Category Archives: Running Your Business


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]

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.

Countdown To Obamacare Special Report

admin-ajaxIn 100 days, the Affordable Care Act, otherwise known as Obamacare, will become law the land. Some key elements of the the bill will not take effect on January 1, 2014, and, if some Republican members of congress have their way, the law will not be funded and essentially be voided.

However, as Small Business owners know, expecting only one unlikely outcome is no way to run a business. Thus, with barely three months left until the law is in effect, Newtek, the Small Business Authority,
a health insurance broker for small businesses, recognizes there is an urgency for both employers and employees to understand what to expect and what to do.

Beginning Monday, we will be posting five blogs here to help you understand the key elements of the bill that are going to take effect.

The first blog, “Understanding the Exchanges” will cover the newest, and perhaps most critical element of the Affordable Care Act — the online marketplace created by the government to shop for health insurance plan.

The second blog, “ Understanding the Exchange Plans” explains the five different coverage options available on the Exchange.

The third blog, “ Understanding The Private Market Options” addresses the changes many health care plans will be making as ObamaCare takes effect.

The fourth blog, “ The Five Things Small Businesses Need To Know” will identify what is required of employers and employees.

The fifth blog, “ The Three Q’s of ObamaCare: Quality, Quantity, and Quitting” will cover the impact ObamaCare may have on you and your family’s healthcare.

With the end of the year fast approaching, businesses need to anticipate both their responsibilities and their employees needs in the coming year. These blogs should illuminate many of the concerns and eliminate some of the anxiety about the bill.

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.

SHOP Delayed (and What That Means to Individuals and SMBs)

business-health-care-delayTo be clear, SHOP, or the Small Business Health Care Options Program, is a piece of the Health Reform Act (in addition to HIX which are the Health Insurance Exchanges for individuals) that has been delayed. Specifically, SHOP is an insurance exchange that is intended to provide small businesses a range of choices.

So what does the postponing SHOP do in the meantime? Well, it seems that businesses that fit into this category now have but one viable plan, contrary to what was promised, at least for the time being.

Why the delay?

Neil Trauntwein, an employee-benefits lawyer for the National Retail Federation, says the delays have at least allowed business leaders to return to Capitol Hill to discuss such issues as whether the cutoff for the employer mandate should be less than 50 full-time employees and if a 30-hour week is the best definition of a full-time worker.

It is important to note that this one-year delay will impact the 33 states that are using federally facilitated or partnership SHOP Exchanges. There are 17 states that are implementing state-based SHOP Exchanges that have the option to choose between limiting a small group employer to one benefit plan choice for its employees or could allow the employees of a small group to choose among several Qualified Health Plans in 2014. For list of which states have state SHOP Exchanges, the information is posted on the federal government’s health care reform website. Certainly the endgame is uncertain when it comes to SHOP, however, we still must prepare for the rest of Healthcare Reform.

In the meantime, there are other aspects of the Healthcare Reform Act that remain on schedule and are seemingly ramping up. Currently, state and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up for federally subsidized coverage beginning on October 1. The poor will also be able to sign up for Medicaid coverage in 23 states that have opted to expand the program.

Additionally, most large employers already offer health insurance and CBO (Congressional Budget Office) said few are expected to drop coverage because of the delay. Nevertheless, it seems the SHOP delay will have its effects by NOT being available.

For example, the change will result in a $10 billion reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, estimates the CBO. They also predict it means another $3 billion in added costs for exchange subsidies.

Why?

Basically, it is because about half of the 1 million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programs including Medicaid.

It should be pointed out that an increase in in taxable compensation (resultant of fewer people enrolling in employment-based coverage) would offset those factors by about a third.

Managing the Healthcare Reform Act

moneystethoscope-1-e1364393455404Under 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. (Update: the ACA has been amended to extend the deadline for the employers of 50+ requirement until 2015).

In addition, many small businesses will be eligible for tax credits under the PPAHCA, as well as taking under consideration managing full-time and part-time staff to meet or beat the 50 employee threshold. Will small business owners hire advisers and consultants to get them through this knothole? Will they try to read and understand the 2000+ page piece of legislation themselves? Healthcare expenditures are approaching 20% of GDP, thus spiraling healthcare costs is a significant concern for small business owners.

Fully Enacted Healthcare Reform – What to Expect

Health care reform5As the full enactment of Obamacare approaches, there are many factors that business owners know to look out for.

  • Do I need to provide health insurance to my employees?
  • Should I go to an exchange?
  • How will the mandate impact my business and profitability?
  • How much are my health insurance premiums going to go up?

These are all questions that many business owners are starting to look. Below are some points that you may not have thought of that should go into your business planning.

We all know that health insurance premiums are expected to go up, but do you know how much? Small groups (2-99 employees) can expect to see price increases between 20% and 50% upon the full enactment of reform. When factoring in medical trend, taxes and fees, carrier and product changes and the introduction of community rating, your premiums will jump significantly. As a small business owner, asking your existing broker for a quote is not going to solve this problem as it will require a new method behind providing employees with health insurance. The objective of a health insurance plan should not be to carry you over to the next year with as little pain as possible, but to address your company’s healthcare expenses for the long term. You need a road map that will allow you to offer affordable coverage to employees while keeping costs in line.

Some employers are looking to drop plans in order to remain profitable. Unfortunately, this is not the answer either and can cause more pain than gain. With the Supreme Court upholding the individual mandate, all Americans will be required to obtain health insurance or pay a penalty. The cost of obtaining coverage for individuals is expected to jump 100% – 200% with an average increase of 116%. This is going to push many employees who either have individual plans or would ordinarily look at obtaining individual plans to go to their employer to obtain coverage. By not obtaining small group coverage, you risk losing your talent to other companies who are willing to absorb the cost. This can result in the loss of business and inevitably impact the bottom line more then not offering coverage at all.

The federal funding for health care reform is already facing challenges that will impact all small business owners. In the deal that was reached in the fiscal cliff debate, an agreement was made to cut the remaining $1.9 billion dollars that was set to fund Consumer Oriented Operated Plans (CO-OP’s) through the Affordable Care Act. $1.9 billion was already spent to fund the creation of CO-OP’s. These will remain in place; however no more federal money will be used to create any additional CO-OP’s at this time. This is another example of where the Obamacare bill has been modified in order to maintain its functionality. This will lead to higher costs in term of premium and taxes for small business owners and individuals seeking health insurance in the short term, to cover the high costs of implementing the systems and covering up all other budget shortfalls that would have ordinarily paid for these costs.

The Small Business Authority is here to answer any related questions you may have. Please contact us either by commenting below, tweeting us directly@The_SBA or sending an email to info@thesba.com.

 

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.

Obamacare Employer Mandate Delayed Until 2015

news-delayed-1211pgOur recent blogs and Small Business Authority Market Sentiment Survey have depicted a sense of uncertainty and lack of clarity amongst business owners as to what to do to prepare for the PPAHCA. This uncertainty has continued to exist with a persistent stubbornness. The administration, in its wisdom, has delayed a key provision in ObamaCare, the “Employer Mandate.” Allbusinesses with over 50 employees must provide health insurance to their staff  or face fines up to $3,000 per employee.

The consumer mandate, which Chief Justice Roberts refers to as a tax, is not delaying its start date of 2015, so individuals not covered under an employer plan must obtain health coverage or face fines beginning in 2014. This announcement came yesterday from the Treasury Department, right before the July 4th holiday is to begin for many businesses and Americans.

Our clients, small independent business owners, could argue the merits of the PPACA ad nauseum, but could not really argue the concern over the rush to implement it quickly. As Nancy Pelosi once said, you have to “pass the act to know what’s in it.” This message and confusion has created great pushback by taxpayers, citizens and even government administrators, who know that this 2000+ page act requires a huge cost and administrative burden to implement and manage. Rules are being perpetually rewritten and updated and a January 2014 start date for employers was just unrealistic.

Now, with the consumer mandate still out there, does this shift an economic burden to uninsured workers or consumers for a year? Or just expand our deficit further? Both? Probably both.

The benefits of ObamaCare, such as insuring all, even those with pre-existing conditions, still are on track for January of 2014. Exchanges are planning on being launched on or before January 2015. Most of the act, so far, is in motion. Our clientele still fears government becoming larger in many areas, including healthcare. Our clientele still fears an ever-expanding deficit. Our clientele is also happy that this provision is getting delayed so that they will have more time to plan and make wiser choices given the new uncertainty and changes being brought in by the act.



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