 calendar year. Thus, health insurance issuers are not required to pay these fees for 2017. Employers are not directly subject to the health insurance providers fee. However, in many cases, providers of insured plans have been passing the cost of the fee on to the employers sponsoring the coverage. As a result, this one-year moratorium may result in significant savings for some employers on their health insurance rates.
Moratorium on the Medical Devices Tax
The ACA also imposes a 2.3 percent excise tax on the sales price of certain medical devices, effective beginning in 2013. Generally, the manufacturer or importer of a taxable medical device is responsible for reporting and paying this tax to the IRS.
The 2016 federal budget suspended collection of the medical devices tax for two years, in 2016 and 2017. As a result, this tax does not apply to sales made between Jan. 1, 2016, and Dec. 31, 2017.
Under the ACA, health insurance issuers and self-funded group health plans must also pay fees to support a transitional reinsurance program for the first three years of Exchange operation (2014-16) to help stabilize premiums for individual market coverage. Fully insured plan sponsors do not have to pay the fee directly.
Because the transitional reinsurance program was operational only through 2016, reinsurance fees do not apply for 2017 and beyond (although the 2016 fees will be paid in 2017). Reinsurance fees may be paid in either one lump sum or in two installments. For the 2016 benefit year, reinsurance fees are due as follows:
Welcome to the latest edition of the Lovitt & Touché newsletter.
In this edition:
- House Republicans Release ACA Replacement Plan
- Underwriting Considerations for D&O Insurance
- Know Your Insurance: Cancellation vs. Nonrenewal in Auto Policies
- Cyber Fraud on the Rise
- Reducing Worksite Injuries
- Dangerous W-2 Phishing Scam
- Phoenix Business Journal Recognizes Former Girl Scout Lisa LaVoie, Highlights 100th Anniversary of Girl Scout Cookie Sales
- Lovitt & Touché Named Among 2017’s “100 Best Arizona Companies
- Featured Community Partner – Homeward Bound
- Prepare for Tax Season
- Workplace Stress Levels Dropping
- Spring Break Travel Tips
- Recipe of the Month: Roasted Herb Potatoes
Receiving a letter from the insurance company concerning the status of your policy may make you a bit tense. Yet, before you get worried, you must understand the difference between a cancellation of your policy and a nonrenewal. These terms are vastly different and require different responses on your part.
A policy nonrenewal occurs after the insurance company or you, as the insured, decide not to renew your policy when it expires.
If your insurance company decides not to renew, they must give you adequate notice based on the laws established in your state, and must outline the reasons as to why they have chosen not to renew your policy for another year. If you think their reasoning is unjust, you may call the insurer for more explanation. Here are some reasons why your policy may not be renewed:
- The insurer no longer carries that particular line of coverage.
- The insurer decided to write fewer policies under that specific line of coverage in your area.
- You committed an act that raised the insurer’s risks significantly. That usually means that you filed too many claims during a policy period. Obtaining a new policy after a nonrenewal is typically not a difficult process. Your premiums may be slightly higher but you will be better off as compared to having your policy cancelled.
The insurance company cannot cancel your policy if it has been in effect for more than 60 days except under the following conditions:
- You did not pay your premium.
- You have committed fraud.
- You have made serious misrepresentations about yourself on your application. If your policy is going to be cancelled, you will receive notice well in advance. After a cancellation, it can be difficult to obtain a new policy, as other companies may see you as an undesirable risk.
If you do receive a cancellation notice because you failed to pay your premium, you may be able to resurrect your policy with the insurer by paying for an entire year’s worth of premiums upfront. If that is not an option for you, then you may have to opt for a high-risk policy.
Workplace injuries are a significant risk for any business, and they can lead to incredibly costly medical bills, lost productivity and increased insurance premiums. You likely have safety protocols to help prevent on-the-job accidents, but another type of injury could be just as costly. Work-related musculoskeletal disorders (WMSDs) are not caused by accidents, but rather from job conditions or tasks that lead to or contribute to the condition. This article discusses WMSDs and includes tactics to address and prevent them in your workplace.
What is a WMSD?
A musculoskeletal disorder (MSD) is an injury or disorder of the muscles, nerves, tendons, joints, cartilage or spinal discs. Work-related MSDs are conditions in which the work environment and performance of work contribute significantly to the condition, and/or the condition is made worse or persists longer due to work conditions. Examples of workplace conditions that may lead to WMSDs include routine lifting of heavy objects, daily exposure to whole body vibration, routine overhead work, work with the neck in a chronic flexion position (head bent forward) or performing repetitive forceful tasks.
Examples of MSDs are sprains, tears, back pain, carpal tunnel syndrome, arthritis and hernia. MSDs are associated with high costs to employers such as absenteeism and lost productivity, as well as increased health care, disability and workers’ compensation costs. In addition, many of these conditions are or can become chronic, further escalating the costs to employers.
There are a variety of strategies employers can implement to reduce WMSDs in their workplace. They may not all make sense for your business, but consider the following ideas to help minimize the impact of WMSDs and prevent them altogether.
- Examine your workplace and look for ways to reduce the chance of injury. For instance, you may be able to change the way materials, parts and products are transported in order to relieve burden on employees. Also consider altering the layout of workstations to be more ergonomic.
- Promote healthy lifestyles, including physical activity and weight management. Improving physical health and maintaining a healthy weight can reduce pain for individuals with arthritis and back problems, and can help employees prevent these and other MSDs.
- Provide training to management and workers regarding risks for workplace injuries, including:
- Training on how to reduce and avoid injuries
- Training to help management and workers recognize potential workplace risks for MSDs and mitigate those risks
- Raising awareness of WMSDs among employees and management, as well as educating employees to recognize a potential injury and know when to seek medical evaluation
- Make administrative changes as they make sense in your workplace to reduce the risk of injuries. These may include reducing shift length, limiting overtime, scheduling more breaks for rest and recovery, rotating workers through jobs that are physically taxing and instituting pre-shift stretching sessions.
- Develop policies that support a corporate culture of good health, safety and injury management, such as:
- Required use of personal protective equipment (PPE), plus training on how to properly use it
- Ergonomic workplace initiatives
- Workplace safety programs
- Disability management policies
- Return-to-work programs
- Encourage early reporting of WMSDs by employees, and prompt evaluation by health care providers. Many workplaces stress early reporting for injuries, but employees may understand that to mean only sudden injuries, like accidents, slips and falls. Even though WMSDs occur over time, employees should still report them and get evaluated early—employee education can help promote this practice in your workplace.
- Educate employees on workers’ compensation and disability benefits, including protections and accommodations offered by the Americans with Disabilities Act (ADA).
Source: The Centers for Disease Control and Prevention
A recent global fraud and risk report by Kroll, Inc. gives insight into the state of fraud and risk incidents in 2016, during which 82 percent of respondents experienced a fraud incident—up from 75 percent in 2015 and 61 percent in 2012.
Fraud concerns affect not only a company’s bottom line, but also its ability to expand overseas. Over two-thirds of executives say their companies have been deterred from operating in a particular country or region due to fraud concerns.
The Most Common Perpetrators Come From Within
Contrary to the popular belief that security breaches come from external sources, the most common perpetrators of fraud, cyber incidents and security incidents were internal.
- Fraud—Sixty percent of respondents who experienced fraud identified a combination of current employees, former employees and third parties as perpetrators.
- Cyber Incidents—Overall, 44 percent of respondents reported that insiders were to blame for cyber incidents, with 20 percent of the source of risk attributed to former employees.
- Security Incidents—Insiders were the main perpetrators of security incidents at 56 percent, with former employees accounting for 23 percent of security incidents.
Increasingly Complex Threats for Businesses
The evolving nature of incidents reflects a growing challenge for businesses. While every fraud category has seen an increase in incidents between 2015 and 2016, market collusion and misappropriation of company funds realized the greatest increases, at 15 percent and 11 percent, respectively.
While insiders are cited as the main perpetrators of fraud, they are also the most likely to discover it, with 44 percent of respondents reporting that it had been discovered through a whistleblowing program, and 39 percent reporting that it was detected through an internal audit. In fact, over 75 percent of respondents indicated that their companies have adopted employee-focused anti-fraud measures, technical countermeasures and physical security measures.