Life, Disability & Long Term Care Insurance Services

Disability Insurance: 

Owning Your Own Policy

: : Roland A. Vitanza, J.D.
Specialist in Life, Disability and Long Term Care Insurance
631.923.1595 ext. 342  
G.R. Reid Consulting Services, LLC 

: : Dr. Eric Studley *1

Managing Director, Long Term Disability Benefits
631.923.1595 ext. 340  
G.R. Reid Consulting Services, LLC

 

Disability insurance is a vital need for every American household. As consumers we
have many expenses, such as mortgage payments, lifestyle costs, or education funds; which are all funded through income. 

The average person’s most valuable asset is not their jewelry, their car, or even their home –  it is their ability to work and produce income. The question must be posed:  

How would my family and my lifestyle suffer if I was unable to generate an income?

The truth of the matter is that when Americans spend extended time on long term
disability leave from work, every aspect of their life becomes susceptible to lose. Without
having an income to pay monthly bills or to make mortgage payments, a person may stand to
lose all that he or she has acquired throughout their lives. Therefore, purchasing Disability
Insurance is one of the most responsible life decisions a person can make.
 

Individual Disability Policies Benefits
You may be asking yourself, "Why do I need to buy a disability policy? My job offers me
disability coverage through my employment.” This could be the case, however, there are
important differences between disability coverage offered by employers and owning your own
individual policy.
 

A. Portability
An individual policy is portable, meaning that if you switch companies, your
profession, or you decide to relocate; an individual policy will follow you to your
new job or your new life in a different city. A disability policy provided by an
employer will not. This is a problem that professionals often encounter when going
into private practice. After years of having group coverage through an employer, now
they must purchase their own policy and pay higher premiums or be denied entirely
because they are now older and, statistically speaking, most likely less healthy. By
purchasing an individual policy at a young age, this can be totally avoided.
 

B. Various Funding Mechanisms
Individual Disability Policies have many different riders and additional coverages that
are attractive to both seasoned employees and young people just entering the work
force. Disability policies may cover (i) student loan payments, (ii) overhead business
expense costs (iii) retirement protection- by replacing retirement contributions made
by you and your employer, and may provide (iv) Own Occupation Coverage, allowing
certain classes of professions to continue receiving benefits after they return
to work, if by returning to work they are forced to switch professions or job titles.

As always our G.R. Reid Consulting Service Life, Disability, and Long Term Care
Insurance team is available to assist you with any questions, to set an appointment please call us at 631-923-1595. 

1* Not practicing for Guardian or any subsidiaries or affiliates thereof.

Accounting & Tax News

:: Jason Saladino, CPA, Partner
631.425.1800 ext. 309
G.R. Reid Associates, LLP

Tax Relief for Victims of Hurricane Irene in New York:
Victims of Hurricane Irene that began on Aug. 26, 2011 in parts of New York may qualify for tax relief from the Internal Revenue Service.


The President has declared the following counties a federal disaster area: Albany, Delaware, Dutchess, Essex, Greene, Nassau, Rensselaer, Schenectady, Schoharie, Ulster and Westchester. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 26, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 26, and on or before Sept. 12, as long as the deposits are made by Sept. 12, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area
The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers
Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief
Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 26 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 26 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 26 and on or before Sept. 12 provided the taxpayer makes these deposits by Sept. 12.

Casualty Losses
Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year's return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year's return should put the Disaster Designation "New York/Hurricane Irene" at the top of the form so that the IRS can expedite the processing of the refund.
 
Other Relief
The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Commercial Insurance Services

: : Louis Santelli, CPCU, CIC, Managing Director, Commercial Insurance Services
631.923.1595 ext. 330
G.R. Reid Insurance Services, LLC 

Five Questions to Determine Your Business Interruption Exposure

The losses resulting from businesses in the area having to shut down for extended periods of time as a result of Tropical Storm Irene are likely to be huge.

For many organizations, the loss of income coupled with continuing expenses after a fire or natural disaster can be even more devastating than the damage itself. To increase the chances that a loss will not shut operations down permanently, organizations must accurately asses their exposures by asking some questions:

• What is the most the organization could lose from a shutdown?
Commercial property insurance policies define "loss of income" as the sum of the expected pre-tax profit or loss and necessary continuing expenses. For example, if the expected profit is $300,000 and necessary continuing expenses are $100,000, the potential loss of income is $400,000. To calculate their exposure to business interruption losses, organizations should refer to their balance sheets, profit and loss statements and cash flow statements. Insurance companies also have worksheets available to assist with the calculation.

• How much insurance should be carried?
Once the organization knows the dollar amount of its exposure, it must decide how much business interruption insurance to buy. The key considerations are the length of time the insurance is likely to apply and the coinsurance percentage the organization must meet. Coverage usually begins 72 hours following the damage to the property and ends when business resumes at another location or when the building should be repaired with reasonable speed, whichever occurs first. If the organization decided that the coverage period would be around six months, it could buy an amount of insurance that would satisfy a 50 percent coinsurance requirement. If the interruption would last longer, higher coinsurance percentage and limits would be necessary.

• How long will it take business to return to normal?
Even after operations resume, it may be some time before revenue returns to normal levels. Customers who had gone elsewhere during the shutdown may be slow to return. The standard insurance policy extends coverage for 30 days after operations resume, but some businesses may need more time than that, especially if their businesses are seasonal. For example, an oceanside restaurant in New Jersey that makes most of its profits during the summer will need additional coverage even if it can re-open in November.

• How much of the normal payroll expense will continue during the shutdown?
The organization will need the continuing services of some employees while it attempts to re-open, but other employees may not be necessary. For example, accounting staff will be needed to pay mandatory expenses such as property taxes and collect receivables earned before the shutdown. Employees who stock shelves will not be needed if there are no shelves to stock.

• Does the business depend on other businesses for revenue?
A business can suffer a loss even if its own building is untouched. A loss that shuts down a key customer or supplier or damage to nearby property that causes authorities to close off access to the street can devastate a business's bottom line (this happened to many businesses affected by 9/11.) Special insurance coverage is available to protect against this possibility.

Business Interruption Insurance covers direct damage to your property. Enhancements to Business Interruption Coverage include Communication and Transmission Interruption Coverage which will cover off-premises power or communications failure including overhead transmission lines. This is an important safeguard to consider for hurricanes and natural disasters. A professional insurance agent can help a business owner answer these questions and identify insurance companies that can meet coverage needs. With some effort and planning before a loss happens, an organization can emerge from a shut down and return to profitability.

Human Resource Services News

: : Karen Randle, Director, Human Resource Services
631.923.1595 ext. 334
G.R. Reid Consulting Services, LLC

 

 

Classifying Independent Contractors and Student Interns

Often times, employers misclassify independent contractors and student interns. The Fair Labors Standards Act breaks down how to classify whether or not a person working you is an independent contractor, or student intern, or none of these. 

Independent Contractors:
The U.S. Supreme Court has indicated that there is no single rule or test for determining whether an individual is an independent contractor or an employee of an organization for the purposes of FLSA, but it is the total activity or situation that controls this determination. Below are factors that have been considered significant in coming up with a determination.

1) The extent to which the services rendered are an integral part of the principal's business.
2) The permanency of the relationship.
3) The amount of the alleged contractor's investment in facilities and equipment.
4) The nature and degree of control by the principal.
5) The alleged contractor's opportunities for profit and loss.
6) The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
7) The degree of independent business organization and operation.

Factors such as the time or mode of pay, where the work is being performed, the absence of a formal employment agreement, or whether an alleged independent contractor is licensed by state or local government, do not have bearing on determining the employment relationship. If an independent contractor does not meet the criteria above and it is determined that the employment relationship does not qualify the individual as an independent contractor, the employee must be paid according to the Fair Labor Standards Act. If an independent contractor is misclassified and should be paid according to the FLSA and is not, the employer may be subject to paying taxes. Lastly, there are more specific classifications that some employers must look into, like if it is an individual working as a farmer, or an electrical contractor, or if an individual is volunteering their time.

Student Interns:
When classifying an individual as a student intern, there are six criteria that must be applied,

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If an employer structures the internship program around a classroom or academic setting, or provides the intern with skills that can be used in multiple employment settings, the individual will be viewed as receiving training. If an employer benefits from the interns’ work such as performing productive work such as filing, or assisting customers, then the individual may qualify for minimum wage and overtime pay as per the FLSA standards. Additionally, internships should be for a fixed amount of time established ahead of time. Unpaid internships should not be used as a trial period before hiring the employee or it will fall under the FLSA standards of employment.

It is important to consider these criteria for determining whether or not an individual is considered an independent contractor or a student intern to ensure that all FLSA standards are being followed. For additional information on independent contractor or student internships, www.dol.gov can be visited.

Information Technology Services

Information Technology Services

631.923-1595
G.R. Reid Consulting Services, LLC
 

 

 

Take Every Precaution Prior To A Storm:
Secure Your Computer Equipment

The following are some precautionary measures that you may want to consider to safeguard your computer equipment.

The most damaging two things that can happen in a major storm are electrical damage and water damage.

Even though we all do our best to put protections in place, such as Uninterruptible Power Supplies and data backup routines, there is always the chance – especially in a major storm – that those protections can be circumvented or overrun.

In preparation for extended power outages and\or interruptions, you may want to consider the following steps:

1) Make sure to take your backup tape or hard drive with you when you leave the office. If you are using an off-site backup service, such as Mozy or Carbonite, double check to make sure it has run successfully.

2) Power down or turn off all computers, servers and electronic equipment such as routers, cable modems, printers and network switches.  Start with the workstations, then the server, and finally all other equipment.  The most damage to data occurs when a computer shuts off unexpectedly which can cause data loss or corruption.  An Uninterruptible Power Supply (such as an APC UPS) is designed to protect against power surges and spikes and short term power loss.  However, if the outage lasts longer than a few minutes, the battery will be exhausted and the equipment will still shut off, increasing the risk of data loss.

3) To protect from lightning and\or major power spikes, such as from trees falling on power lines, you may want to take the added precaution of physically disconnecting all wires from the back of your equipment.  Even though you may have surge protectors, if the spike is large enough, it can still find its way through the wires.  For example, if there is an unprotected wire connected to the internet or phone system, the power spike can actually travel through ANY connected wire, such as a network cable, and damage the internal components of the system.
4) If you are in a location that is prone to flooding, after you have physically disconnected your computer or server, move it off the floor and onto a higher location or take it off the premises.

The level of precaution you decide to take will surely depend on the storm severity in your area and your own business continuity needs, but we want to communicate the options so that everyone is prepared.

Even with a good data backup, waiting for replacement parts and equipment can cause days or weeks of lost business productivity.  We have found that a few hours of precautionary system downtime can save time piecing things back together afterwards.

Should you decide to shut everything down, when you power everything back up do so in the reverse order that you powered it down.  Start with the miscellaneous equipment (internet devices, printers, etc), then the server, then the workstations.

We strongly advise that if you are not using G.R. Reid for I/T services that you contact your own I/T support company for their approval and recommendations before following these steps.

If you have any questions or concerns, please contact us.

Health Benefit Services

: : Julie Seiden, Managing Director,
Health Benefits Services | 

631.923.1595 ext. 310

G.R. Reid Consulting Services, LLC




Have You Considered Full-Replacement CDHP?


The Corporate Executive Board, an advisory and research company, and HighRoads, a compliance and health care costs services provider, assembled 2011 data from almost 11,000 medical plan design and the medical plan rates of over 30 million Americans. The data showed that an average of $187 dollars per year in out-of-pocket expenses was saved when an employee used a high-deductible consumer-driven health plan, or CDHP. The savings for families averaged $204. However, when compared to health maintenance organization (HMO) plans and traditional preferred provider organization (PPO) plans, CDHP premium and out-of-pocket savings might be too little, as well as the deductible being too high, to spur employees to make the change. Even with substantial communications related to high-deductible CDHPs, PPOs are still the most widely offered and popular plans, representing 39% of employer plans. HMOs represented 27% of U.S. employer plans and CDHPs linked to health savings accounts (HSAs) represented 17%. Other data included:
• Traditional, non-high-deductible plan premiums averaged $132.11, exclusive provider organization (EPO) plans averaged almost $112, HMO premiums averaged almost $133, and PPO premiums averaged almost $150 (employee-only/per month).
• At an average premium of almost $63 (employee-only/per month,) CDHPs were significantly lower than other plans.
• When compared to PPOs, CDHP plans were accompanied by lower yearly out-of-pocket costs.
• For CDHPs, the average yearly out-of-pocket cost was $2,128 for individuals and $5,656 for families. For PPOs, the average yearly out-of-pocket cost was $2,315 for individuals and $5,860 for families.
• The average in-network co-pays with non-CDHP plans were $103 per emergency room visit, $31 per specialist visit, and $19 per primary care provider visit.
By effectively educating employees about potential cost savings from CDHPs, employers can offer employees more control and flexibility related to health care decisions and help them decrease their out-of-pocket yearly expenses.

Implementation Tips For Shifting to Full-Replacement CDHP
Some businesses are offering one or more CDHPs since just encouraging employee enrollment might not be sufficient to create the enrollment numbers necessary for significant cost reduction. Towers Watson/National Business Group on Health found that eight percent of employers are currently offering full-replacement CDHPs to some portion of their workforce. Most experts recommend employers consider several factors before making such a commitment. For example, employers should consider their low-income workers - do they have families and will they need an employer contribution to a HRA or HSA to ensure they're protected from exorbitant out-of-pocket costs? Employers should also assess and weigh the challenges that will come from full-replacement CDHP against the costs of crafting a plan to drive voluntary participation rates.

Should a full-replacement CDHP be the best option, here are a few suggestions:
• Use focus groups to test full-replacement CDHP. Listen to the employees. Find out what they might need to utilize the plan. Such feedback can be helpful as communications are drafted.
• Don't forget the big picture. Employers need to clearly and effectively explain how the change is connected to the business's overall benefits strategy. For example, is there a wellness factor that could be interlinked to the full-replacement CDHP? Employees also need to see how the change plays into their personal big picture, such as from being shown the strong connection between health care decisions and retirement decisions and the benefit of health care expense saving with a tax-advantaged HSA.
• Address the change head-on and keep stakeholders involved in the process. If rumors get started before an announcement is made to employees, it can create confusion and be detrimental to employee support. A news release, whether it be from a media relations firm or internally through HR, should be sent to explain the what and why of the change. Be sure to keep managers; supervisors; and, if applicable, union officials in the loop.
• Make any choice among CDHPs meaningful. Also, be sure that the options are differentiated thoroughly so that employees can clearly determine which option is best for their needs and be confident in the their final decision.
• Use a combination of print and news media to reach all the workforce generations. Keep in mind that Twitter, Facebook, blogs, and other online portals are freshly-streamed, inexpensive media portals to engage employees.
• Communicate early and frequently, and don't forget to actually listen and respond. Don't be surprised by an array of employee reactions. Some employees might be open to CDHP, while others might be fearful or angry. Anticipate all the reactions. Give employees a portal, such a call center line, to vent, but also give them sufficient information and time to eventually embrace the change. Communication should begin at least three months before annual enrollment and include CDHP tip sheets and user guides.
• Relating is key. Young, single workers aren't going to plan the same way a middle-age parent or older individual plans. Testimonials within communications can help employers reach their multi-demographic workforce.
• Whether using print or other media to communicate employee benefits, ensure it's done year-round to keep the stream of information fresh and up-to-date.

Personal Insurance Services

: : Neal B. Patel, Managing Director,
Personal Insurance Services | G.R. Reid Agency, LLC
631.923.1595 ext. 303

 

 

Hurricane Preparedness:
Have a Plan in Place

In the United States, hurricane season officially begins June 1 and runs until November 30th  each year.  It is important to have a thorough storm emergency plan in place if you live in an area prone to hurricanes.  It is also imperative that you know your local evacuation routes prior to the issuing of a "Hurricane Watch" or a "Hurricane Warning." Radio and television networks will keep you updated with the latest information for your area. There are different meanings to the terms "Hurricane Watch" and "Hurricane Warning."  If a "Hurricane Watch" is issued for your area, weather conditions are favorable to produce a hurricane within 36 hours.  When a "Hurricane Watch" has been announced preparations that require extra time, such as securing a boat or evacuating an island, should be initiated. A "Hurricane Warning" is a more serious notification.  If a "Hurricane Warning" has been issued, sustained winds of at least 74 mph are expected within 24 hours.  You should now be in the process of completing protective actions and deciding where you will be safest during the storm.  

If you live in an area that is prone to flooding, do not plan on riding the storm out at home.

Other Items to Consider Before a Hurricane

• Purchase materials to board up windows.
• Store any outdoor objects that could blow away.
• Find a safe place for your pet.  Your veterinarian or local humane society can provide you with information on preparing your pets for an emergency.
• Stock up on supplies and prepare a survival kit for your home and car.  Items to include are:  a first-aid kit; canned food and bottled water, enough for at least 3 to 7 days per person; toiletries; blankets and pillows; a battery-operated radio and flashlight; some protective clothing and any special items for infants or elderly. 
• Store important documents in waterproof containers or bags.
• Withdraw some cash. Banks and businesses can be closed for a period of time following a hurricane.
• Fill up your car's fuel tank.

Be Safe As the Hurricane Approaches

• It is safer to stay indoors and away from windows, as strong winds will blow items around.
• If you live in a mobile home, seek temporary refuge in a shelter.
• If your home is in a flood prone or low-lying area, move to higher ground or go to a shelter.
• If a mandatory evacuation has been issued, leave immediately.

After The Hurricane

• Exercise caution when checking for injured or trapped people.
• Beware of flooding which is typical after a hurricane, and do not attempt to drive into floodwaters.
• Avoid standing water.  It may be electrically charged from underground or downed power lines.
• Do not drink tap water until it has been cleared to do so. 

While hurricanes are potentially dangerous and life threatening, preparedness is crucial to weathering the storm safely.