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IRS Allows HDHPs to Pay for COVID-19 Testing, Treatment Pre-Deductible
Specifically, the new guidance states that HDHPs with attached HSAs will not lose their plan status if they provide medical care services and items related to coronavirus testing or treatment even before an enrollee has met their deductible.
While the regulation does not require HDHPs to cover the testing and treatment without any out-of-pocket expenses by the enrollee, the plans can do so ― and without breaching the rules regarding these plans. The new rule could also pave the way for non-HDHPs like PPOs and HMOs to also provide coronavirus testing without out-of-pocket costs for their participants. While there is no rule preventing them from doing so now, many of the country's large PPOs and HMOs have been reluctant to start offering free testing until they know how HSA plans would be affected. Typically, enrollees in HDHPs with an attached HSA are required to pay all of their medicinal costs up to their deductible before the insurer will pay. The Trump administration earlier issued another rule that allows HDHPs to foot the bill for certain preventative health services, such as vaccines and screenings for specific conditions like diabetes and high blood pressure, before the deductible is met. In 2018, 23% of employees enrolled in employer-sponsored health insurance plans were enrolled in an HDHP with an HSA. The 2020 minimum annual deductible is $1,400 for self-only HDHP coverage, and $2,800 for family HDHP coverage. In notice 2020-15, the IRS says that "Due to the unprecedented public health emergency posed by COVID-19, and the need to eliminate potential administrative and financial barriers to testing for and treatment of COVID-19, a health plan that otherwise satisfies the requirements to be an HDHP under section 223(c)(2)(A) will not fail to be an HDHP merely because the health plan provides medical care services and items purchased related to testing for and treatment of COVID-19 prior to the satisfaction of the applicable minimum deductible." The notice only applies to coronavirus and does not void any other requirements governing HDHPs and HSAs. It states that "Individuals participating in HDHPs or any other type of health plan should consult their particular health plan regarding the health benefits for testing and treatment of COVID-19 provided by the plan, including the potential application of any deductible or cost sharing." The decision came after the American Benefits Council, which includes many of the largest corporations in the country, sent a letter to the Treasury Department asking it to confirm that HDHPs could cover COVID-19 testing and treatment without enrollees first having to meet their deductibles.
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Retired and Facing Stock Market Volatility
If you are concerned about the effect that volatility is having on your investments and retirement funds, you can call us so we can help you devise a strategy that you are comfortable with. In the meantime, here are some tips to consider:
Resist the urge to panic sell The problem with panic selling is that you will likely plan to get back into the market, and the same stocks you had before, when things settle down. But most people are terrible at timing the market and, in order to profit from this strategy, you need to make two timely decisions:
If you get either of these wrong, it can hurt your financial situation rather than improve it. Most people who choose to get out rarely get back in on time. This results in them missing out on rallies that are often part of a recovery. There is another consideration as well: If you have your money in a taxable account, selling will trigger long-term unrealized gains, so you'll take a tax hit that you could have deferred to the future. Plan ahead The key to successfully riding out stock market volatility or a downturn in retirement is to plan for it ahead of time. Some financial planners recommend allocating a few years of income in bonds, for example. During market downturns, you can opt to remove the funds from your bond investments, which will not be affected as much by a stock market downturn ― and may even perform better. So, during the years that stocks are down and recovering, you can sell bonds for your minimum withdrawals. In this way, you are selling investments that are up or down the least to meet your income needs. Use multiple sources Develop sources of monthly lifetime retirement income that don't drop if the stock market crashes. Use these "retirement paychecks" to cover your basic living expenses, or at least come close to doing so. Basic living expenses include housing, utilities, food, medical insurance premiums, and income and property taxes. For a good majority of Americans, their Social Security check is the main source of income and fortunately, it's protected from stock market volatility. Try to live a life where this check covers most of your main living expenses. If you need additional retirement paychecks to cover your basic living expenses, consider using a portion of your retirement savings to purchase a low-cost immediate fixed-income annuity. Talk to us about what your options are. Dial back on withdrawals If you need to budget but have many of your funds in stocks, see if you can pay for your living expenses without tapping your 401(K) or IRA account. If you can leave it untouched and wait for the eventual bounce-back, you'll be better off since you won't be depleting your stock holdings. So, you if you were considering removing a significant portion of your retirement account to cover upcoming expenses, you would lose money. If you can postpone that decision by tapping other funds that are not tied to the stock market, you could ride out the downturn and not be much worse off. If you have already started taking out funds from your 401(k) or IRA and are withdrawing more than your required minimum distributions, you may want to cut back to the minimum withdrawal instead in order to reduce the impact. Coverage Disputes Over Online Attacks Grow
In this latest case however, a judge in the U.S. District Court in the Southern District of New York ruled that American International Group must cover $5.9 million that a company had been duped out of by Chinese hackers in 2016.
AIG had disputed the claim saying that the professional liability policy the business had does not cover "criminal acts," adding that it had never sold the company a cyber policy. These disputes are becoming more common and you should pay attention to your policy exclusions, as well as consider cyber insurance, if you have assets that could be exposed through a cyber attack or fraud. How was the business scammed? SS&C Technologies received spoof e-mails that purported to come from one of the company's clients, Tillage Commodities Fund, a commodities investment firm. The e-mails instructed the company to make six wire transfers to a bank account in Hong Kong. The scammers masqueraded as Tillage employees with e-mail addresses that spelled "Tillage" as "Tilllage." But according to court documents, there were telltale warning signs that the e-mails were fishy:
Based on the above, staff at SS&C were not too diligent in looking out for possible business e-mail compromise scams involving a third party hacker posing as someone else (a client, a vendor or even a manager or president of the targeted company) via e-mail and requesting a wire transfer into a bank account. This type of scam, which cost organizations $300 million every month in 2018, according to the U.S. Department of Treasury, is covered by a standard cyber insurance policy. SS&C did not have a cyber policy, so it sought coverage under its professional liability policy for the losses it sustained when transferring those funds. AIG did pay for SS&C's legal defense costs after Tillage Commodities sued, but refused to cover the $5.9 million in stolen funds. According to court documents, AIG's policy included a clause that it would not provide indemnity coverage for losses arising from "dishonest, fraudulent or criminal acts." What this means for your firm? While this case worked out for the insured party, businesses should not rely on their non-cyber insurance policies to continue paying claims. As costs for cyber attacks like ransomware, malware, stolen data and business e-mail compromise scams grow, insurers are increasingly including clauses that explicitly exclude coverage for those risks. If you have any important company assets in digital form and/or make or receive payments online, it would be wise to secure a cyber insurance policy. If you don't, you can try to seek coverage under other policies. That it may be difficult to obtain, but not impossible. For example, if your company has D&O liability insurance and/or crime insurance, it may be able to seek coverage for any ransomware events since those policies will typically include coverage for kidnapping and ransom. Some insurers are now providing - either deliberately or unintentionally - kidnapping and ransom coverage that applies to ransoms paid in response to cyber extortion. Among the events that these policies may consider cyber extortion are:
That said, many insurers who provide this coverage likely did not anticipate covering ransomware losses and have started changing their D&O and crime policies to specifically exclude ransomware. Other insurers have added deductibles to the coverage, mirroring the terms of cyber policies, while others have capped the amount of business interruption coverage they will provide for cyber-extortion losses. Smart Home Sensors Can Save You from Calamity
You can set up some smart sensors as stand-alone units with their own dedicated hub, while others are adaptable and can communicate with brand-name smart home hubs like:
The sensors communicate with a central hub using Bluetooth technology, while the hub uses your home Wifi to alert the app on your phone. Here are the sensors that can give you the most bang for your buck in terms of safety and preventing damage to your home, its contents, your family - and even pets. Water sensors There are a number of smart leak detectors on the market, and depending on the brand, the system can shut off water in about five seconds after detecting a leak in your home. This can save you thousands of dollars in property damage. You can place these sensors at specific points where leaks are possible, such under sinks, appliances and water heaters. This allows you to customize a leak detection solution based on your needs or concerns. Some sensors can even detect changes in water temperature, which can help you avoid damage from frozen pipes. These sensor units may also include shut-off valves, which can be installed at strategic locations in your piping. It's best to call a plumber because installing a shut-off valve may require cutting into the water line. Leave that to the pros. Freeze sensors These are typically only necessary in regions that have freezing temperatures and snow for periods of time in the winter. When pipes freeze, they can back up, expand and burst and possibly flood parts of your home. Many of the systems that detect leaks also can detect if pipes have frozen. Like leak sensors, freeze sensors are small devices that constantly monitor the temperature of the object or area they're in touch with. If a sensor detects frozen pipes, it will notify you via your smart phone app or activate a shut-off valve if it's installed. Smart smoke alarms A smart smoke alarm works just like a normal smoke alarm, except it has the added feature of notifying you if there is a fire and you are not home. That gives you the opportunity to call the fire department or a trusted neighbor to ensure a faster response. If you own an Alexa speaker, it has a feature that will act as a smoke alarm by listening for the sound of your regular smoke alarm then send you an alert. There is also a smart 9V battery on the market that you plug into your smoke alarm and which alerts you in case it goes off. Temperature sensors Smart temperature sensors can alert you to changes in areas of your home that need to have steady temperatures, such as wine cabinets, crib rooms, pet enclosures and humidors. Window and door sensors For your home security needs, you may want to consider door and window sensors. They usually come in two parts - one that attaches to the door or window frame, and another that attaches to the door or window itself. When the door or window is closed, the circuit between the two parts of the sensor is complete and so is marked as 'closed' - but as soon as a door or window is opened, the circuit is 'broken,' which triggers an alert. Can You Legally Refuse to Hire Nicotine Users?
Already, some hospitals have instituted similar policies, and Alaska Airlines has had a policy of not hiring smokers since 1985. But with U-Haul making the move, other companies, both large and small, are weighing the choice of whether they should implement a similar policy.
Although U-Haul subsidiaries operate in all 50 US states, the policy will be implemented in the 21 states that do not have discrimination protections for smokers on their books. Those states are: Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Georgia, Hawaii, Idaho, Iowa, Kansas, Maryland, Massachusetts, Michigan, Nebraska, Pennsylvania, Texas, Utah, Vermont, Virginia and Washington. Benefits of a no-nicotine policyA 2013 Ohio State University study that reviewed smoker absenteeism, productivity and health insurance, found that they cost their employers an average of $6,000 more per year than those who have never smoked. Smokers overall are less productive. A 2007 Tobacco Journal study by Petter Lundborg of University of Amsterdam found that smokers took 11 more sick days per year than nonsmokers did - eight days when you factor in variables like a smoker's tendency to take more risks and have poorer health. There also are other indirect effects on productivity, such as an increased rate of early retirement in smokers, the study found. Other studies have found that tobacco users have an increased risk of short-term illness, and a higher risk of developing chronic illness, resulting in even more missed days and significantly higher health care costs. Smokers can also have a negative impact on employee morale, as non-smoking colleagues may perceive that they abuse their breaks and do less work as a result. Tough choice for employers Employers who are considering similar policies need to tread carefully. Twenty-nine states and Washington, D.C. have laws on the books that bar employers from discriminating against an employee's lawful off-duty activities (such as nicotine usage) or prohibit discrimination based on tobacco use. Also, if you have operations in multiple states you would have to roll out different policies in different jurisdictions, which ends up costing your organization more money. On the other hand, there are no federal laws barring action against nicotine users. For example, nicotine addiction is not a disability under the Americans with Disabilities Act. Attempts by government employees to gain protection for their right to use nicotine products have routinely been shot down by courts. Given the state-specific nuances associated with this issue, you should consult an attorney if you are thinking about implementing a nicotine-free hiring policy, to make sure you can do so under the law. Additionally, employers who have tough rules on nicotine use may have a harder time attracting talent, potentially causing them to miss out on strong candidates who use nicotine products. All this said, employers can still regulate and limit an employee's on-site nicotine use in the workplace. It's wise to have policies in place that bar smoking and vaping on the premises to protect customers, the general public and your non-smoking employees from second-hand smoke and vape. Studies have shown that the best way to get someone to quit smoking is not through punitive measures, but through incentives. Many wellness plans include smoker cessation programs that provide incentives to employees who quit smoking. Some of these programs impose surcharges on nicotine users that are then used to cover claims and pay for administrative expenses under the employer's group health plan. Lower-Income Gen Xers, Baby Boomers Will Run out of Money in Retirement: Study Recent research showed that baby boomers and Generation Xers who are in the lower income brackets are more likely to fall short of their retirement goals, which will leave them lacking enough money to live on.
Researchers at Northwestern Mutual Planning & Progress found that some people may run out of funds within their first year of retiring, and that 22% of Americans have less than $5,000 saved for retirement. Even some people who fell in the highest income brackets would likely run out of money at some point during retirement. The outlook for many of their futures remains grim. The survey found:
After gathering these findings and analyzing them, researchers point out that people who are in the lowest income bracket are extremely vulnerable. With the possibility of not only running out of funds but running out quickly, people who are in this category should be concerned and take steps to enhance their retirement preparedness. People in all categories, however, can find themselves at risk, and each person's likelihood of running low on funds will depend not only on their current financial status, but also on their health status. Not all health issues are predictable, and what exists now may be complicated later. Some people may need extra funds for health care. Even if health facilities for skilled nursing care will pay 100% of costs, some households will still run out of money far before they should. What to do? First off, do not expect Social Security to keep you afloat in your golden years. It won't provide enough income for you to live off in retirement. If you're like the typical recipient, your benefits will cover roughly 40% of your previous income, assuming that Congress doesn't move to slash future Social Security benefits. If you have not started saving for retirement, regardless of your age, start doing so now. Thanks to compounding interest and earnings, the more you start socking away now, the more money you can earn in your retirement funds in the future. If you begin setting aside a decent chunk of money each month, and continue doing so consistently for the remainder of your career, you have more than enough opportunity to catch up. The following shows how much money you would have when you retire at the age of 67 if you start putting away $500 a month at different ages:
You should review your retirement plan and accounts annually and increase how much you set aside if you feel you are not meeting your retirement savings goals. It's never too late. Update your options as needed, and take into account any long-term changes in health conditions. To learn more about your options, call us. The specter of having a severe illness or injury that requires long-term care is a scary proposition for most anybody, not to mention the financial obligations you would face. But trying to time when is the best age to purchase a policy is not an easy decision. Obviously, you don't want to buy the policy too early and unnecessarily spend thousands of dollars on premium over your life for coverage you may not need until you are much older. The younger you are when you buy a policy, the lower your premiums. That said, people typically do not purchase long-term care policies in their 30s or 40s since they are looking at a long time-horizon for when they would need to file a claim. After all, the policy may not be needed for 30 years or more. At the same time, if you wait until you are in your late 60s or early 70s, the premiums may be cost-prohibitive for you - not to mention you may have trouble finding an insurer willing to write your policy. For example, based on the "Genworth 2019 Cost of Care Survey," if purchased today, a long-term care policy with a maximum daily benefit of $150 a day for three years would cost an estimated:
As you can see, the ideal time cost-wise is probably in your 50s and 60s. But before pulling the trigger, you should think about how the premiums fit into your life and other obligations. If you have children who have not yet graduated from college, they will be your major concern. You should carry enough life insurance to see them through. But after your children, if any, are on their own, you might take the funds you were using to pay for life insurance premiums and use them to finance long-term care insurance premiums instead. What policies cover Long-term care insurance covers:
When shopping for a policy, you will have many choices to make: The trigger - Policies will have a trigger for when payments can commence. Often, policies base qualification on cognitive impairment or the need for assistance in at least two activities of daily living (dressing, toileting, eating, transferring, bathing and continence). Inflation riders - As you know, health care inflation is never-ending. While $150 may be sufficient to cover your cost of care today, that may not be the case in a decade or 20 years from now. With long-term care insurance, you often have the option to buy an inflation rider with the policy, which will increase the allowance for daily benefits by a certain percentage a year, like 5% on a flat or compound basis. But, you need to know that this type of rider comes with a price in increasing premiums. Some experts recommend that buyers aged under 70 purchase an inflation rider, while anybody older than 70 does not need to do so. Elimination period - The elimination period is the time the insured must wait before the policy starts paying out. During that period of waiting, you will be on the hook for long-term care expenses. Typically, the waiting period is anywhere from one to 90 days, but it could be even longer. The longer the elimination period, the lower the premium. That said, the premium savings you achieve by choosing a longer elimination period may not be worth it for you. Don't fall into the disclosure trap One thing you have to be very careful about when applying for long-term care insurance is full disclosure about your pre-existing conditions or prior illnesses. If you fail to tell the insurer about an illness, the company may refuse you coverage at the time you file for benefits. It's in your best interest to be upfront about your health, as you would rather be denied during the application process than have your claim denied after paying your premiums for years. There are other options available: There are life and annuity products with long-term care options available depending on your health, age, and resources that can work well too. Ready find solutions to your long-term care needs?
Adult Children on Your Policies Can Create Coverage Gaps
Homeowner's insurance
Under a homeowner's policy, the insured is limited to:
This causes issues for some people, as many children are still in college beyond the policy cut-off date. You could run into coverage gaps for their contents and personal liability if:
The picture gets murkier these days as well because many parents are renting an apartment or buying condos for their adult children to live in. Some parents may mistakenly think that since they are footing the bill, their insurance may still cover their adult child. But that's not the case. Auto coverage Typical auto insurance policies will include family members under the coverage. The standard policy form defines a family member as "a person related to you by blood, marriage or adoption who is a resident of your household." For your adult child's vehicle, insurance coverage is determined by:
As you can see, even if a parent owns the title of the car and it's insured under the parent's policy, if the adult child is driving the vehicle and lives on their own, they could run into coverage issues in certain instances. The following scenarios could leave you with coverage gaps:
If you have an adult child on your policy, play it safe and give us a call so we can go over your policy and circumstances with you to identify any possible coverage gaps. Without the proper insurance protection for injuries and damages, you risk significant financial liabilities that you may not be able to cover. Getting All the Facts for Your Estate Planning
The threshold for lifetime gift and estate tax increased - In 2020, the amount has risen to $11.58 million for individuals; it is $22.8 million for couples. This is the maximum amount of gifting via money or asset transfer allowed during a person's lifetime without tax consequences. The limit more than doubled in 2019 after tax legislation was signed into law by President Trump.
The annual gift exclusion amount is $15,000 - The annual federal gift tax exclusion allows you to give away up to $15,000 ($30,000 for couples) in 2019 to as many people as you wish, without those gifts counting against your $11.58 million lifetime exemption. Some types of gifts are not subject to this limit. For example, gifts to a spouse, a medical fund or an education fund are not included. Also, education and medical gifts are not taxable. When making medical or education gifts, transfer the funds directly to the institution rather than sending them to an individual recipient. Lifetime exclusion amount portability is still an option - Estate tax laws started allowing surviving spouses to use remaining lifetime exclusion amounts of their deceased spouses in 2011. In addition to simplifying estate planning, this gave couples a way to access exclusion amounts. Couples can transfer up to $22.8 million of their taxable property to their heirs without estate tax penalties. However, transfers must be made by election in the estate. The gift and estate tax effective rate is 40% - If your estate is under $11.8 million, congratulations: The federal estate tax will not apply to your estate. Any amounts over that threshold will be taxed at marginal tax rates that cap out at 40% for an estate worth more than $1 million over the cap. Remember state gift tax laws - While the rules covered in the previous sections apply to federal laws, they do not apply to state laws. Many states have laws that require estate and gift taxes. If the taxes include lifetime exclusion limits, they will be lower than the federal limits. To learn about individual state laws, discuss concerns with an agent. It is not possible to avoid these taxes in the states where they are required. The takeaway While estate planning is not something most people think about often, it should be considered every year - and when any major life changes happen. A new addition to a family, a marriage, a death in the family, getting a major promotion and big health changes are just a few examples of times when estate plans should be reviewed and changed as necessary. Neglecting these changes can cost a person's heirs a considerable amount of time and money. Stay on top of these issues to keep plans running smoothly. Call us 540-712-2199 to learn more about optimizing estate planning. Employers Guide for Dealing with the Coronavirus
On top of that, if you have workers who come down with the virus, you will need to consider how you're going to deal with sick leave issues. Additionally, workers who are sick or have family members who have stricken, may ask to take time off under the Family Medical Leave Act.
Coronavirus explained According to the Centers for Disease Control, the virus is transmitted between humans from coughing, sneezing and touching, and it enters through the eyes, nose and mouth. Symptoms include a runny nose, a cough, a sore throat, and high temperature. After two to 14 days, patients will develop a dry cough and mild breathing difficulty. Victims also can experience body aching, gastrointestinal distress and diarrhea. Severe symptoms include a temperature of at least 100.4ºF, pneumonia, and kidney failure. Employer concerns OSHA - OSHA's General Duty Clause requires an employer to protect its employees against "recognized hazards" to safety or health which may cause serious injury or death. According to an analysis by the law firm Seyfarth Shaw: If OSHA can establish that employees at a worksite are reasonably likely to be "exposed" to the virus (likely workers such as health care providers, emergency responders, transportation workers), OSHA could require the employer to develop a plan with procedures to protects its employees. Protected activity - If you have an employee who refuses to work if they believe they are at risk of contracting the coronavirus in the workplace due to the actual presence or probability that it is present there, what do you do? Under OSHA's whistleblower statutes, the employee's refusal to work could be construed as "protected activity," which prohibits employers from taking adverse action against them for their refusal to work. Family and Medical Leave Act - Under the FMLA, an employee working for an employer with 50 or more workers is eligible for up to 12 weeks of unpaid leave if they have a serious health condition. The same applies if an employee has a family member who has been stricken by coronavirus and they need to care for them. The virus would likely qualify as a serious health condition under the FMLA, which would warrant unpaid leave. What to do Here's what health and safety experts are recommending you do now:
If you have an employee you suspect has caught the virus, experts recommend that you:
If there is a massive outbreak in society, consider whether or not to continue operating. If you plan to continue, put a plan in place. You may want to:
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