There are over 240 million registered motor vehicles in the U.S., according to the Census Bureau. At a given time, as many as a third of those clutter American roadways, and it is estimated that one-fourth of those are being used in the course of work.

Running errands, making deliveries, visiting customers. Even for those whose employment is not based on driving, it’s fair to say that your vehicle is an essential part of your employment. This presents an important question: If you are involved in an accident in the course of employment, are you covered by your personal auto insurance policy (PAP)?

Like most insurance questions, the answer depends on circumstance. For example, what kind of car are you driving? Does the car belong to you or someone else? What type of business are you in?

Consider the language found in the typical PAP. At a glance, many policyholders are shocked to see that the PAP appears to exclude coverage for the use of any vehicle in the course of business other than farming or ranching. However, a very broad exception to this exclusion allows coverage for the business use of a vehicle provided it is one of three types: 1) a private passenger auto, 2) a pickup or van, or 3) trailer while used with the aforementioned. This exception suggests that as long as the vehicle is one of these three types, coverage remains intact after the accident.

But policyholders should proceed with caution, since some PAPs are not as generous. For example, some versions may be more restrictive towards pickups or vans, possibly including a gross vehicle weight (GVW) limitation or a clause that restricts coverage to owned pickups or vans only. Be sure to consult your policy before driving any pickup or van for work.

Further, policyholders should understand that any coverage permitted for business use of personal vehicles by the PAP is not intended for these three vehicle categories:

Commercial-type vehicles. The PAP restricts business use to private passenger autos, pickups and vans. While they can be purchased personally, box trucks, tractor trailers, shuttle busses and other commercial-type vehicles do not fit this description; such vehicles require a commercial auto policy.

Furnished or available for regular use. Often called the “company car” exclusion, this provision is dangerous and must be remedied if the exposure exists. The reason is that a typical PAP will exclude coverage for a vehicle that is regularly available to the policyholder but is not specifically insured under the PAP. For example, if you are furnished a company car as a benefit to your employment, make certain that you are covered by your employer’s auto insurance policy. If not, specific action is required to extend coverage under your PAP; it will not do so automatically. The good news is that this coverage change is usually inexpensive and can be done easily; just be sure to request the change now, before the accident happens. While the definition of furnished or available for regular use varies by case, err on the side of caution. Don’t assume that because you don’t take it home with you each night or that you only drive it occasionally you’re in the clear. Regardless, a vehicle owned by your employer could be considered available for your regular use. This exclusion presents a potential gap that is too risky to ignore; your Trusted Choice® agent can help you take the appropriate steps to close it.

Vehicles that are the business. A PAP will not cover your vehicle if you use it to carry people for a fee, such as a taxi, limo or shuttle. The only exception is a share-the-expense car pool. And if you’re planning to make a few extra bucks delivering pizzas, auto parts, newspapers or other goods, proceed with caution. Many PAPs also remove coverage for vehicles that are used to deliver food or other types of property for a fee.

While in most cases the PAP will cover you for business use of a personal vehicle, there are situations where it will not. Such situations are not uncommon and, if not remedied, could result in significant financial detriment for you and your family. Consult your Trusted Choice® agent for advice on how to close potentially devastating gaps in your PAP today.

Of particular note to the Big “I” is that there is not a public option present in the legislation. Also absent is the Health Rating Authority Commission, which was the proposal to have a federal rating board.

Individual Mandate
All individuals will be required to have health insurance, with some exceptions, beginning in 2014. Those who do not have coverage will be required to pay a yearly financial penalty of the greater of $695 per person (up to a maximum of $2,085 per family), or 2.5% of household income, which will be phased‐in from 2014‐2016. Exceptions will be given for financial hardship and religious objections; and to American Indians; people who have been uninsured for less than three months; if the lowest cost health plan exceeds 8% of income; and if the individual has income below the poverty level ($10,830 for an individual and $22,050 for a family of four in 2009).

Guaranteed Issue
Through private market reforms (detailed below) all carriers will be required to have guaranteed issue and guaranteed renewal in order to accommodate the individual mandate beginning in 2014.

American Health Benefit Exchanges
States will create the American Health Benefits Exchanges where individuals can purchase insurance and separate exchanges for small employers to purchase insurance. These new marketplaces will provide consumers with information to enable them to choose among plans. Premium and cost‐sharing subsidies will be available to make coverage more affordable.
• Access to Exchanges will be limited to U.S. citizens and legal immigrants and subsidies will only be available to those without other coverage or whose share of the premium for coverage offered by an employer exceeds 9.8% of their income. Small businesses with up to 100 employees can purchase coverage through the Exchange.
• Although there will not be a public plan option in the Exchanges, the Office of Personnel Management, which administers the Federal Employees Health Benefit Program, will contract with private insurers to offer at least two multi‐state plans in each Exchange, including at least one offered by a non‐profit entity. In addition, funds will be made available to establish non‐profit, member‐run health insurance CO‐OPs in each state.
• Plans in the Exchanges will be required to offer benefits that meet a minimum set of standards. Insurers will offer four levels of coverage that vary based on premiums, out‐of‐pocket costs, and benefits beyond the minimum required plus a catastrophic coverage plan.
• The four levels of coverage will be:
o Bronze – minimum level of coverage, provides essential health benefits. Cover 60% of benefit costs of plans, with an out of pocket limit equal to the HSA current limit ($5,950 for individual and $11,900 for family).
o Silver plan – provides the essential health benefits, covers 70% of the benefit costs of plan, with the HSA out-of-pocket limits.
o Gold plan – provides the essential health benefits, covers 80% of the benefit costs of plan, with the HSA out-of-pocket limits.
o Platinum plan – provides the essential health benefits, covers 90% of the benefit costs of plan, with the HSA out-of-pocket limits.
• Premium subsidies will be provided to families with incomes between 100‐400% of the poverty level (or $22,050 to $88,200 for a family of four in 2009) to help them purchase insurance through the Exchanges. These subsidies will be offered on a sliding scale basis and will limit the cost of the premium to between 2% of income for those between 100‐133% of the poverty level to 9.8% of income for those between 300‐ 400% of the poverty level.
• Cost‐sharing subsidies will also be available to people with incomes between 100‐200% of the poverty level to limit out‐of‐pocket spending.
• Broker Role – HHS Secretary is required to “establish procedures under which a State may allow agents and brokers to enroll individuals” in Exchanges.
• An Advisory Board must be set up by HHS and must include “individuals with experience in facilitating the enrollment in qualified health plans.”
• A “Navigators” Program must be set up by Exchanges to engage in education, marketing, and enrollment activities. Insurance agents and brokers are expressly included in the list of potential “Navigators” but they may not serve as a “Navigator” if they are paid in any way “directly or indirectly” in connection with enrollment in an Exchange-provided plan. Regulations will be forthcoming from HHS on this issue. Importantly, any Navigator must be “qualified, and licensed if appropriate.”

Employer Requirements
There is no employer mandate but employers with more than 50 employees will be assessed a fee of $2000 per full‐time employee (excluding the first 30 employees from the assessment) (excluding the first 30 employees from the assessment) if they do not offer coverage and if they have at least one employee who receives a premium credit through an Exchange. Employers that do offer coverage but have at least one employee who receives a premium credit through an Exchange are required to pay the lesser of $3,000 for each employee who receives a premium credit or $750 for each full‐time employee.
• Employers that offer coverage will be required to provide a free choice voucher to employees with incomes below 400% of the poverty level if their share of the premium cost is between 8‐9.8% of income and who choose to enroll in a plan in an Exchange. Employers that offer a free choice voucher will not be subject to the above penalty.
• Large employers (more than 200 employees) that offer coverage will be required to automatically enroll employees into the employer’s lowest cost premium plan if the employee does not sign up for employer coverage or does not opt out of coverage.
• No employer may impose a waiting period that exceeds 90 days.

Private Insurance Mandates
New insurance market regulations will prevent health insurers from denying coverage to people for any reason, including their health status, and from charging people more based on their health status and gender. These new rules will also require that all new health plans provide comprehensive coverage that includes at least a minimum set of services, caps annual out‐of‐pocket spending, does not impose cost‐sharing for preventive services, and does not impose annual or lifetime limits on coverage (existing individual and employer‐sponsored plans do not have to meet the new benefit standards).
• Health plan premiums will be allowed to vary based on age (by a 3 to 1 ratio), geographic area, tobacco use (by a 1.5 to 1 ratio), and the number of family members.
• Health insurers will be prohibited from imposing lifetime limits on coverage and will be prohibited from rescinding coverage, except in cases of fraud.
• Increases in health plan premiums will be subject to review before they can be implemented.
• Young adults will be allowed to remain on their parent’s health insurance up to age 26.
• States will be allowed to form health care choice compacts that enable insurers to sell policies in any state that participates in the compact under a single set of rules.

Merging of Individual and Small Group Markets
Beginning in 2014, the legislation allows states the option of merging the individual and small group markets within the Exchanges.

Expansion of Public Programs
Medicaid will be expanded to all individuals under age 65 with incomes up to 133% of the federal poverty level ($14,404 for an individual and $29,327 for a family of four in 2009). This expansion will create a uniform minimum Medicaid eligibility threshold across states and will eliminate a current limitation of the program that prohibits most adults without dependent children from enrolling in the program today. Eligibility for Medicaid and the Children’s Health Insurance Program (CHIP) for children will continue at their current eligibility levels until 2019. People with incomes above 133% of the poverty level will obtain coverage through the newly created state health insurance Exchanges.
• The federal government will provide 100% federal funding for the costs of those who become newly eligible for Medicaid for three years (2014‐2016). In 2017 and 2018, states will receive an increase in the federal medical assistance percentage (FMAP) based on current state eligibility levels for adults, and then beginning in 2019, all states will receive the same FMAP increase. Different funding rules apply for Nebraska and certain states that are not eligible for the increased FMAP because they have already expanded Medicaid eligibility.

New Taxes and Fees
• “Cadillac Tax”– Imposes an 40% excise tax on insurers of employer sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage (these threshold values will be indexed to the consumer price index for urban consumers (CPI-U). This tax would apply to self-insured plans and sold in the group market, but not plans sold in the individual market.
• Non-Wage Medicare Tax- starting in 2013, households with incomes above $200,000 ($250,000 for married couples) will have a new, 3.8 percent tax applied to their income from interest, dividends, capital gains, and some profits from investments in partnerships and S corporations.
• 0.9% Medicare Tax Increase- starting in 2013, households with incomes above $200,000 ($250,000 for married couples) will have a 0.9% increase to their Medicare taxes on their wages.
• Third party administrators and health insurers must pay a three-year aggregate industry fee to fund a reinsurance program that will total $12 billion in 2014, $8 billion in 2015, $5 billion in 2016.
• There is a fee on health insurers and self-insured plans of $2 per covered beneficiary to fund comparative research initiatives.
• Health insurers must pay a new annual fee based on their market share. The fee will be assessed based on their net premiums written starting in 2014. The fee will total (across all health insurers) $8 billion in 2014, $11.3 billion in 2015, $11.3 billion in 2016, $13.9 billion in 2017, and $14.3 billion in 2018. After 2018 the fee will be indexed to growth based on premium growth for the preceding year.
• The pharmaceutical manufacturing sector must pay a new annual fee ($2.5 billion in 2011).
• The deduction for the subsidy for employers who maintain prescription drug plans for the Medicare part D eligible retirees is eliminated started in 2013.

HSA and FSA Changes
• Only prescribed drugs would be permitted to be reimbursable through a health savings account.
• The tax on distributions from a health savings account that are not used for qualified medical expenses would be increase to 20% (from the current 10%) of the disbursed amount.
• The amount of contributions to FSA’s for medical expenses would be limited to $2,500 per year, adjusted for inflation.

Medical Loss Ratio (MLR)
Require health plans to report the proportion of premium dollars spent on clinical services, quality, and other costs and provide rebates to consumers for the amount of the premium spent on clinical services and quality that is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets. Requirement to report medical loss ratio effective plan year 2010, requirement to provide rebates effective January 1, 2011.

Small Business Tax Credit
Provides a two year tax credit to small businesses (less than 25 employees) with aver annual wages of less than $40,000 that purchase health insurance with the tax credit.
• For tax years 2010 to 2013, the tax credit would be up to 35% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50% of the total premium cost.
• For tax years 2014 and later, for eligible businesses that purchase through the Exchanges, the tax credit would be up to 50% of the employer’s contribution toward the employee’s premium if the employer contributes at least 50% of the employee’s total premium cost.
• The full credit will be available to employers with 10 or few employees and average annual wages of $25,000 and less, the credit phases out as firm size and wages increase.

Prevention/Wellness Programs
• Establish the National Prevention, Health Promotion and Public Health Council to coordinate federal prevention, wellness, and public health activities. Develop a national strategy to improve the nation’s health. (Strategy due one year following enactment)
• Create a Prevention and Public Health Fund to expand and sustain funding for prevention and public health programs. (Initial appropriation in fiscal year 2010)
• Create task forces on Preventive Services and Community Preventive Services to develop, update, and disseminate evidenced-based recommendations on the use of clinical and community prevention services. (Effective upon enactment)
• Establish a grant program to support the delivery of evidence-based and community based prevention and wellness services aimed at strengthening prevention activities, reducing chronic disease rates and addressing health disparities, especially in rural and frontier areas.
• Provide grants for up to five years to small employers that establish wellness programs. (Funds appropriated for five years beginning in fiscal year 2011)
• Provide technical assistance and other resources to evaluate employer-based wellness programs. Conduct a national worksite health policies and programs survey to assess employer-based health policies and programs. (Conduct study within two years following enactment)
• Permit employers to offer employees rewards—in the form of premium discounts, waivers of cost-sharing requirements, or benefits that would otherwise not be provided—of up to 30% of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard. The reward limit may be increased to 50% of the cost of coverage if deemed appropriate.

CLASS Act
Establishes a national, voluntary insurance program for purchasing community living assistance services and supports (CLASS program). Following a five-year vesting period, the program will provide individuals with functional limitations a cash benefit of not less than an average of $50 per day to purchase non-medical services and supports necessary to maintain community residence. The program is financed through voluntary payroll deductions: all working adults will be automatically enrolled in the program, unless they choose to opt-out. (Effective January 1, 2011)

Reprinted with permission from the National Association of Insurance and Financial Advisors (NAIFA). Copyright 2010. All rights reserved.

Date: March 22, 2010

Action Taken: Last Night, the House of Representatives passed H.R.3590, a health insurance reform bill passed by the U.S. Senate in December. The House vote was 219 to 212. Since the House passed the bill exactly as the Senate had previously, H.R.3590 will become law as soon as President Obama signs it. That should happen early this week.

The House also passed a “sidecar-fixer” health reconciliation bill, H.R.4872, by a vote of 220 to 211. The reconciliation bill now goes to the Senate, where it will face procedural challenges that will require 60 votes to overcome prior to a simple majority vote on the bill itself. The reconciliation bill’s fate in the Senate is far from certain.

Impact on NAIFA Members: H.R. 3590 has numerous provisions that will impact how agents will continue to serve their clients. Following is a rundown on key provisions impacting the role of the agent. After each bullet point is an explanation of how (if) the health reconciliation bill, which still faces the need for considerably more legislative process, would change H.R.3590.

Key provisions include:

Creates state-based exchanges: The exchanges will be operational by 2014, and will be open to individuals without access to affordable health insurance and to very small businesses. Agents are specifically authorized to help individuals and very small businesses buy their insurance through exchanges. All the insurance sold through the exchanges will be private insurance (that has to comply with extensive rules regarding benefits included in the policies)
State Based Insurance Exchanges: There will be no government-underwritten health insurance plan offered through the exchanges
The above two provisions would not change in the amendments contained in the health reconciliation bill
Insurance Reforms: H.R.3590 contains extensive insurance reforms, including a prohibition against using preexisting conditions or health history in pricing insurance, guarantee issue rules, elimination of lifetime and unreasonable annual benefit caps, discrimination rules applicable to employer-provided insurance, and more. It also requires insurance policies to allow for coverage of adult children up through age 26.
The health reconciliation bill does not change these insurance reforms, but does modify the dates by which they must take effect.
Individual Mandate: Impose a requirement on virtually all Americans to buy health insurance. There are many subsidies for low and lower-middle income Americans to help them buy the required health insurance — failure to comply would result in a fine equal to the “bronze level” health plan premium (the authorized plan with the highest allowable co-pays and deductibles, other than the “young invincible plan” open to young adults)
The health reconciliation bill would change the fine for failure to comply with the individual mandate—to the greater of 2.5% of income or $695, once the fine is fully phased in
Employer Fees: Assess employers with more than 50 employees $750 per employee if they do not offer health insurance and one (or more) of their employees uses a federal subsidy to buy their health insurance through an exchange
The reconciliation bill would increase the assessment on employers that do not offer health insurance and who have at least one employee who buys health insurance with federal subsidies to $2,000 per full-time employee, after the first 30
Employer Fees II: Assess employers with more than 50 employees who do offer health insurance, but that health insurance is not “affordable” (costs more than 8% of a worker’s salary) $2,000 for such a worker (but not all workers) who uses a federal subsidy to buy health insurance
The reconciliation bill would increase this fine to $3,000 per employee who uses a federal subsidy to buy health insurance because the employer-offered insurance is not “affordable”—also changes what constitutes “affordable” to a sliding scale percentage of income that tops out at 9.5%
Insurance Company Tax on High Value Plans: Imposes a 40% tax on health insurers (or plan administrators or employers if they administer their own self insurance plan) if the employer offers “high value health insurance.” High value health insurance, generally, is insurance (all coverage aggregated, including FSAs but not stand-alone dental and vision insurance) with premiums in excess of $23,000 for family coverage and $8,500 for individual coverage. Those threshold amounts would go up if the health reconciliation bill’s amendments were to be enacted.
The health reconciliation bill would increase the thresholds to $27,500 and $10,200 for family and individual coverage; it also delays imposition of the tax to 2018
FSA: Caps FSA annual contributions at $2,500 (indexed)
The health reconciliation bill delays the effective date of the cap by one year
State Regulation of Insurance-Neither H.R.3590, the bill that is now ready for President Obama to sign into law, nor the health reconciliation bill, would repeal (or restrict) health insurers’ antitrust immunity contained in the McCarran-Ferguson Act of 1945.

Reconciliation Bill Issues of Concern: Issues of concern in the health reconciliation bill include a proposed 3.8% tax (the proceeds of which would go to the Medicare trust fund) on high income ($200,000/individual and $250,000/married) taxpayers’ unearned income, including annuities. Also of concern is a new rate review entity at the federal level that would have to approve health insurance premium increases.

Management Liability 

Bond & Financial Products offer a broad array of executive liability and crime coverages that can be tailored to address your needs on a stand-alone or integrated basis.

Products and services

Directors and officers liability (D&O)

Why you need it Suits against directors and officers are most often filed by shareholders, but can be brought by competitors, customer, vendors and governmental and regulatory agencies.  Allegations can include breach of duty, fraud, unfair business practices and infringement of trade secrets.

How D&O protects you This policy provides liability protection when claims are asserted against directors and officers for actual or alleged wrongful acts.  The assets of the company or organization, as well as the personal assets of their directors and officers, are protected from costly litigation.

Employment practices liability (EPL)

Why you need it The number of employment-related lawsuits filed with state and local agencies is at an all-time high and steadily increasing:  In 2007, EEOC handled nearly 82,000 charges.*

How EPL protects you This policy helps shelter company assets from employee lawsuits alleging discrimination, harassment or wrongful termination and other employment related claims.

Fiduciary liability

Why you need it Under ERISA, anyone who uses discretion in administering or managing employee benefit plans is a fiduciary and subject to strict standards of conduct, including a duty to act prudently and solely in the interest of plan participants and their beneficiaries.  ERISA plan fiduciaries may be personally liable for any breach of their duties.

How fiduciary protects you Fiduciary liability insurance responds to claims made against employers, employee benefit plans, board members and employees for breaches of fiduciary duty with respect to employee benefit plans, including allegations of imprudent investment of plan assets, excessive fees paid to service providers, non-compliance with plan documents, and false and misleading statements to plan participants.

Miscellaneous professional liability (MPL)

Why you need it Today, more clients are bringing suits against business professionals than ever before.  The defense costs for these claims are skyrocketing.  While general liability policies will respond to claims for bodily injury and property damage, they typically exclude coverage for professional liability/errors and omissions.

How MPL protects them This policy guards business professionals from allegations of wrongful acts, such as negligence, misstatements, misleading statements, errors or omissions in services or failure to provide services.

Bond & Financial Products

Management Liability

Fidelity/employee dishonesty

Why you need it According to a 2008 report,* seven percent of business revenues are lost, on average, as a result of occupational fraud and abuse.  The average small-business employee dishonesty scheme causes $200,000 in losses.

How it protects you This comprehensive crime policy protects businesses against the devastating financial losses caused by employee theft and forgery.

Identity fraud expense reimbursement (IFER)

Why you need it Identity theft is the fastest growing white-collar crime in America- over 8 million people are victimized each year.  In a 2008 Identity Fraud Survey, individual victims reported over $5 billion in out-of-pocket expenses.**

How IFER protects you The coverage reimburses victims for lost wages, pre-approved attorney’s fees, long distance telephone charges, loan re-application fees and notary and certified mailing charges.

President Obama recently signed the Temporary Extension Act of 2010. The Temporary Extension Act:

• Extends the eligibility for the ARRA premium assistance for both COBRA and State Continuation from February 28, 2010 to March 31, 2010.
• Provides a new requirement that an involuntary termination of employment that occurs on or after March 2, 2010, which follows a continuation coverage qualifying event of a reduction in hours that occurred at any time from September 1, 2008 through March 31, 2010, is also a qualifying event for the ARRA premium assistance (and includes some special notice requirements).

Wellmark intends to cooperate, and at the request of the Commissioner, we voluntarily agreed to postpone the effective date of the premium increase for 30 days—from April 1 to May 1— to allow for the review to be completed.  

Greenpac is available on all property policies Selective Insurance writes.

PRODUCT AND COVERAGE HIGHLIGHTS

This endorsement helps our customers become “greener” after a loss by providing coverage for:

Green property increased costs

• • Green upgrade replace or rebuild with sustainable construction materials, fixtures, windows, doors, roofs, heating, ventilation and air conditioning equipment and systems, paints, sealants, and flooring.
  • Green upgrade as per Leadership in Energy and Environmental Design (LEED), Energy Star® and Green Globes® standards

• Green soft costs

• • LEED accredited architects and engineers
  • Certification or recertification by a green authority (LEED, Energy Star®, Green Globes®)
  • Building ventilation or air flush out before occupancy
  • Commissioning of HVAC

• Green increased restoration period

• • 30-day increase in the restoration period from delays in obtaining green construction materials, equipment and other replacement property

• Excess ordinance or law coverage

• • Greenpac™ applies on an excess basis over building ordinance or law increased cost of construction coverage in response to green building codes