Category Archives: Reducing Your Costs


5 Important Questions for SMBs Regarding Cyber Liability & Data Breach

cyber-securityCyber criminals do not discriminate and often target small entities. In fact, “31% of all breaches in 2012 occurred at organizations with 100 or fewer employees,”1  spanning across diverse industries including finance, retail, manufacturing, technology, government, and more.

While some business owners may understand the dangers of  hackers infiltrating their network and stealing private information (i.e. credit card/checking account numbers), most believe their IT systems are secure with passwords and firewalls. Moreover, most seem comfortable that even if their network were penetrated, a privacy breach is covered under their existing business insurance. Unfortunately, that’s not the case at all.

Here are some questions that SMB owners should be asking about their coverage in today’s tech-heavy world:

1. “I have a general liability policy, doesn’t it cover me against cybercrime?”

No. The property policy protects the computers but not the data that is stored on them. The general liability policy specifically excludes claims of copyright, trademark and trade secret infringement. Although there have been limited instances of coverage for privacy breach under Liability Policies, relying on this for coverage is not in your best interest.

Business Interruption coverage, an essential part of any businesses risk management plan, will not respond to outages caused by computer viruses or hackers. In addition, 47 U.S. states now have laws requiring notification in the event of a potential loss of PII (personally identifiable information), as well as fines and penalties for not reporting the breach. Many carriers offer policies that can cover regulatory fines or penalties incurred because of a data breach.

2. “How much does Breach Insurance cost?”

Cyber liability insurance is still a fairly new concept, so there’s a lot of variation among policies, and a lot of room for negotiation. We have seen policies starting as low as $995 for a small business and premium rises as the business gets larger.

3. “We have an IT department and we have firewalls. Isn’t that enough?”

Not usually. Many data breaches occur because of an employee error or an “inside job” from rogue employees. From passwords tacked on computer screens in plain sight and employees opening suspicious email and downloading malware to lost laptops and smart phones, a large portion of security breaches occur because of employee actions. Also, keep in mind that a data breach can occur from paper records and a properly written policy will provide protection for a breach of paper files. Outdated customer information, old credit card receipts and employee files that have been thrown into the Dumpster are just as vulnerable as if a hacker logged into your network.

4. “We use a third party vendors. Do we still need this coverage?”

Are you taking online reservations? Are you processing credit card payments online? Even if you utilizing a third-party vendor and your network is not storing the data, your customers’ personal information, in case of a data breach, is still your responsibility.

5. “What are the state’s privacy notification laws, fines and penalties?”

When it comes to the unauthorized release of personally identifiable information (PII), there is no federal mandate governing privacy notification, so each state has its own law, so you must be aware of your responsibility at the state level.

In California, for example, S.B. 24 requires the inclusion of certain content in data breach notifications including a description of the incident, the type of PII breached, the time of the breach, the toll-free numbers and the addresses of credit-reporting agencies. In addition, S.B. 24 requires the breached business to send an electronic copy of the notification to the California Attorney General if a single breach affects more than 500 residents. (California already requires notice to the Department of Public Health for breaches involving patient medical information).

1 [source: Travelers]

Newtek CEO Featured in Daily News Article

Barry-SloaneCEO Barry Sloane of Newtek Business Services was quoted in the September 30, 2013 Daily News article “Your guide to Obamacare: Young entrepreneur sees value of New York’s insurance marketplace firsthand.

Mr. Sloane said, ”Although the exchanges are opening, and do provide another way for you to purchase insurance, they are not necessarily the best way to go. Look at the pricing, network size, and the administration costs to make sure that you are making the best decision.”

Click here to read the article in its entirety.

The Three Q’s Of ObamaCare: Quality, Quantity, and Quitting

iStock_000011181067XSmallIt’s important to understand the impact Obamacare will have on your family’s healthcare. The most important effects can be covered with 3 Q’s: Quality, Quantity, and Quitting.

Quality: The Affordable Healthcare Act may change the quality of healthcare in the United States forever. There was time in the United States that the sacrifice of going to Medical School and studying for 8 total years, as well as interning, was well worth the wait of being awarded into one of the most noble professions in society. Doctors were honored, well paid, and well respected. The stresses on the healthcare system, with tort litigation soaring and the lack of accountability in the private and public sector for healthcare, has taxed the profession severely. Our medical clientele representing small businesses are seriously concerned about the quality of care for patients in the new environment, where 11 million or so new patients will have access to care with the same pool of physicians. The Affordable Healthcare Act may take away the freedom of good practice and end up overworking and overtaxing medical professionals.

Quantity: The supply of new physicians entering the market may be limited. The best and brightest from all over the world used to want to be in America to practice medicine. In the new highly regulated environment, the best and brightest minds may opt out for other professions in less regulated careers where they can let their talents and creativity provide a valuable resource to society. This potential effect can dramatically reduce the quantity of physicians in the United States.

Quitting: There may be an increased number of quitters that includes doctors, hospitals, and private health insurance  - providers who can no longer make a living or a profit by practicing under these ACA rules. Many private insurers are reducing plans, leaving states, raising deductibles, and altogether leaving the system, as they can no longer provide a return on investment, on their capital or their time, by providing healthcare to American society within the current framework. Quitting the system, obviously, will grossly affect our other 2 Q’s (Quality and Quantity). Some have called this “Quazy.”

Root of All Evil or the Holy Grail? Health Insurance in the Age of Obamacare

girl-reaching-appleMany believe that the private health insurance market has been the “root of all evil” when it comes to offering affordable health care in the United States today. Ironically, these same companies that many consumers dislike may end up being the same companies that consumers turn to with the implementation of Health Care Reform.

With the implementation of health care reform, companies will have the option to sell their plans on the exchange, off the exchange or have a plan offering in both markets. Some carriers will choose to sell their plans on theexchange in an effort to enroll more consumers that ordinarily would not be able to purchase coverage without the help of government subsidies. Although these plans may be more affordable and purchasing them will come with help from the US government through subsidies, their networks are not appearing to be as expansive as those of a private market carrier. This is vital to obtaining the value and service that you will need as a consumer. If you are out of network or do not have an adequate number of health care providers in network, you may be left with an insurance plan that does not cover some major healthcare expenses.

The private market plan networks are expected to remain as expansive as they are now, and for many consumers are the reason why they pick a certain plan. Their plan option may cost more than another option they may be looking at, however, if that network has more doctors available, or nationwide coverage for an individual that travels a lot, then a higher premium may be a small cost to ensure coverage.

The private market options will also be able to offer the package pricing on the ancillary lines of coverage that are not available through the exchangecurrently. United Healthcare, Aetna, and Humana, and others that offer dental, vision, disability, and group life products, will be able to integrate many of these products and services into existing group health offerings. Pricing discounts, streamlined and consistent billing, as well as consistent online user access are all benefits of implementing a group health insurance policy through the private market. By going through the exchange, these services need to be placed in addition to exchange plans, which can create duplicate processes which can be timely and expensive for a small business owner.

Carriers like Aetna and United Healthcare have been very vocal lately, issuing press releases in some of the largest markets for healthcare, stating that they will not be participating in the state based exchanges. Aetna has advised that they will not be participating in the New York or Connecticut exchange, and United Healthcare will not participate in the New Jersey, or Pennsylvania exchanges. This is catching many off guard as these titans of the private market believe that they can offer coverage that is more reasonably priced and more accessible by consumers by not participating in the exchange. This news will definitely disappoint many as they are looking to enroll in exchanges with a more established and reliable partner in the healthcare space. This also provides some insight into the eyes of the carriers to the strength of the exchanges in terms of cost and plan offering of healthcare as opposed to what they can deliver to consumers outside of these marketplaces.

It’s Simple – SMBs Need (and Appreciate) Agents and Brokers

iStock_000018435702XSmallAccording to the J.D. Power 2013 U.S. Small Business Commercial Insurance Study, small businesses rely on independent agents and brokers to act as risk advisors with a deep understanding of their businesses. It is important to these business to have such entities rank insurers on the breadth and quality of their policy offerings – something they are not qualified or experienced enough to do on their own.

Based on responses from almost 4,000 small business insurance decision makers at companies under 50 employees, the inaugural study examined overall customer satisfaction, insurance shopping, and purchase behavior within the demographic.

Overall satisfaction with respect to the insurance-buying experience was based on five disparate factors including interaction, policy offerings, price, billing and payment, and claims. Here are the findings in order of importance:

  • On a 1,000-point scale, small-business customer satisfaction came in at 777. This number jumped to 835 when an agent or broker who understood their business provided risk guidance.
  • Policy offerings, not price, are more of a determinate in how small businesses select an insurer. (While price remains a factor, quality takes a front seat.)
  • Buyers who stay with their insurer for more than 2 years base their decision on the level of service.
  • Buyers were most satisfied with their agent interaction when communication was in person (854), compared with 819 when communication was via email.
  • Customer satisfaction was highest among small businesses with 11 to 50 employees, with higher scores influenced by agents and brokers spending more time in person with these key accounts. In fact, figures show that the higher the employee count, the more important the product selection becomes. Nearly two-thirds (62 percent) of such small businesses, indicate that policy offerings are a leading reason for retaining business with their insurer. This compares favorably to the 50 percent of businesses with fewer than five employees where cost seems to be a bit more of a factor.

Is An Exchange Option Right For You?

Apple in HandOne of the most pressing questions that individuals and small business owners have regarding the exchanges (the new online market places being set up by the state and federal governments to help consumers purchase health insurance), is whether these options will be better than their current private market options.

As we approach the expected opening of the exchanges on October 1st, below are 5 points that will help you determine if the state exchanges are a better option:

  1. Cost – If you were quoted with no medical rate up, and have seen consistent pricing, you will most likely receive a better deal in terms of coverage by staying in the private market. Unless you have been denied coverage previously and do not have any exclusion on your policy, there is a good chance that your pricing will be in line with the exchange pricing. Once we factor in community rating that will take place on 1/1/2014, you would likely see a major price increase, by going to the exchange.
  1. Structure of Exchange Plans – The exchange plans do offer policies with varying minimum essential health benefits, but the strength of the networks are still unknown. If a plan is offered at a lower rate, and only offers local hospital network coverage, then it may not suit your needs. This is especially if you travel for work or on vacation, or live in a more rural area that already has limited health care providers.
  1. Application – The preliminary application for the exchange enrollment is 16 pages. The exchanges will provide assistance in completing the applications however the process is looking to be more complicated than the carriers are currently offering. Most carriers have a quick 10 minute online application, where the exchange plans cross reference carrier systems and the IRS, to determine eligible subsidies.
  1. Operations – There is still the uncertainty that the exchanges will be opening on time. We are currently about 60 days out from the exchanges opening, and many of them have not started advertising or generating awareness of their opening. Pair this with the system and servicing issues in requiring insureds to complete a 16 page application, and not having any experience in operating these programs, operationally there are many obstacles in getting these exchanges up and running successfully
  1. Subsidies – One of the greatest issues with the subsidies through the exchanges is how the subsidies will be managed by the IRS. The government is still confirming how they are going to check the individual’s income to make sure that there is no fraud, and ensure that the appropriate credits are given to the correct people.

4 Biz Options to Manage Increased Obamacare Costs

5.31healthcarecostsRising healthcare costs, Obamacare taxes, and the individual mandates are all major factors that are affecting the price and coverage ofhealthcare plans for businesses today. All small business owners need to take an objective look at the options that are available to their business, and how we can effectively contain costs while making sure your employeebenefits package remains competitive. Below are 4 important options to consider in order to manage the increases costs of Obamacare:

1)      Address a long term solution and institute Wellness Programs. As an employer, you want to choose a health plan option that will be affordable to employees but will also provide a game plan for the business in the coming years. By looking at future budgets, plan options, growth in workforce and employee education, you can establish a plan that will ensure you are reform compliant, within budget and on the same page as your employees as to what kind of benefits they can expect. Additionally, you may want to consider instituting Wellness Programs designed to encourage employees to live healthier lifestyles. By providing cash or gift incentives, Wellness Programs help motivate employees to engage in and sustain healthy behavior.

2)      Manage employee headcount. Under the PPAHCA, small businesses with 50 or more employees are mandated to buy health insurance for their employees or pay a fine, or tax, according to Justice Roberts. This may force some employers to get creative by possibly switching many of their full-time employees into part-time roles or splitting their companies into two separate businesses in order to control headcount.

3)      Re-examine benefits to employees. Review the benefits currently offered to your employees and decide which are absolutely necessary to maintain. While removing certain benefits will manage costs (which is essential to the viability of a company health plan), it may bring down employee morale and may make your company appear less competitive with other employers in the same field. Unless your benefit package is out of line with competitors, your goal is ensure that your benefits package remains as comparable as possible. If you eliminate too many benefits you may risk losing some of your most valuable staff and revenue producers to local competition.

4)      Share the increased cost of the health plan with your employees. While it is important to make sure that there is a vested interested in benefits by the employees, it should be part of a larger plan. You want to make sure that employees not only share in the sacrifice, but also in any benefits as well. If you only look to pass along the full cost of the plan increase to the employees, you will risk driving them out of the plan (which can cause eligibility issues), or to look for work at an employer that offers more competitive benefits. A better option would be pass only part of the increased cost to the employee, while having the company share in the expense.

At Newtek – “The Small Business Authority” we stand ready to help you review what options work best for your business. Please feel free to contact us with any questions at 855-2THESBA or tweet us directly @the_sba or@SloaneBarry.

 

Health Insurance for Startup Businesses

646178wmgz269y0“I’m thinking about getting a first time health insurance policy, where do I start?”

Purchasing a health insurance policy for the first time can appear to be very overwhelming, especially in today’s marketplace. Below are some key points to keep in mind to help you simplify and better manage the process to ensure the best results possible in today’s market.

Before you even pick up the phone to call a broker, you must make sure to gather the following information:

  • Census of your current employees – This means collecting the name, home zip code, date of birth, and coverage status of the employee (employee only, employee spouse, employee children, and family). All brokers will need this information in order to get back rates from the carriers.
  • Know your budget – Figure out how much money you are looking to spend on a health insurance policy for your business. Knowing how much you want to send allows you to work with the broker to find a policy and/or supplemental health products that can help you meet your objectives.
  • Familiarize yourself with plan options – Have an idea of what types of plans you would like to offer your employees. Even if these plans may not be feasible, they will allow you to frame the conversation with your broker. Make sure to check out our blog post on which plan options may be best for your business.
  • Pull your benefit summaries – If you are looking to match benefits or to an existing or previous plan, make sure to provide this to your broker as well. This will help streamline the options that your broker brings back streamlined options that look to meet your objectives.
  • Identify your long term goals – You expect your clients, and employees to work with you for a long time, and you should make sure to lay out a comparable plan for your benefits. Figure out the average age of your group, what you want to offer them in future years, and what information you think you will need to provide them in order to understand your vision.

Comment or tweet us @The_SBA with any questions.

Newtek Lending a Hand in Sandy Recovery

At Newtek, The Small Business Authority, we just announced several special programs to help small businesses devastated by Hurricane Sandy. Newtek Chairman and CEO Barry Sloane says, “We are here to help small businesses and even moreso, any individuals affected by Hurricane Sandy’s devastation. Newtek, “The Small Business Authority” helps independent business owners in good times and bad, both our clients as well as others. We are a business located in both Manhattan and Long Island and clearly understand the problems these local businesses face. We are here every day, around-the-clock to help with all major causes of concern for small businesses.”

Mr. Sloane offers, “All it takes is a phone call to the 1-855-2-THESBA phone line for help with:

* SBA Disaster Loan Funding

Examining Insurance Policies for wind, flood, and business interruption coverage.

Data Back-up Planning

Cloud Computing Solutions for immediate cost-savings and future disaster protection.

Additionally, it is important to know that The United States has declared several states (and many counties within them) Federal disaster areas. These include areas within Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia.

Newtek understands both individuals as well as small business leaders have myriad assistance questions. Answers may be found at FEMA, U.S. Department of Homeland Security’s Website. Assistance can include grants for temporary housing, home repairs, and other programs to help individuals and business owners recover from the Hurricane Sandy disaster. Moreover, this site also provides helpful programs for medical and other serious disaster-related needs not covered by insurance.

U.S. Small Business Administration (SBA) Disaster Loans are available for businesses located in affected counties and States which include loans up to $2MM for certain property losses and/or fiscal damage.

Business owners’ first step should be to register the affected business by calling 1-800-621-FEMA(3362) or by Internet at www.disasterassistance.gov.

Remember that you can call any time, 24/7/365 at 1-855-2-THESBA or, visit us online at www.thesba.com.

 

Is Workplace Drug Testing Really the Best Thing for Your Business?

Is Workplace Drug Testing Really the Best Thing for Your Business?

Is Workplace Drug Testing Really the Best Thing for Your Business?

Personal accountability is especially important in a small business to meet deadlines, satisfy clients, control budgets, and produce positive results. With fewer employees to run day-to-day operations, small-business owners rely even more on individual contributions than do larger corporations.

A small-business owner has two choices to ensure his company employs personally accountable and law-abiding individuals: (1) a system based on trust, or (2) a system based on test results.

Surprisingly, however, a system based on trust yields higher productivity and employee morale than one based on testing. Take, for example, drug testing in the workplace.

More than half of employers in the United States (57 percent) still conduct drug tests on job candidates, and many employers (36 percent) continue to conduct periodic drug tests on current employees, according to 2011 research by the Society for Human Resource Management1.

Because drug testing costs as much as $50 per candidate, small-business owners (99 or fewer employees) are less likely to conduct drug tests (39 percent) compared with owners of businesses employing 2,500 or more employees (71 percent), according to the same research.

However, in a study of 63 high-tech firms in the computer-equipment and data-processing industry, drug testing was found to reduce rather than enhance productivity, according to a report by the ACLU2. Firms with pre-employment drug testing scored 16 percent lower on productivity measures than firms with no drug testing in the workplace at all, according to the ACLU report.

Here are three more reasons to reconsider drug testing in the workplace:

  • Drug testing is expensive. According to an ACLU study, the federal government spent $11.7 million to find 153 drug users among almost 29,000 employees tested in 1990 – a cost of $77,000 per positive test2.
  • Drug testing is not completely accurate, as it is not a pure science. There is a chance that an employee will receive a false positive. This unfairly destroys the rapport between an employee – falsely accused of using drugs – and an employer – forever biased by the inaccurate results.
  • Drug testing does not catch drug users. Drug testing, especially when conducted exclusively during the hiring stages, doesn’t guarantee that you’ll identify a drug user.

“The vast majority [of workers who use drugs] undergo examinations only when they apply for a job, and they can pass by abstaining from drugs for a reasonable period before the test – or by using a variety of masking agents or devices that make their urine seem clean,” Reynolds Holding wrote for Time3.

If you want to improve productivity and decrease absenteeism in your workplace, you have other methods available for encouraging personal accountability at your company, including:

  • Encourage participation in substance abuse programs. Medical insurance often covers counseling and substance abuse programs. If you suspect that an employee has a problem with drugs or alcohol, promote a substance abuse program at the office. Small businesses are more like families. As such, raising awareness for insurance-covered counseling kindly allows employees to address issues confidentially and quietly, and it shows that your company supports healthy recovery and doesn’t just issue reprimands.
  • Conduct comprehensive reference checks. Instead of testing candidates for drugs, try conducting more comprehensive reference checks on your employees. Ask for three professional and three personal references.
  • Prepare a list of questions in advance that ask previous employers and personal references to honestly evaluate a candidate’s sense of personal accountability. (Of course, check with a lawyer ahead of time to ensure that you’re not violating any workplace discrimination laws.) Reference checks done correctly will identify more areas for potential problems or conflict than will a drug test.
  • Hire outside consultants to improve workplace efficiency. If there is a decrease in productivity at your business, it may have nothing to do with your employees at all. Hire an outside consultant to analyze your operations and bookkeeping.

Implementing more efficient workplace systems may be just what your business needs – as opposed to promoting a culture of mistrust – to increase morale, efficiency, and company profits.

For more information, visit:

1. Society for Human Resource Management: “SHRM Poll: Drug Testing Efficacy

2. American Civil Liberties Union: “Drug Testing: A Bad Investment

3. Time: “Whatever Happened to Drug Testing?”



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