Keep Financials in Order for Fast Bond Acquisition

| April 2, 2024
Engineering working with drawings inspection on laptop in the office and Calculator, triangle ruler, safety glasses, compass, vernier caliper on Blueprint. Engineer, Architect, Industry and factory concept.

Owners of construction projects often require contractors bidding on the job to secure bid and performance bonds.

If you’re not familiar with contract bonds, you might be surprised by the degree to which your company’s financials will be scrutinized as part of the surety underwriting process.

This begs the question of how well you’re keeping your books and whether you use a CPA to do your accounting. If you’re hoping to grow your company and compete for bonded projects, you’ll need to get your financial house in order. The more confident a surety company is about your financial condition, the faster and easier it will be for you to secure the bonds you need.

What is a bond?

A bond is a promise on the part of a surety company to make the project owner whole if the contractor fails to meet its contracted obligations. Generally, this means taking over a project if the contractor defaults. However, bonds also come into play if a contractor fails to pay its subcontractors or suppliers.

Before extending a bond to a contractor, the surety’s underwriters want to be certain the contractor has the capacity and experience to perform the work. They also want to know that the contractor has the capital to purchase supplies and materials, finance equipment, pay workers and finish the project.

It may seem that the surety is asking you for a lot of documentation, but it’s to protect all parties involved. Those include your company. When a surety issues a bond, it’s saying it has a high degree of confidence in your ability to complete the job.

Sound financial record keeping is a must 

What kinds of financial information will a surety ask you to provide? How does keeping good financial records help you get bonded?

Let’s first look at what you’ll be asked to submit with your application for a bond. For small bonds, often written through a “fast” or “quick” bond program, you may need to provide only a credit report and some basic financial information. However, for contract bonds that require an examination by a surety underwriter, you’ll need to provide detailed financial statements.

For starters, you’ll need to have: 

  • CPA-prepared year-end financial statements going back three years
  • Your most recent internally prepared financial statements 
  • A work-in-process (WIP) schedule 
  • Personal financial statements of the owners of the company 
  • A copy of your bank line of credit

Providing financial information to your surety doesn’t end once the bond has been approved. You’ll be expected to continue to provide financial statements, WIPs and accounts receivable reports.

While you may be able to provide an internally generated financial statement if you don’t have a CPA, you will eventually need to retain a CPA to prepare your year-end reports.

Partner with a construction-oriented CPA

Take the time to find a CPA who specializes in construction. Construction-oriented CPAs are familiar with the methods of accounting used in the industry and know how to prepare statements, schedules and notes that meet the requirements of sureties and lenders.

A construction-oriented CPA can help you take your accounting to the next level if you’re a small contractor ready to take on bigger projects. Contractors usually start off using cash accounting but soon find they can’t grow without more sophisticated financial tools. You’ll need to prepare your financials on a percentage-of-completion basis to qualify for larger bonds; otherwise, you’ll forever be limited to small bonds tied to your personal credit.

A CPA can prepare the schedules you’ll need, such as showing completed and uncompleted projects, aged receivables and your cash balance. A CPA can also give you advice on handling lines of credit, showing cash on balance sheets, reducing your debt and keeping retained earnings in the company.

Use financial reports to improve your operation

A balance sheet is a key financial report that sureties look at carefully. A sound balance sheet helps you qualify for larger bonds and secure better pricing. A balance sheet lists your assets and liabilities and is used to calculate your working capital and net worth. The stronger your liquidity, the more favorable you’ll be viewed by sureties.

Sureties also look at your income statement, which indicates how your company is doing over time, usually for a one-year period. An income statement shows your company’s income, expenses and net income. The surety wants to make sure you have income after you’ve paid your expenses, i.e., that you’re a profitable company.

These financial reports, and others a CPA can generate for you on a monthly or quarterly basis, can help you make more informed business decisions. With detailed and timely reports, you can better analyze costs and allocate job expenses, minimize profit fade and maintain cash flow. You can track your billings and backlogs, improve your income and run your company more efficiently.

A CPA specializing in construction can help you plan for the future, too. They can help answer questions like:

  • How much profit should you take? 
  • What’s a good growth rate? 
  • Is it better to lease or buy? 
  • When should you use credit? 
  • How can you minimize your tax liability?

Construction-oriented CPAs also keep up with regulatory changes that affect the building industry. They can advise you on new rules that may impact the way you recognize income, meet your payroll or prepare financial statements.

A surety agent is a great teammate

Where can you find a construction-oriented CPA and get help securing a bond?

Your best resource is a surety agent, also known as a surety bond producer. An experienced bond producer knows the surety market and can successfully guide you through the process. The bond producer will prepare your bond submission and work with you to get it approved. The producer can also recommend CPAs and attorneys to help you with your business. Ask your commercial insurance agent for a referral. 

In a nutshell, sureties are looking for CPA-reviewed financials, strong retained earnings and good cashflow. Do you have enough working capital to sustain your company? Are you keeping your expenses in line? Does your balance sheet show positive equity?

The more complete a picture you can provide of your financials, the more willing sureties will be to work with you. When a surety sees you have your finances in order, it’s more likely to approve your bond and give you a good price.

Learn More

To learn more reach out to Brett Findlay, Senior Vice President Business Risk Specialist at BFindlay@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2023 Applied Systems, Inc. All rights reserved.

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Preparing for Your New Teen Driver

| April 1, 2024
smiling handsome father teaching teen son driving car

According to the Insurance Institute for Highway Safety, drivers ages 16 to 19 are almost three times as likely to be involved in a fatal accident than drivers 20 and over. 

The first time you hand over a set of car keys to your teenager is a moment filled with pride, and maybe some mixed emotions. Are you ready to send them out into the world without you? Can you afford the bump in premiums to insure them? The unfortunate truth is that drivers ages 16 to 20 are the most likely to be involved in an auto accident, and as a result they’re a bit more expensive to insure.

Defining the risks

It may seem like stating the obvious, but teen drivers simply don’t have the same maturity or experience as older drivers do. While all new drivers have an increased risk of being involved in an auto accident, teens in particular are more likely to be affected by other major risk factors.

Statistically, they are more likely to be in an accident caused by distracted driving (texting, eating or applying makeup while driving), speeding, alcohol or drugs. And they’re twice as likely as other age groups to be in an accident because they are overtired.

Still, there is some good news. National Highway Traffic Safety Administration statistics show the number of accidents and fatalities is falling. As more and more safety features are added to cars, this downward trend will hopefully continue.

Counting the cost

Adding your teenager to your auto insurance policy will increase your premiums. Consider these factors when estimating the new cost.

  • Age — The younger the teen, the higher the premium. While it is possible to obtain a separate policy for older teens, most insurance companies will not offer insurance to younger teen drivers unless they are included on a parent’s policy. An individual needs to be at least 18 for a contract (including an insurance contract) to be binding, though some insurance companies also require drivers ages 18 to 21 to be covered under a parent’s policy.
  • Gender — Male drivers (teen or otherwise) are statistically more likely to be involved in an auto accident. As a result, male teenagers traditionally face the largest premium hike. However, some states have banned using gender as a factor in calculating premiums.
  • Type of vehicle — A vehicle with a good safety record and a less powerful engine will always be a better bet for a young driver.
  • Your state — Premium levels (and regulations) vary from state to state.
Reduce your costs

There are a few measures you can take to reduce premiums and risk for your teen driver.

Enroll your teen in an advanced or defensive driving course to improve their skills and prove to your insurance company that they are not a significant risk. You could also look into usage-based insurance programs, which monitor driving habits and then offer lower premiums to careful drivers. These apps work just as well for teen drivers and can also give you peace of mind that your child is not taking unnecessary risks when driving.

If your teen is in college, let your insurance company know that they will be away from home and therefore not using your car. This could have a dramatic effect on your premiums.

Have you ever considered “good grade” discounts? Some insurance companies recognize that hard-working students are more likely to be safe drivers and less likely to exhibit risk-taking behavior.

While obtaining insurance for your teen driver may be expensive, there are ways to reduce the cost. Reach out to your insurance professional for details on available discounts and programs for safe driver training.

For more information

If you have questions about auto insurance, reach out to our Personal Insurance team.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2021 Applied Systems, Inc. All rights reserved.

Effective Practices for Employee Engagement Surveys

| March 28, 2024
Customer satisfaction assessment rating 5 stars by notebook, User has received excellent service, Review the highest rated service, the best attention, impressed very good service, feedback from guest

Employee engagement has been dropping for the past few years. The management consulting firm Gallup reports engagement is at its lowest level in a decade.

When employee engagement suffers, so do organizational well-being, job satisfaction, retention, safety, customer relations, productivity and profitability.

Employee surveys can help you identify engagement challenges and opportunities. But you need the right questions, timing and feedback, and a comprehensive strategy, according to the industry news site BenefitsPRO.

Questions, timing and feedback

The first step to crafting an effective engagement survey is to frame it through the lens of collaboration and transparency. Never criticize or punish an individual for their feedback. Explain to employees that the survey is a joint effort to improve your organization.

But don’t focus solely on the negative. Surveys can also capture positive trends that enhance morale and workplace culture.

Once you’ve framed your survey as a partnership, the next step is to strategize your questions, timing and feedback.

Questions

Survey content must be relevant and valuable to employees. The design should be visually appealing and easy to use. The experience management firm Qualtrics recommends concise questions free of jargon and complicated wording. If necessary, define potentially ambiguous terms such as “your team,” “your manager” and “senior leadership.” Definitions ensure employees answer questions with a consistent frame of reference, notes Qualtrics.

Open-ended questions encourage employees to provide personal insights. More detailed answers can help you identify successes, problems and solutions more effectively.

Examples of open-ended questions include:

  • When do you feel most satisfied at work?
  • Does our company demonstrate appreciation for you and your contributions?
  • What is one solution that would immediately benefit your role?
  • Are there specific ways our organization can communicate better?
  • How would you enhance the work environment?

While open-ended questions help employees feel heard, don’t make every question mandatory. Allow employees to skip questions irrelevant to their roles or needs. This technique will increase survey participation and completion rates.

Timing

Employees are often pressed for time. They are less likely to participate when surveys are too frequent or too long. Consolidate questions and simplify the process whenever possible.

Surveys with 10 or more questions should only be sent once or twice a year. Shorter surveys of three to five questions can be sent more often, perhaps quarterly or monthly, notes the engagement survey platform Quantum Workplace. But their relevance and purpose should always be clear. Use these surveys to capture employee insights on current trends, workplace changes or organizational challenges.

Feedback

Demonstrate a willingness to listen to employees and act on their recommendations. Employees are more likely to engage with surveys when they feel like a valued part of the process, reports Quantum Workplace.

Share survey results and next steps. Regularly communicate action plans and progress based on survey results and employee feedback.

Regular check-ins and transparent communications

Once you’ve crafted your approach to questions, timing and feedback, fold it into a larger strategy that includes supervisor check-ins and company communications.

Check-ins

Supervisor check-ins provide another avenue for capturing employee solutions. These conversations can complement surveys, letting employees expand on their thoughts and receive immediate feedback. These one-on-one conversations can also be a way to gather feedback from employees who don’t participate in surveys or feel more comfortable speaking with a manager.

Train supervisors to conduct open and productive conversations. By fostering trust, respect and collaboration, they can enhance your company culture and relay valuable information on employee engagement.

Communications

Company communications must be transparent and authentic. BenefitsPRO reports 40% of employees doubt the transparency of their employers. Those doubts will undermine your surveys and engagement efforts.

Provide frequent updates on company news and business results. Talk about your culture and your employees’ role in your success. Quickly address rumors and external reports on your company or leadership.

In addition to supervisor check-ins, regularly hold all-staff meetings and provide anonymous chat platforms.

All-staff meetings should review priorities and progress on employee-identified issues. Remember to include time for questions and comments.

Confidential platforms let employees freely discuss issues and improvements. Their comments can help you discover what’s working and what you can improve. With high engagement, these platforms can reduce the number of formal surveys you need to deploy.

More information

For more insights into employee engagement surveys, reach out to our Human Resources Consulting team. They can help you examine best practices for survey frequency, relevant questions and feedback. They can also identify training solutions to inform supervisor check-ins and company communications.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2024 Applied Systems, Inc. All rights reserved.

Protect Your Consulting Firm from Financial Harm  

| March 26, 2024
Business partners in meeting.

What is putting your firm at risk?  

According to Forbes, the U.S. has nearly one million management consultancy firms. Combined, these businesses bring in $329.9 billion. 

As organizations compete to become faster, leaner and more customer-focused, there is a growing demand for these highly paid professionals. But there are risks to being a management consultant that require appropriate insurance protection. 

Since management consultants provide expert advice in human resources (HR) and staffing, operations, accounting, technology, marketing, and business strategy, you could be held liable if your recommendations don’t pan out and a client loses money. There are plenty of examples of companies suing their consultants when things go south. 

Clients may have unrealistically high expectations for the work you provide. They may blame you if sales don’t improve or a new system doesn’t work. Consulting disputes commonly occur over performance issues, HR recommendations and plan implementations. In each of these cases, you could find yourself in court if you can’t reach a resolution. 

Professional liability insurance is essential. 

One big lawsuit could put you out of business. Because the risk of a lawsuit is so high, management consultants should make professional liability insurance a top priority. This type of policy will help pay for your legal defense and the cost of any judgments or settlements. 

Professional liability insurance covers errors and omissions you’ve made, professional negligence, breaches of duty, misrepresentations, and nonperformance of professional services. For example, not fulfilling a contracted obligation or making a mistake in your work product would be covered by a professional liability policy. 

An insurance professional can help you decide how much coverage to purchase. Policies generally start with a limit of $1 million and go up depending on the size and needs of your firm. Policies have an occurrence limit, the maximum an insurer will pay for a single claim. And they have an aggregate limit, the most the insurer will pay out during a policy’s term. 

Policies are also sold on a claims-made or an occurrence basis. A claims-made policy covers you no matter when the harm occurs, as long as the claim is made while your policy is in force. An occurrence policy covers you if the policy is in force when the harm occurs, regardless of when the claim is filed. 

Professional liability insurance doesn’t cover dishonest or intentional acts, employment liability, property damage, bodily injury, or medical expenses. Some of these exposures are covered by commercial general liability (CGL) insurance, which we’ll address next. 

Commercial general liability covers bodily injury and property damage. 

A companion policy to professional liability is CGL insurance. CGL covers injuries and property damage that occur as a result of your consulting practice. It’s an important coverage, since consultants spend a lot of time in their clients’ offices. If you or one of your employees damages a client’s property, your CGL policy will pay for the claim. 

CGL also covers injuries and damages to clients visiting your premises. For example, if a client trips on argue and breaks their leg, they could sue you. Your CGL policy would pay your expenses. CGL policies include coverage for bodily injuries and medical expenses, property damage, and personal injuries such as libel, slander, copyright infringement and using another firm’s advertising idea. 

If you have a staff, consider employment practices liability insurance (EPLI). EPLI protects you if one of your employees or managers sues you over an employment-related issue. Common claims include sexual harassment, discrimination, breach of employment contract, retaliation, wrongful termination, and failure to promote. 

Like professional liability insurance, CGL and EPLI have policy limits so you can purchase a policy based on your firm’s size and needs. 

You can also purchase umbrella insurance, which provides liability coverage beyond the limits of your underlying policies. Umbrella coverage also fills gaps in your existing policies and may be less expensive than raising the limits in each of those policies. 

Talk to an insurance professional about the different types of liability coverage available so you can create the best plan for you. 

Commercial property insurance 

If you lease space or own a building, you’ll need commercial property insurance to cover damage to your premises. These policies protect you against fires, vandalism, theft, burst pipes and natural events such as windstorms. They cover the structure and the contents of your office, including furniture, computers, office equipment, files, supplies and inventory. 

If you work out of your home, your office equipment may be covered by your homeowner’s insurance. Some homeowners policies offer limited business coverage, but usually no more than $2,500. Check with an insurance professional to see whether you can purchase a home business endorsement or you should get commercial property insurance. 

In addition, if your employees drive company cars or use their own cars for business, you’ll need to purchase a commercial auto policy. 

A BOP may a good choice for you 

Many insurers offer business owners policies (BOPs), which bundle the policies most small firms need. The standard BOP includes CGL, commercial property and business income insurance. Business income, sometimes called business interruption insurance, replaces lost income if your business is interrupted by a fire, government shutdown or natural disaster. 

While BOPs are a convenient way to bundle your basic business insurance needs, they can leave you with gaps in your coverage. Some insurers will allow you to add coverage to your BOP. Another solution is to purchase a commercial package policy (CPP), which lets you customize your coverage. You design your own package, paying only for the coverage you need. 

Workers’ compensation 

Workers’ compensation provides benefits to employees if they are injured or become sick on the job. Most states don’t require sole proprietors, independent contractors or self-employed people to purchase workers’ comp insurance. But you’ll need this coverage if you hire a staff or manage a larger firm. 

Your premiums will be calculated based on your claim’s history and the type of business you operate. 

Cybercrime insurance 

Consultants often possess sensitive information about their clients’ businesses. You’ll want to take precautions to safeguard that information and follow all applicable cybersecurity laws on personal information. 

Cybercrime insurance protects your firm from loss of data, network disruptions, loss of income if your business is shut down by a hacker, and damage to your reputation. These policies cover client notifications if you suffer a data breach, fraud protection and credit monitoring for affected clients, and expenses such as forensic investigations. 

Being a management consultant can be exciting work. You’re spending time with top executives and helping them grow their businesses. Your work can have a huge impact on the future success of your clients. But you also need to ensure the success of your own business by protecting against lawsuits, property damage and on-the-job injuries. 

For more information

For more information, please contact Rina Corigliano-Hart, Director of Client Engagement and Outreach, at RHart@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2021 Applied Systems, Inc. All rights reserved.

Reduce Risks Associated with Electric Vehicles

| March 25, 2024
EV charging station

While the federal government and firefighting associations don’t collect data on the number of electric vehicle (EV) fires, there’s one thing all industry specialists seem to agree on:

When an EV catches fire, it’s much more difficult to extinguish than traditional vehicle fires. That’s because an EV’s lithium-ion battery holds a lot of concentrated energy, with each cell containing a flammable electrolyte. And it burns very hot.

A malfunction in one of the cells can cause “thermal runaway,” according to the website How-To Geek. UL Research Institutes describes thermal runaway as “a phenomenon in which the lithium-ion cell enters an uncontrollable, self-heating state,” possibly resulting in smoke, fire, extremely high temperatures and the violent ejection of gas, shrapnel or particles.

The primary causes of EV fires include: 

  • Manufacturing defects 
  • Wear and tear 
  • Accidents 
  • Extended exposure to water 

Problems with home and commercially available charging stations can also cause fires.

One of the complications of EV and hybrid vehicle fires is the incapacity of many fire departments to deal with the blaze. Suppressing an EV fire requires thousands of gallons of water, much more than a typical pumper truck carries. Additionally, water may cause gases in the vehicle to explode, and even foam containing water can have this effect. 

Because of these factors and the safety precautions firefighters must take, extinguishing an EV fire can be a long process. Furthermore, major damage to garages, attached homes, and nearby structures and vehicles is common.

Steps you can take

Because of the extreme damage EV fires can cause, some parking garages and homeowners associations restrict the areas where owners can park their hybrid and electric cars. And the National Highway Transportation Safety Administration advises keeping soaked vehicles at least 50 feet from structures and other cars after a flood. 

If you own an EV, purchase a fire extinguisher that will put out an EV blaze. Look for a label that says the product works on cars and indicates it’s suitable for electrically charged material. You may wish to have one in your home and one in your car. You should know how to operate the extinguisher before you need it.

Servicing your EV and keeping the battery in good shape are imperative, as are staying abreast of recalls and getting repairs done as soon as possible. For example, one of GM’s EVs had a defect that could cause battery cell packs to ignite. GM advised owners of the EV not to park inside structures until the repair was made.

When charging the vehicle, follow the manufacturer’s instructions. You may need to upgrade the wiring in your home or have an electrician install a dedicated circuit for the charging outlet. 

The charging device you use is also important. Look for a label from Underwriters Laboratories (UL) or another nationally recognized testing laboratory. The Federal Emergency Management Agency (FEMA) also recommends installing a residual-current device or ground-fault circuit interrupter with the charging unit. This will automatically turn off the power if a fault is detected. 

As with all electrical chargers, replace the unit when worn or damaged and don’t use it in wet conditions except as permitted under the manufacturer’s guidelines. FEMA also cautions consumers not to use multiplug adapters or extension cords. 

Note that defensive, alert driving is especially important when operating an EV because the car is virtually silent. Pedestrians often cross streets with their eyes on their phones, relying on their hearing to alert them to oncoming traffic. 

Insurance issues presented by EVs

Insurance losses may be higher with EVs because their batteries and components are more expensive. GreenCars, an EV information and advocacy company, says a replacement battery runs between $2,500 and $20,000, depending on the make and model of the vehicle (2023 info). This means an accident that destroys the battery could result in a declaration of total loss for the vehicle, simply due to the outsized cost of that one component. 

Moreover, labor to repair EVs is often more expensive due to the specialized training mechanics must have. That said, insurance costs may be counterbalanced by fuel savings. And some insurers offer discounts for safe driver data-sharing programs.

Since EVs have faster acceleration and different handling than combustion engine cars, they may take some getting used to. Any drivers using your EV should practice cautiously until they are familiar with starting from a stop, coming to a stop, changing lanes and turning corners.

By practicing smart charging, scheduled maintenance and safe driving, you can avoid fires and accidents, and enjoy a smooth ride for years to come.

For more information

If you have questions about EV risks, reach out to our Personal Insurance team.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2023 Applied Systems, Inc. All rights reserved.

The Basics of ACA Compliance

| March 20, 2024
Magnifying glass lies on white keyboard on

Affordable Care Act (ACA) compliance has never been more important.

The IRS continues to hone its compliance practices, with targeted efforts increasingly replacing random audits. And the IRS has announced that good faith efforts are no longer enough to protect employers from ACA penalties for missing or mistaken information on required ACA forms.

Examining your protocols in the following three areas can help you stay compliant and lower your odds of an IRS audit:

  • Documentation
  • Administrative processes
  • Communications
Documentation

Your ACA compliance efforts should begin with rigorous documentation.

  • Maintain detailed records throughout the year.
  • Document your reasoning.
  • Ensure documents are readily available.
  • Meet filing and distribution deadlines.

The compliance company Health e(fx) notes that many companies wait until the end of the year to manage compliance. At that point, it may be too late to fix any errors. Putting processes in place at the start can improve your documentation and help you avoid audits and penalties.

Document all data relevant to ACA compliance, including:

  • Plan eligibility, participation and amendments
  • Employee classifications
  • Employee work hours
  • Plan participant communications
  • Recordkeeping procedures
  • Service provider contracts

In addition, keep records of the reasoning behind your decisions. For example, if you categorize some employees as part-time or seasonal, document why you selected those classifications and how your decisions comply with ACA regulations.

Make sure your documents are easily accessible in case of an IRS inquiry. Audits typically come with a deadline, and governing agencies want to see that your recordkeeping processes are responsive. The benefits of robust recordkeeping are twofold:

  • You are less likely to be audited in the first place.
  • If you are audited, you are more likely to respond successfully and avoid penalties.

To avoid triggering an audit, file all forms accurately and on time. This includes:

  • Delivering applicable Forms 1095-B or 1095-C to employees by March 2
  • Sending applicable Forms 1094-B, 1095-B, 1094-C or 1095-C to the IRS by February 28 (paper filing) or March 31 (electronic filing)

Ensure accuracy on all forms. Vague or illegible answers regarding information like minimum essential coverage and employee head counts may raise suspicions. By demonstrating a clear understanding of ACA rules for employee classifications, hours worked, and requirements for quality and affordable health coverage, you can further reduce your risk of an audit.

Administrative processes
  • Evaluate administrative processes related to ACA regulations.
  • Be transparent about errors and correct them immediately.

Another way to lower the odds of an audit is to regularly review your internal and external administrative processes related to ACA compliance.

Administrative processes include:

  • Determining whether your group health plan is grandfathered
  • Ensuring your plan is compliant with waiting periods, coverage for essential health benefits and preexisting conditions, out-of-pocket costs, etc.
  • Evaluating the compliance of health reimbursement arrangements, health flexible spending accounts and cafeteria plans
  • Providing plan participants with a summary of benefits and coverage, notice of plan changes and other required information
  • Meeting plan nondiscrimination requirements

You should keep copies of and regularly review contracts with service providers to make sure they are following applicable regulations. Even if they handle your ACA compliance, you are ultimately responsible.

Errors increase the likelihood of being audited. If you find an error:

  • Be transparent about what occurred.
  • Correct the error right away.
  • Document how the error was discovered and resolved.

If you discover an error, document the updates you made to your processes to ensure that it is not repeated.

Communications
  • Be responsive to employee concerns.
  • Engage in media relations when necessary.

When employees file a complaint, the IRS pays attention. Responding to employee questions and concerns is another way to reduce the likelihood of an audit.

When employees raise concerns about issues like work hours, full-time versus part-time classifications and plan eligibility, take them seriously and respond to every inquiry. Keep a paper trail of your communications and resolutions.

News reports of unethical business practices or compliance protocols can also put you on the radar of regulatory agencies. Stay on top of media coverage. Work with your internal team or service provider to demonstrate responsiveness, refute inaccurate allegations and communicate resolutions for outstanding issues.

More information

For more information on ACA compliance, talk with your benefits adviser. They can help you improve your processes related to ACA documentation, administration and communication. They can also help you examine and select service providers to ensure your plan remains compliant with the ACA and out of the sights of the IRS.

Reach out to our Employee Benefits team to talk about ACA Compliance.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2022 Applied Systems, Inc. All rights reserved.

Time for Spring Cleaning

| March 19, 2024
Happy family spending leisure time in their garden.

The first sign of spring is not the melting snow, the return of robins, the budding trees and bulbs, or even the light jackets replacing heavy winter coats.

The first sign that spring has sprung is the relentless desire to clean with all of that newfound energy.

Storm windows must come down, gutters must be inspected, the house must be power-washed, carpets must be steam-cleaned, the soil must be prepared for gardens and the inside of the house must be refreshed.

Amid this flurry of activity, it’s easy to get overwhelmed. Here are a few tips to stay safe and sane as you clean.

Set realistic expectations and schedules. Remember that you don’t have to do it all in one day. A good rule is not to tear apart what you can’t put back together before nightfall.

Take care to prevent falls. Falling is the leading cause of home injuries. If you need to use a ladder, choose one that allows you to reach what you need without standing on the top rung or support step, or reaching beyond the side rails. Keep the ladder stable, upright and straight by placing it on even ground. And keep stairs and walking areas free of clutter to prevent tripping hazards. If you’re carrying a load, make sure you can see over it. Ask for help if it’s too heavy to carry alone.

Use cleaning solutions cautiously. When using cleaning solutions, wear gloves and don’t stand downwind of the spray. A caustic cleaner can cause permanent vision damage if it comes in contact with your eyes.

Keep your kids and pets away from steam cleaners, power washers and attractive-smelling solvents.

Don’t let your pets drink out of cleaning buckets, and store empty cleaning buckets upside down.

Give your kids age-appropriate tasks. Let your kids help, but give them chores they can do. Dropping a storm window or five-gallon bucket of brick-cleaning acid can cause a permanent injury.

Keep your work area clean. Just as you keep your work area clean and free of hazards at work, keep your work area clean at home. This prevents hazards and helps you work more efficiently. If your tools are well-organized, you can find them more easily.

These are just a few suggestions to make your spring cleaning go more smoothly. But in general, think about what can go wrong before you act. Then, take precautions to protect yourself and your family.

For more information

If you have questions about other ways to protect your belongings, reach out to our Personal Insurance team.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2023 Applied Systems, Inc. All rights reserved.

More Problems, More money…

| March 12, 2024
Tower crane and building construction site silhouette at sunrise.

As of January 2024, OSHA released an update to the maximum penalty costs to adjust for the cost-of-living increases over the past few years.

Violations in serious, other than serious, and posting violations categories increased to $16,131 per violation. Failure to abate violations are $16,131 per day (generally limited to 30 days) beyond the abatement date. Willful or repeated violations are $161,323 for each violation. The higher gravity of the violation, the higher the cost of the fine will be.  

Types of OSHA Citations:

  • Serious – Violation of situations in which a hazardous condition could lead to death or serious harm of an employee.
  • Other Than Serious – Violation of situations in which a hazardous condition could lead to a direct and/immediate injury/illness but would not cause death or serious harm to the employee. This category also covers failures in recordkeeping, posting and electronic reporting.
  • Failure to Abate – Violation in which previously cited hazards were not brought into compliance since the previous inspection.
  • Willful – employer intentional disregards OSHA requirements or demonstrates indifference to health and safety of employees.
  • Repeated – Violation of a previously cited hazard. These violations were corrected at one point in time but found again in a new inspection.  

It is important to note that in January of 2023, OSHA issued an expansion on their Instance-by-Instance (IBI) citations which outlines if an employer has multiple violations, those citation fees will be individualized instead of grouped together as they might have been in the past. To give an example, if a company has multiple work sites with the same hazards identified, OSHA will cite each site with the violation, not the company as a whole. This can lead to very hefty fees for a company. 

Should an employer receive citations due to hazardous work conditions, they do have the right to, in good faith, contest the citations. The employer has 15 working days to respond in writing. In these cases, the OSHRC (Review Commission), an independent agency, will assign an administrative law judge who will conduct a hearing in which the employer and employees can participate. The judge may then make changes to the citations and/or penalties.  

An employer may not be able to avoid an OSHA inspection, but there are things that can be done to ensure the process runs as smoothly as possible. Have a plan for event which outlines who should meet with the inspector, how to determine what the inspector needs to see and what information needs to be provided immediately. As always, OneGroup is available to help put a plan together and/or work on safety related programs to ensure employee health and safety is prioritized.

Learn More

To learn more reach out to Megan Coville and Paula DeStefano at MCoville@OneGroup.com and PDeStefano@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2023 Applied Systems, Inc. All rights reserved.

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Accident & Injury Reporting

| March 12, 2024
Wrapping Injured Hand

When accidents happen on the job, your response is everything.

Timely injury and claim reporting is crucial to workers’ compensation and insurance. Reporting injuries promptly helps ensure that employees receive timely medical care, reducing the risk of further complications and promoting a faster recovery. It also allows employers to address potential workplace hazards, making the environment safer for everyone.

From an insurance perspective, reporting claims promptly helps insurance providers investigate the incident while the details are still fresh, increasing the likelihood of accurate and fair compensation for the injured worker. Delayed reporting can lead to increased cost of both the claim and expense, making it harder for the injured employee to receive the benefits they deserve.

Timely claim accident and illness reporting can significantly impact the cost of the claim when it comes to insurance expenses. Reporting a claim promptly allows insurance providers to investigate the incident quickly and accurately assess the situation.

Here’s how it affects the costs:

  1. Faster Resolution: Timely reporting enables insurance companies to respond promptly, facilitating a faster resolution. This can lead to quicker access to medical treatment and benefits, potentially preventing the injury or illness from worsening, and reducing the overall cost of medical expenses.
  2. Preserving Evidence: Early reporting preserves crucial evidence related to the incident, such as witness statements, photographs, and other documentation. This helps insurers in their investigations, ensuring they have all the necessary information to handle the claim fairly. Delayed reporting may lead to missing or incomplete evidence, making it harder to assess the claim accurately.
  3. Preventing Fraud: Timely reporting reduces the opportunity for fraudulent claims. Insurance companies can thoroughly investigate the incident and verify its legitimacy. Delayed reporting may raise suspicions and increase the likelihood of fraudulent claims, which can inflate insurance costs for everyone.
  4. Controlling Costs: With timely reporting, insurance companies can take appropriate measures to manage costs effectively. Early intervention can help prevent unnecessary medical treatments or identify cost-effective alternatives, which can ultimately reduce the overall claim expenses.
  5. Reserving and Budgeting: Prompt reporting allows insurance providers to set aside appropriate reserves and budget for potential claim payouts accurately. This helps them manage their financial stability and avoid unexpected financial burdens.

Timely claim accident and illness reporting allows insurance companies to respond efficiently, mitigate potential risks, and manage expenses effectively, resulting in a smoother claims process and more stable insurance costs for employers and workers, ultimately benefiting all parties involved.

Contact Us

For more information, please contact Risk Management Consultant Todd Goodman at TGoodman@OneGroup.com.

Does your home have flood insurance?

| March 8, 2024
Flood in the Midwest

Flash rains and ice melts can cause flooding when the ground can’t absorb the water fast enough.

Flooding is the most common and costly natural disaster in the U.S. Many homeowners live in flood-prone areas, but even those who don’t live in a flood zone are at risk. 

Just a small amount of floodwater can cause major damage. According to the Federal Emergency Management Agency (FEMA), just four inches of water in a 2,500-square-foot home would likely result in $38,552 in damages!

Uninsured flood victims may qualify for low-interest loans or government grants, but assistance depends on whether the area is officially declared a disaster. Funds usually run out quickly and only cover a fraction of the cost to rebuild or replace your home.

No matter your zone, standard homeowners and renters insurance don’t cover flood damage. You’ll need a flood insurance policy to offset your costs. Otherwise, you might pay out of pocket.

Assessing your flood risk

FEMA’s National Flood Insurance Program (NFIP) can help assess your flood risk. The NFIP runs flood mapping for the entire country and determines where the highest and lowest risks of damage are.

The zones are rated using letters:

  • Zones A and V have the highest risk and generally require flood insurance.
  • Zones B, C and X have a moderate or low risk of flooding.

But don’t be deceived by your flood ranking: One in three insurance claims involve homes in low-risk zones. In January 2023, NFIP paid $26 million to 489 California NFIP policyholders for flooding due to severe winter rainstorms. The average claim was $53,000.

If you live in a flood zone, your mortgage lender will require you to obtain flood insurance. Typically, that coverage must equal at least what you owe on your mortgage and meet specific legal requirements.

NFIP coverage

Policies have a 30-day waiting period before coverage begins. While NFIP sponsors most flood insurance, only those who live in NFIP-participating communities can purchase this coverage. Some communities even qualify for discounts on coverage based on their flood mitigation improvements. Your insurance professional can determine if your city or county participates and show you the types of coverage available for your property.

The maximum NFIP protection for a residential structure is $250,000, and the limits for contents top out at $100,000. NFIP covers your personal property for actual cash value, not replacement value, so your things will be reimbursed with depreciation.

NFIP doesn’t cover the contents of finished basements, swimming pool damage or the cost of living elsewhere while your home is being repaired.

Unlike a private insurer, NFIP cannot drop your policy because of claims or risk. It also has regulations that cap premiums. NFIP is a federally backed policy, so you won’t have to worry if the insurance company goes bankrupt.

You can only buy NFIP coverage through insurance agents, even though the government sponsors it. Call your insurance agent to get a quote.

Excess flood coverage

More insurers are offering excess flood insurance to supplement regular NFIP coverage, especially for high-value homes and waterfront properties.

Excess flood insurance can be expensive. Pricing varies depending on your home’s age and location, whether it is elevated, its distance from the water, which way it faces and the deductible you’re willing to pay.

Excess policies kick in after your NFIP policy limits are exhausted. Since private insurers underwrite excess policies, they have broader coverage options. Your agent can help you decide if excess flood coverage suits you.

Private flood coverage

New datasets and advanced tools like artificial intelligence have made flood coverage more affordable. Private flood insurance is an alternative to NFIP coverage, not in addition to it. Private policies have a shorter waiting period before coverage begins, usually 14 days or less.

Private flood insurance has a few perks that NFIP doesn’t such as:

  • Higher property limits
  • Higher limits for personal belongings
  • Additional living expense reimbursements
  • Pool damage and refill coverage
  • Damage prevention materials like sandbags and barricades

The government doesn’t guarantee private flood coverage. However, many private insurance companies are regulated by their state agencies, with state-level guaranty funds that can help if the company goes bankrupt.

Ask your insurance agent for help finding a reputable company.

NFIP Risk Rating 2.0

FEMA’s Risk Rating 2.0 system is changing the way FEMA prices its coverage. The last time FEMA updated its rating system was in the 1970s. It focused on information like property elevation and antiquated flood maps but didn’t account for variables like flood types, severity or rebuilding costs. As a result, FEMA determined that policyholders with lower-value homes may have been charged too much based on their risk and rebuilding costs, while those with higher-value homes may have paid too little for their risks and costs.

Risk Rating 2.0 incorporates data points to examine how flooding events occur. It uses dynamic data to get a comprehensive picture using information like:

  • Types of flooding in the area (river overflows, storm surges, waves, mudslides, coastal erosion and heavy rainfalls)
  • Weather risks and predictive modeling
  • Characteristics of the residential building (the type of foundation or elevation of the first floor)
  • Property elevation
  • Distance from flooding sources like coasts, rivers and lakes
  • Replacement value of the structure, including the cost to rebuild in the area
  • Ways a building is adapted to withstand floods, such as flood vents
  • Levee performance

Risk Rating 2.0 views risk as dynamic. Communities can decide about development and infrastructure to increase or reduce the flood risk throughout a community. When the risks change, premiums can change.

FEMA will comply with its existing caps on premium increases (no more than 18%) and help transition policyholders who have substantial increases. And policyholders can still transfer their NFIP coverage discounts to new homeowners when they sell their homes.

You can also do a few things to contain your insurance premiums.

Keeping your costs down

Ask these questions when discussing rates:

  • Is your community enrolled in FEMA’s Community Rating System? If so, you may qualify for a discount based on your community’s efforts to reduce the risk of flooding in your area.
  • Have you elevated your home? Owners who elevate their homes 3 feet above the base flood elevation can expect to save 60% or more on premiums, according to FEMA. If your property must comply with local floodplain requirements, you may be eligible for the Increased Cost of Compliance program, which can help pay to elevate a building after a flood. FEMA also has a grant program to help elevate homes.
  • Have you floodproofed your home? Even if you can’t elevate your home, you can make your dwelling more resistant to flood damage. Consider raising the utilities, installing basement infill and flood openings, and placing valuable contents above flood level.

Call your insurance agent for a flood insurance quote. They can help you understand your risk and offer advice about NFIP and private flood solutions. As extreme weather events continue across the U.S., now’s the time to prepare. Having adequate flood coverage is a smart first step.

For more information

If you have questions about flood insurance, reach out to our Personal Insurance team.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

Written content in blog post: Copyright © 2023 Applied Systems, Inc. All rights reserved.