Archive for November, 2014

Keeping it Safe and Limiting Liability during the Holidays

With year-end festivities about to begin, you should include safety into your holiday plans, be that if you are simply decorating the office or throwing a party for your staff.

Since the holiday season or your party is only once a year, it’s easy to overlook safety even though you already incorporate it into the other aspects of your operations.

While you obviously want your staff to relax and have fun at your holiday party, you also want to make sure they get home safely and that nobody gets hurt or sick at your party. This takes planning and consideration.

Some of your safety priorities should be:

  • Liquor consumption,
  • Safety on the premises of your party, and
  • Food-borne illnesses.

 

Due to their infrequent nature, the liability risks of company-sponsored holiday events are often overlooked. To ensure the health and well-being of all who attend, it is important to be aware of any potential liability concerns that your company may face if the event doesn’t go exactly as planned.

 

Safety

While you want your staff to enjoy themselves, safety should still be your top priority during the holidays.

Keep in mind that if someone trips and injures themselves on an extension cord for your holiday lighting or other decorations, it would be considered work-related and could possibly be subject to workers’ compensation. The same may hold true for injuries sustained at work parties. Consider the following:

  • If you are holding a party outside your premises, you need to inspect the venue first to make sure it meets your safety standards. Some things to keep an eye out for are exits, emergency lighting, and flooring that might prevent slips and falls, particularly if there is a chance of bad weather.
  • Keep an eye on the weather forecast and whether storms are looming on the date of your party. Consider the effects that weather may have on safe travel to and from the event. You may need to make special plans to keep sidewalks and parking lots clear if the event is outside of normal business hours.
  • If you are in an unfamiliar area, do you need security? It’s something to consider.
  • Keep an eye on party-goers to ensure that no one wanders off or goes to their car alone after dark.
  • Prepare an emergency plan in case someone is injured or needs medical assistance. Know where the closest hospital is and if anyone knows how to use a defibrillator or can perform CPR.
  • Do you have employees with disabilities who have special needs? Wheelchair-bound employees should be able to get in and out of any venue you choose.

 

Other liability issues

Other issues to consider:

  • Applying your workplace policies on behavior, including those on violence, harassment, discrimination and the general code of conduct, even if you’ve chosen a venue other than your workplace. Prior to the event, let employees know the standards to which they will be held.
  • Making sure your staff know that the event is optional and it won’t reflect poorly on their performance evaluation, advancement potential or job security if they don’t’ attend. All invitations and announcements should emphasize this point.
  • Making sure that the party is not tied to any specific religious tradition and is referred to as a “holiday party.”
  • Monitoring employees’ behavior to ensure that it conforms to company policies. Take prompt action if any activity or behavior exceeds acceptable bounds. For instance, if someone is getting too friendly, carrying mistletoe and asking for kisses from others, you should pull the person aside and discreetly manage the incident before it becomes a bigger issue.
  • Limiting alcohol consumption, which can help avoid impaired decision making and a lowering of inhibitions that can lead to poor behavior.
  • Avoiding activities or items such as mistletoe, a game of Twister, or inappropriate music that could lead to physical contact, unwanted social pressure or inappropriate conversation.
  • Taking complaints that stem from the party seriously. As you would with any other incident, document, investigate and take appropriate action.

 

Alcohol

Some companies have recognized the liability exposure that alcohol represents and have chosen to hold holiday events free of beer, wine or liquor. If it is to be served, there are some important considerations that can help to limit potential problems:

  • Hold the event at an off-site location and hire professional bartenders who have their own insurance and are certified for alcohol service. Speak with the vendor to determine what protocols it uses to keep from serving minors and others who are visibly intoxicated.
  • Make sure there is an array of choices of non-alcoholic beverages.
  • Don’t have an open bar. Instead, hand out drink tickets to control consumption.
  • Stop serving alcohol at least an hour before the event ends.
  • Keep lots of starchy and high-protein snacks for the party-goers to munch on to slow absorption of alcohol into the bloodstream.
  • Give a supervisor or manager the authority to cut off the serving of alcohol to anyone who is intoxicated.
  • Provide alternative transportation, which may include free cab rides.

 

A word about insurance

Make sure that any vendors you use carry insurance. Insist on seeing the certificates of insurance with sufficient coverage and liability limits for:

  • Catering firms,
  • Bartending firms,
  • Facilities, or
  • Entertainers.

 

When reviewing rental contracts, be sure to note whether any hold harmless or indemnity agreements that could release the vendor from liability and instead hold your company responsible for losses from situations over which you have no control.

Also, talk to us to make sure that your own insurance policies cover any mishaps that may occur at your company event.

holiday party

 

Closed Claims and Adjustments to Your X-Mod

So, you have a workers’ comp claim that’s been growing in terms of costs for the last two years, and finally it has closed.

You’ve been fretting about its impact on your experience modification factor (X-Mod), so now that it’s closed, what happens?

Under the Closed Claims rule of the Workers’ Compensation Insurance Rating Bureau, an experience modification may be subject to revision whenever claims that were used in calculating the experience mod are reported as closed, meaning that no more payouts will be made on the claim.

The WCIRB uses the amount your insurance company has reserved for a particular claim, not the actual payouts to date. In many cases you will find that, on an open claim, the insurance company may have paid out $5,000 to date, but may have $15,000 in total reserved, meaning they estimate the payouts might reach that point some day.

Check with us to make sure your insurance company is closing claims in the system. Once the claim is closed out, then the experience mod will use the sometimes lower actual rather than the reserved number.

If the aggregate value of all closed claims used in calculating your X-Mod is valued collectively at an amount that is less than 60% of the aggregate of the highest value at which each closed claim was previously used in a rating, then the experience rating may be revised downward using the most current reported values.

The good news is that X-Mods will not be revised pursuant to the Closed Claims rule if it results in an increase to the experience modification.

When a claim is first reported by an insurer as closed on a unit statistical report, the WCIRB automatically reviews the policyholder’s current and two immediately preceding X-mods to determine if they should be revised pursuant to the Closed Claims rule. As necessary, revised experience modifications are automatically published and the insurer is notified.

Finally, remember that X-Mods are calculated looking back over a three-year period, and the last year is not included. So, for a renewal date of Jan 1, 2014, your experience mod probably includes claims from Jan. 1, 2010 to Dec. 31, 2012.

return to work

Health Plans That Fail Minimum Value Test Get One-year Reprieve

The IRS has announced that group health plans that don’t provide hospital coverage do not satisfy the Affordable Care Act’s “minimum value” test, but they will be approved for use in the 2015 policy year.

The IRS announcement put to an end concern and confusion over why a benefits calculator on the IRS website approved group health plans that did not provide inpatient coverage.

The IRS promised that new regulations that will eliminate this unanticipated loophole would be released shortly before the end of 2014.

The resolution is good news for employers because it eliminates a major source of confusion and uncertainty. That’s because the ACA imposes, starting in 2015, heavy penalties on employers that offer their workers plans that do not meet the law’s minimum value test.

In order to pass muster, a health plan must pay for at least 60% of covered services. If a plan does not pass the minimum value test, there could be financial repercussions that could quickly spiral.

If an employer offers such a plan and any of its workers purchase insurance from a state or federally run public health insurance exchange and they receive government subsidies, the employer would be liable for a fine of $3,000 for each employee that obtains subsidized coverage.

Likely due to what many think was an error in a benefits calculator on the Department of Health and Human Services website, low-cost plans that excluded coverage for hospital services are able to pass the minimum test.

That, in turn, fueled interest in the plans, which cost about half the price of more traditional plans, especially from employers who have not offered coverage and, starting in 2015, faced an ACA mandate to offer coverage or be hit with a stiff financial penalty.

The IRS, in its notice, said that the calculator had failed to produce “valid actuarial results.”

In its announcement, the IRS said employers that – prior to Nov. 4 – had entered into a “binding written commitment” to offer plans excluding hospital coverage or had begun to enroll employees in the plans, could offer them through the end of the next plan year.

In those cases, the employers would not incur a penalty, even if eligible employees opted for subsidized coverage through the public exchanges.

money pills

ACA Age-banded Rating Explained

An important change you may have noticed this year is that your group health plan has dozens of age-banded rates.

This new rating structure is a result of the Affordable Care Act, which bars insurers from charging individuals who are 64 or older more than three times the amount that they charge individuals who are 21 years old. As a result, most insurers will increase their rates by a fraction for each year above 21 or so, resulting in as many as 45 age-banded rates.

This is a big shift from prior years, which featured composite rates in the market. All insurers must now use these bands to rate their products in these two business lines.
Federal law requires that, for age-rating purposes, health insurers use a uniform age-rating curve established by the state for the individual market, small group market or both markets, specifying the relative distribution of rates across all age bands.
The rule also indicates that if a state does not establish or propose a uniform age curve, the federal standard default age curve will apply in both the individual and small group markets in that state for the 2014 plan or policy year.

Regulations created by the Centers for Medicare & Medicaid Services require insurers to utilize as many as 45 different rate bands, obviously adding to the confusion of your employees come policy renewal. We’ve tried to cut through the haze with the following.

 

This is how it works

  • Ages 0-20 are one rate band.
  • There are 43 individual bands for ages 21 through 63.
  • There is one rate band for individuals 64 and over.
  • The age of 21 is basically the base rate. Under the federal rate-band schedule, which is applicable in most states, the rates for the 0-20 band are 63.5% of the rate that 21-year-olds are charged.
  • After 21, the percentage multiplier increases gradually for each year, until 64.
  • The maximum that can be charged to individuals who are 64 and older is 300% of the rate charged to 21-year-olds.
  • Insurers can charge the 0-20 rate for up to three children of the policyholder. There is no charge for additional children aged 0-20. Because children can be covered up to age 26, once a child reaches 21, they will have a rate for their specific age through 26.

 

The age represented by each member will be their age at their enrollment date. That age rate will remain until the contract renews. The ages will then be adjusted to the current ages of members at contract renewal.

Net costs for older adults are considerably higher than for the younger adults, not only because of age rating and its consequent higher premiums, but also because older adults use significantly more medical care services, meaning their out-of-pocket spending is considerably higher, as well.

According to the Robert Woods Johnson Foundation, the average spending under the new rating bands by single 21- to 27-year-olds with incomes above 400% of the federal poverty level is $5,820, while it is $15,620 for singles aged 57 and older of the same income.

Also, average direct costs for older families under 3:1 rating are $28,410, compared with $12,900 for younger families.

 

age timelines

 

 

Health Plans That Fail Minimum Value Test Get One-year Reprieve

The IRS has announced that group health plans that don’t provide hospital coverage do not satisfy the Affordable Care Act’s “minimum value” test, but they will be approved for use in the 2015 policy year.

The IRS announcement put to an end concern and confusion over why a benefits calculator on the IRS website approved group health plans that did not provide inpatient coverage.

The IRS promised that new regulations that will eliminate this unanticipated loophole would be released shortly before the end of 2014.

The resolution is good news for employers because it eliminates a major source of confusion and uncertainty. That’s because the ACA imposes, starting in 2015, heavy penalties on employers that offer their workers plans that do not meet the law’s minimum value test.

In order to pass muster, a health plan must pay for at least 60% of covered services. If a plan does not pass the minimum value test, there could be financial repercussions that could quickly spiral.

If an employer offers such a plan and any of its workers purchase insurance from a state or federally run public health insurance exchange and they receive government subsidies, the employer would be liable for a fine of $3,000 for each employee that obtains subsidized coverage.

Likely due to what many think was an error in a benefits calculator on the Department of Health and Human Services website, low-cost plans that excluded coverage for hospital services are able to pass the minimum test.

That, in turn, fueled interest in the plans, which cost about half the price of more traditional plans, especially from employers who have not offered coverage and, starting in 2015, faced an ACA mandate to offer coverage or be hit with a stiff financial penalty.

The IRS, in its notice, said that the calculator had failed to produce “valid actuarial results.”

In its announcement, the IRS said employers that – prior to Nov. 4 – had entered into a “binding written commitment” to offer plans excluding hospital coverage or had begun to enroll employees in the plans, could offer them through the end of the next plan year.

In those cases, the employers would not incur a penalty, even if eligible employees opted for subsidized coverage through the public exchanges.

healthcare money

 

Rising Danger of Hacks Spurs Need for Comprehensive Strategies

The “root cause” of the credit and debit card data breach at Target Corp. last year was the company’s lack of a chief information security officer (CISO).

That’s according to a former Target manager who made the comment during a talk at the “Work-Bench Enterprise Security Summit,” according to press reports.

The news came in the same week that the Ponemon Institute released a new study, which found that 43% of enterprises experienced a data breach in 2013 – up from 33% in 2012.

The study also found that the cost incurred for each lost or stolen record containing sensitive and confidential information increased to an average of $201 per record – or $5.9 million per breach. Those costs are up from $188 per record in 2012, and $5.4 million per breach.

The lesson from these two news items is that no business can afford a lackadaisical attitude towards cyber security, as hackers and other cyber threats are targeting small and large businesses alike. And while CISOs are out of reach for most companies because of the cost, there are outside consultants in the market who can review your plans and develop a strong security plan for your organization.

The primary reason for the increase in the cost of a breach is the loss customers incur following the data breach due to the additional expenses required to preserve the organization’s brand and reputation. In fact, the average rate of customer turnover or churn increased by 15% since the previous year in Ponemon’s study.

 

The study found that data losses were mainly caused by:

  • Malicious or criminal attacks (44% of companies reported this as the reason for their breach). These were the most expensive breaches, at $246 per record.
  • Employee negligence (31% of organizations). This factor typically cost the organization $160 per record.
  • System glitches (25% of organizations). This factor cost organizations an average of $171 per record.

 

Fighting the threat

While most companies are not the size of Target and cannot afford to have a CISO on staff, you can still learn from Target’s mistakes. Karl Mattson, who worked at Target from 2008 until 2013 – most recently as manager of cyber and global intelligence – said that the lack of a security culture was Target’s undoing.

Besides not having a solid infrastructure in place to prevent the breach, Target also responded poorly. When the company’s intrusion-detection software discovered the suspicious activity and alerted Target’s IT staff, the company did not take immediate action, he said.

However, many companies are turning to virtual CISO engagements. These are security executives for hire, and they will help develop a security roadmap for their clients.

They will typically conduct reviews of your information security, breach response plans, sensitive data, database, and more.

After the reviews, they will usually produce a report with recommendations for improvements in your policies, security framework, security culture, and more. They will also help you implement the recommended strategies – and they are typically on call in case of a breach.

Finally, whatever route you take to protect your data, you need the final backstop: A cyber liability policy. This will help cover the costs of a myriad of expenses such as data recovery, breach notification, remediation and more.

 

cyber thief

Safety Devices Aren’t Any Good if Not Operational

The 2013 workplace death of an electrician working for a wheel-manufacturing company in Southern California is a textbook example of why you need to regularly maintain your safety equipment.

The electrician was crushed to death after he was caught between a moving hoist and a chrome-plating tank at the worksite. The accident occurred when as he was leaning over a tank from his position on a catwalk to check on the flow from a pump filter that had been installed in the tank.

The electrician had entered the plating area unbeknownst to the hoist operator.

Instead of shutting off like it was supposed to, the hoist pinned the worker between the tank and pipes on its rim. The hoist, which was computer-controlled, was equipped with a safety sensor that was designed to shut the hoist off immediately if it makes contact with an object.

The California Department of Public Health’s Fatality Assessment and Control Evaluation (FACE) unit investigated the incident to see what went wrong and found that the safety sensor was not operational.

 

The recommendations by FACE apply to any manufacturing setting:

1. Ensure that moving machinery is inoperable when employee access into a danger zone is required. Danger zones include places in or around machines or pieces of equipment where employees can suffer injuries.

In this case, the operator was supposed to stop the hoist if he observed a worker entering the danger zone – the area immediately adjacent to the tanks in the hoist’s path. FACE says the employer could have installed additional mechanisms to stop the hoist, including gate interlocks, visual or auditory warning alarms, or sensing devices.

An alternative protection would be a lockout/tagout procedure that would shut down the hoist whenever an employee is required to enter the danger zone.

 

2. Ensure that emergency safety devices are maintained in operating condition. As noted, the hoist was equipped with a safety sensor, but it did not work. A post-incident inspection of it revealed that the atmosphere around the tank had produced corrosion that rendered the stop inoperable.

The Division of Occupational Safety and Health cited the employer for several alleged serious violations, including a willful-serious violation of General Industry Safety Orders §4002 for the faulty sensor. Cal/OSHA is seeking more than $120,000 in penalties in the case.

workplace safety cartoon