According to a recent survey, 4 in 10 American workers live paycheck to paycheck. This means that an unexpected illness or injury that takes an employee off the job for more than a few days can have devastating consequences for those who depend on their wages to survive. Disability insurance – sometimes called disability income insurance – helps protect workers’ incomes against the possibility of loss of work from illness or injury.

What it Covers

In a nutshell, disability insurance helps replace a portion of a worker’s income if that worker loses his or her income due to an injury or illness. Typically, disability insurance policies will replace between 50% and 65% of a worker’s income – a percentage low enough that most people would prefer to return to the workforce as soon as possible, but high enough that most workers could keep a roof over their heads, the lights on in their homes, and some food on the table for themselves and their families until they recover. Broadly speaking, there are two kinds of disability insurance policies:

Short-term disability – for events that disrupt income for less than 90 days
Long-term disability – covering benefits for a longer period of time

• Advantages of Group Coverage
• Group disability coverage has advantages for both the employer and the workforce. Advantages to the employer include:
• Reduced costs compared to offering individually underwritten policies to everyone
• Increased employee loyalty – especially after someone in the workforce has a claim and word gets out that these valuable benefits kicked in
• Tax deductible premiums
• Easy, streamlined administration
• List billing

Advantages of group disability insurance to the worker include:

• Affordability – the employer subsidy makes it possible for workers to get coverage they would be unable to get on their own
• Pre-existing conditions that would make it impossible for employees to get coverage as individuals may be waived in a group plan
• Streamlined application process with no medical exam required
• No prior year tax returns or income verification are required; employer reports income information to the disability insurance carrier

In addition, some policies are portable. If the employee leaves the company, he can sometimes keep the policy, though he loses the employer subsidy. Portability is an important feature, because disability insurance can be difficult to qualify for on the individual market.

Disadvantages of Group Disability Insurance

All coverages have both advantages and disadvantages. Some of the disadvantages include:

• Less flexibility – managers and supervisors may have different needs and risk profiles compared to rank and file employees
• Less coverage – some workers may be able to get more robust plans on the individual market than carriers offer via group plans
• Benefits are taxable to the recipient
• More restrictive definitions – with disability insurance policies, the definition of the word “disability” in the contract itself is of paramount importance. For example some policies, known as “Own Occupation” policies, pay benefits if you cannot work in your own profession. Other policies will not pay benefits if the worker can work in any occupation.
• All things being equal, “Own Occupation” policies are preferable – but they tend to have higher premiums, and are less prevalent in the group disability insurance market.

Taxation of Disability Insurance

Group term premiums are generally deductible to the business as a business expense, just like any other wage expense. The value of the premiums, however, is not usually taxable as income to the worker. Disability insurance benefits may or may not be taxable, depending on the circumstances. Generally, if the recipient didn’t pay taxes on the premiums, then the benefits are taxable as ordinary income. This is true for most employer-paid group health insurance plans. If the employee paid part of the premiums, then a similar percentage of benefits will be tax-free.

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.

A recent article in the Boston Globe, entitled “Boston’s Brightest Pick their Top Apps”, peaked our curiosity. While we all have read countless articles and downloaded oodles of apps, there might be one more you should consider. It’s called MyHome Scr.APP.book.

After reading that Joseph Murphy, the state’s Commissioner of Insurance recommended the app, we not only downloaded it but began using it. We found it to be one of the best and easiest ways to take inventory of household possessions. It even includes a preparedness section with various insurance tips.

MyHome Scr.APP.book is great for determining how much insurance you really need and cataloging your possessions in the event you need to file a claim. If you’re like us, you don’t think about taking a picture of your washing machine or jotting down the serial number until something happens and your homeowner’s insurance company is looking for the information. With MyHome Scr.APP.book, you simply walk through your home and enter names, purchase dates, prices, and serial numbers of your most valuable possessions.

Developed for the National Association of Insurance Commissioners (NAIC), the software links to your smartphone camera so you can easily attach a snapshot of each item. Once your list is complete, you can email or export the list to a safe location on the internet.

Cataloguing the contents of your home can be tedious and time consuming. It always seems to be on the list of things to do next week, though next week never seems to come. While no one wants to think about filing a claim, especially those that aren’t prepared, you can get prepared and organized with the help of MyHome Scr.APP.book. Best of all, it’s free and easy to use.

Concerned about your personal insurance coverage? At Cleary, our experienced Personal Lines departement will work with you to evaluate your insurance needs, identify exposures and create a customized insurance portfolio. Give us a call today at 617-723-0700.

Of the U.S. companies that are victim to a man-made or natural disaster, the Contingency Planning Research Strategic Corporation says 43% never reopen their doors and 29% are out of business within the following two years. A study by Touche Ross found that companies without a disaster recovery plan only have a 10% or less survival rate. Business owners should be seriously asking themselves whether or not they have an adequate recovery plan for disasters.

There are three crucial areas that all disaster recovery plans should cover:

Physical Resources

• The physical assets of a business, such as equipment, electronics, office furniture, and the building itself, are things that usually can’t be quickly or easily replaced if they’re damaged during a disaster. An adequate disaster recovery plan should answer the following:
• Is there at least three days’ worth of emergency supplies on hand to carry the business immediately following the disaster?
• What steps can you, should you, and will you take to protect physical assets?
• How would physical assets hold up against various disasters (e.g. flood, hurricane, tornado, fire, or earthquake)?
• Who will assess the damage to physical assets following a disaster?
• Has a list been made to prioritize the replacement of key physical assets, and what suppliers or companies should be contacted for the replacement?
• Is access available from an off-site backup system if data and electronics are damaged, and how often should backups take place?
• How will important documents and records be kept secure and protected?
• Is an alternative facility an option to resume operations if the primary location is unusable; what location and type of facility would be needed?

Human Resources

All employers know that their employees are one of their business’s most vital assets. Therefore, employee safety and the resulting personnel issues that follow a disaster should be a top priority. An adequate disaster recovery plan should answer the following:

• Have all staff been adequately instructed on the disaster recovery plan?
• How will staff find safe shelter?
• How will contact be maintained with staff during and after the disaster?
• Are current contact numbers for all staff, vendors, suppliers, and clients available at an off-site location and how will this list be maintained and updated to stay current?
• Have staff members been identified to assume mandatory or key roles should other employees not be able to resume their roles?
• Are staff members assigned to form a crisis management team?

Operation Continuity

Getting the business back up and running after the disaster is top priority. An adequate disaster recovery plan should answer the following:

• Does insurance, in particular business interruption insurance, provide adequate coverage?
• What amount of cash will be available for emergency contingency expenses?
• If the facility isn’t usable, then where should an alternative command center be located to coordinate the recovery?
• Is there an alternative list of suppliers to use in the event regular suppliers aren’t operational?
• What should be done for clients and customers during and after a disaster?

Employers might further assign specialized teams to be in charge of some of the tasks related to the above points. For example, a post disaster recovery team could manage recovery tasks like getting the business up and running quickly; an administrations team could handle areas like logistics, transportation, and emergency and survival gear; a public relations team could make public announcements and field inquires; a client/supplier communications team could advise vendors and clients of the business’s status; and an IT team could be responsible for software and hardware issues.

Remember, disasters can strike with little, if any, warning. Business owners can keep themselves off the wrong side of the statistics by being prepared and being able to get themselves up and running as soon as possible. For more on disaster recovery, please consult the FEMA Emergency Management Guide for Business and Industry. In addition, Symantec and Ponemon Institute have developed an online Data Breach Risk Calculator, helpful for assessing cyber liability and your potential exposure to data breach risk.

At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. Give us a call today at 617-723-0700.

The DOL has sufficient funding to hire over 200 full time additional Wage & Hour Investigators. The funding was provided over the past several years by the American Reinvestment & Recovery Act (ARRA).

Timothy J. Helm, Chief for the Branch of Government Contracts Enforcement for the Wage & Hour Division of the DOL has been responsible for the hiring and training of these individuals. According to Mr. Helm and his staff, open investigations are at an all-time low as a result of the additional investigators. At the quarterly Professional Services Council (PSC) Labor Relations meetings, Mr. Helm spoke of violations following a DOL audit, mentioning that his goal is to debar contractors instead of negotiating settlements with them.

We have been encouraging contractors, as a result of the above, to ensure that all their personnel dealing with these Service Contact Act (SCA) and Davis Bacon Act (DBA) contracts have the appropriate training to handle DOL audits. If contractors have not had all their respective personnel properly trained, they should make sure that this is done as quickly as possible.

We have been coordinating Service Contract Act training programs for the PSC Association three times a year, and these will continue in 2012 in March, June and November. We have also designed a one-day Davis Bacon training program that will be held in early April 2012. The DOL Wage & Hour staff has agreed to participate in this training, as they have always done with the SCA programs.

Additionally, MARAL, LLC has been offering SCA and DBA one day training programs in Rosslyn, VA and at client locations for the past several years. Their schedule and registration procedures can be found on www.eventville.com/maral or e-mail Al Corvigno at acorvigno@marall.com.

Some contractors are reluctant to provide their employees working on SCA or DBA contracts the appropriate fringe benefits listed on their respective Wage Determinations. In lieu of providing the fringe benefits, they choose to pay a cash value. While this meets the minimum legal requirement, it actually increases the cost to both the contractors and the employees due to the taxable implications.

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 fringe benefit obligations and provides your employees with valuable benefits.

Winter is right around the corner. Depending on where you live, this could mean extreme amounts of snow and/or ice; and with that comes power outages. While there is little you can do about a winter power outage once it has happened, you can take steps to prepare yourself.

Lots of Water

When you lose power for weeks at a time, water becomes a guarded resource as there is no way to use the toilet or bathe without some type of extra water supply. Preparing gallons or buckets of water is one of the best things you can do to prepare yourself. If you should lose power and you have not saved water, think of what available resources you may have. This may mean getting water from a local lake or pond (if it is not frozen over). As with any water source that has been sitting for a very long time, remember to boil the water prior to use.

A Cooking Source

It is important to have some way to cook food (and boil water); there are several available options. You may want to consider purchasing a gas stove and having it installed now. If you do not have a gas stove, consider using your grill. Though you may only think to use a grill in summer, it can really come in handy during a winter power outage – as long as it hasn’t been covered by several feet of ice! Keep in mind that an outside grill should only be used outside.

Easy-to-Make Foods

Although it is always best to have a source available to boil water, it is a good idea to stock up on some foods which require minimal to no cooking when you know that a big storm is about to hit. Some options include bread, peanut butter crackers and cups of soup which require only boiled water to heat. As always, canned foods make excellent choices to have handy.

A Source of Light

Light becomes crucial during a winter power outage, especially if your power should go out for weeks at a time. Given winter’s reduced daylight hours, having candles and flashlights on hand is important. Don’t forget to stock up on matches and new batteries.

Outside Sources of News

Keeping in touch with the real world can help bring you a sense of hope that things will improve. Having a portable radio will provide you with news in your area, weather predictions and information around when your power may return. A cell phone can also be used to call the electric company or local centers offering updates. Keep in mind, however, that a cell phone battery needs to be recharged, so consider having a charger that can be plugged into your car’s cigarette lighter.

A Source of Heat

Many people invest in wood stoves or gas heating so that they can have a source of heat available for use during an outage. This can be a great idea even if you do not use your heater at any other time of the year. Having blankets, sweatshirts and extra layers available is also very important. Remember to keep babies and young children bundled up well. If your child wants to go outside to play during a winter power outage, the best thing you can do is say no, as they may have a hard time getting warm again after experiencing such cold.

A winter power outage can be an inconvenience to many, especially if lengthy, so it is important to be prepared. Many families begin making preparations mid-fall, such as stocking up on flashlights and water, just in case there is an unexpected autumn snow or ice storm.

Concerned about your personal insurance coverage? At Cleary, our experienced Personal Lines department will work with you to evaluate your insurance needs, identify exposures and create a customized insurance portfolio. Give us a call today at 617-723-0700.