Insurance Insights: The Cleary Insurance Blog
The Cleary Insurance blog covers insurance, risk management, and financial planning for New England businesses and individuals. Our team of licensed advisors and specialists publishes regular articles on commercial and personal coverage, employee benefits, life and financial planning, and insurance compliance. Browse recent articles below, or use the category filters to find topics relevant to your business or personal situation.
PCORI Fees: IRS Form 720 Update
The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). PCORI is responsible for conducting research to evaluate and compare the health outcomes and clinical effectiveness, risks, and benefits of medical treatments, services, procedures, and drugs.
Plan sponsors must pay the PCORI fee by July 31 of the calendar year immediately following the last day of that plan year. All plan sponsors of self-insured group health plans will pay the fee in 2014, but the amount of the fee varies depending on the plan year.
- Calendar year plan beginning January 1, 2013 will pay $2 per covered life.
- Plan years beginning from October 2, 2012 – December 31, 2012 will pay $2 per covered life.
- Plan years beginning January 2,2012 – October 1, 2012 will pay $1 per covered life.
PCORI fees are reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st. The fees are based on the average number of lives covered under the policy or plan. They apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. The PCORI fee will not be assessed for plan years ending after September 30, 2019, which means that for a calendar year plan, the last year for assessment is the 2018 calendar year.
The types of plans that must pay the PCORI Fees by July 31, 2014 include the following:
- Health/accident plans
- HRAs with a plan year that began 1/1/2013 that are not an excepted benefit (Employer contribution is greater than $500)
- Health FSAs with a plan year that began 1/1/2013 that are not aIRn excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
- Retiree plans
Please click on the links below to access Form 720 and Form 720 instructions.
Welcome Justin Yurchenko to the team
We are pleased to welcome Justin Yurchenko to the Cleary Insurance team! Justin is the newest member of our sales force.
He was hired to evaluate and analyze potential loss exposure for any type of company, including both for-profit and nonprofit organizations. Justin works directly with the board of directors, CEO’s, presidents, owners, and or trustees to develop and implement risk management strategies that can serve to be an effective way to monitor and hopefully mitigate potential loss.
When Justin is not working he enjoys playing hockey or golf, depending on the weather!
Electronic Signature Technology Takes Hold
If you haven’t seen them yet, chances are you soon will. Electronic signature technology – ‘e-signature’ for short – is rapidly making inroads into a variety of professional services – and the insurance industry is among the leading proponents.
The technology has many benefits both for the insurance industry and for the customers themselves:
Cost savings. E-signatures help control costs. One property and casualty insurer estimates that e-signatures reduce the cost of issuing a new policy by at least $10, and that’s just at the carrier level. Cost and time savings are even more significant when you consider that a customer or agent can use an e-signature on an emailed document much faster and more easily than driving across town to get a signature, or even emailing, printing, signing, scanning, and emailing the document back.
Fewer mistakes. An electronic process has less potential for paperwork errors to delay a policy issuance. This means less risk exposure for the client. It also means much lower administration and compliance costs for the carrier as well.
What are e-signatures? An e-signature is a safe, secure and legally binding digital fingerprint that establishes that you have viewed a document – and affixed your signature to it – except you used bits rather than ink. The signature itself consists of a digital identifier that can be used to verify that your signature came from you.
Are e-signatures secure? Yes, they are as secure as any online or digital procedure – and much more secure than a pen-and-ink signature, which can be forged later on an altered document. An e-signature not only establishes you were there, but also freezes a document in place. The document cannot be altered without removing your signature.
There are three levels to ensuring the security and validity of electronic signatures:
- User verification. The technology authenticates the user, via a variety of possible techniques:
Login/password combinations
Secret questions and answers
Third party authentication services
“Smart cards” and PIN number combinations
SMS codes - Document verification. The technology authenticates the document. It takes a snapshot of the document with the signatures in place. The file cannot be altered without your signature being removed. So if your signature is on the document, you know the document has not been altered since you signed it.
- Process authentication. This is still in its earlier stages of development. But some e-signature vendors also have technology that verifies exactly what information was displayed to the customer, as well.
Legal background. Congress formally recognized the validity of e-signatures under the Electronic Signatures in Global and National Commerce Act (ESIGN). This law first passed in 2000, formally laying out the legal protocols and underpinnings for the validity of the electronic signature in interstate commerce.
Conclusion
The technology has not been universally rolled out yet. Some carriers and agencies are slower to adapt than others. But it is likely that substantially all major carriers and the agencies that represent them will have adopted electronic signature technology over the next few years. You can be sure that the technology is safe and legally sound.
At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.