NYC Insurance Blog

What are the Common Types of Business Health Insurance?

Health insurance continues to skyrocket in the United States. With a good health insurance policy, you can benefit from physician services, home care, and hospital care. Typically, small companies are not obligated to offer health insurance. However, companies with more than 50 full-time employees are required to offer health insurance. Companies usually offer one plan or several plans to their employees depending on the company size, coverage offered, and cost among other factors. Here are the common types of business health insurance in the United States:

• Preferred Provider Organization (PPO)
• Point of Service (POS)
• Health Maintenance Organization (HMO)
• Exclusive Provider Organization (EPO)
• Health Savings Account (HSA) Eligible Plans

In this blog article, we will help you understand the pros and cons of each plan and how your business can benefit. Understanding group health insurance can help you save money and offer the best coverage to your employees thus motivating them to work hard and remain loyal.

Preferred Provider Organization (PPO)

Under a PPO plan, members have the flexibility to choose any doctor or specialist without needing a referral, whether they are inside or outside of the network. However, using providers within the network typically results in lower out-of-pocket costs for the insured individual.

Although PPO plans encourage the use of in-network providers by offering lower out-of-pocket costs, they still provide coverage for services obtained from out-of-network providers. However, the member's out-of-pocket costs, such as deductibles and co-payments, are typically higher when using out-of-network providers.

Point of Service (POS)

Although it is not a common insurance plan nowadays, POS offers members flexibility in choosing healthcare providers. However, to receive medical care outside of your network, you must get a referral from your primary care provider. The referrals help ensure that the care is coordinated and members receive appropriate medical services from qualified physicians. The insured individual must pay the extra costs for an out-of-network provider. 

Health Maintenance Organization (HMO)

HMO plans usually require insured individuals to receive medical services from in-network providers. Members are required to select a primary care physician (PCP) from within the network. The PCP serves as the main point of contact for all healthcare needs and coordinates referrals to specialists when necessary. 

Although HMO plans are budget-friendly, they usually do not cover services obtained from providers outside of the network. Exceptions may be made for emergency care or other specific circumstances, but members generally bear the full cost of out-of-network services.

Exclusive Provider Organization (EPO)

EPO plans typically offer lower premiums and fewer restrictions on provider choice compared to HMO plans, but they usually do not provide coverage for out-of-network care, just like HMOs. Therefore, members are responsible for the full cost of out-of-network care, except in cases of urgent medical needs.

HSA-Eligible Plans

Health Savings Account (HSA) eligible plans are high-deductible health insurance plans that meet certain criteria set by the Internal Revenue Service (IRS) in the United States. These plans are designed to work in conjunction with a Health Savings Account, which is a tax-advantaged savings account that allows individuals to save money for qualified medical expenses.

Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free. Additionally, unused funds in an HSA can be rolled over from year to year and invested for potential growth.

Insurance Options for Small Businesses

If you have less than 50 full-time employees, here are some options to choose from:

Small Group Health Insurance

It is one of the most popular insurance policies because it is cost-effective. Employers pay a fixed premium and have the option of passing a portion of the cost to their employees. Luckily, employees receive the same rate depending on their age or gender. While your business can enjoy tax benefits, employees are required to pay deductibles and co-pays. 

Individual Coverage Health Reimbursement Agreement (ICHRA)

ICHRA plan that allows employers to reimburse employees for individual health insurance premiums and other medical expenses. The employer provides a set amount of money to each employee in the form of a health reimbursement arrangement. Employees can use the funds provided by the employer to purchase individual health insurance coverage that best fits their needs. This means employees have the flexibility to choose a plan that aligns with their preferences and circumstances, including coverage levels, networks, and cost.

It is crucial to understand that there are no minimum or maximum contribution limits set by the IRS for ICHRA plans, although employers must provide a uniform benefit to all employees within the same class.

Qualified Small Employer Health Reimbursement Agreement (QSEHRA)

QSEHRA is IRA-approved and it functions like ICHRA. However, unlike ICHRA, QSEHRA has an annual cap on how much allowance employers can offer. The plan usually has minimum caps for individuals and families.

Self-Funded Health Insurance

Also known as self-insurance, self-funded health insurance is a type of health insurance arrangement in which an employer assumes the financial risk for providing health care benefits to its employees. Rather than paying fixed premiums to an insurance company, the employer pays for claims out of its own funds, often with the assistance of a third-party administrator (TPA) to handle administrative tasks.

While self-funding can provide cost savings and flexibility, it also exposes employers to greater financial risk, particularly if there are unexpectedly high claims. As such, employers must carefully manage their self-funded plans and consider implementing risk management strategies such as stop-loss insurance.

Health Stipends

An employer can offer a stipend to help cover medical expenses. Although a stipend can be offered in advance or as a reimbursement, the employer has the right to accept or deny it. Remember, if you receive a stipend as an employee, you are required to pay taxes. 

Conclusion

If you want your business to grow, it is important to offer health insurance coverage to your employees. Insuring your employees improves productivity and loyalty because they know they are taken care of. There is a high possibility that you will maintain your hardworking, qualified, and best employees for a long period of time. Be that as it may, it is crucial for employers to analyze what the employees need and want, the cost of purchasing insurance policies, and available options to make the right choice. If you have any questions, do not hesitate to contact a qualified insurance agent. 

Professional Liability, Explained!

As a business owner, you strive to improve your business daily. It could take months and sometimes years to achieve a sustainable level of success. It will be a waste of all your hard work if a hateful comment from your employee to your customers lands you in court battling a lawsuit. 

That is why most business owners protect their business with professional liability insurance. You should highly consider getting insurance if you sell your services. 

What is Professional Liability Insurance?

Also known as Errors and Omission Insurance, or E&O, professional liability insurance protects businesses from customer claims. If one of your customers sues you, then professional liability insurance covers the cost of the lawsuit. The policy protects individuals from business owners' liability from claims arising from practices such as negligence, misrepresentation, and malpractice. Professional liability coverage offers protection to experts like accountants, physicians, or lawyers where their general liability policy is insufficient. 

How Professional Liability Insurance Works:

Depending on your career, professional liability may have a different name. For instance, to medical practitioners, the policy is called malpractice insurance. To real estate agents, it is E&O insurance. 

These policies are usually arranged on a claims-made basis. This means that you only enjoy the protection of the insurance policy if the claims are made during the period when the insurance policy is active. Therefore, any incidents before the policy became active may not be covered. 

What Risks Does Professional Liability Insurance Cover?

A client may claim that your organization's or employee's negligence cost them a hefty loss. Following this claim, they may sue for compensation, which could mean a long, expensive, and tiring battle in court. A perfect example is when a wedding planner sues a florist for failing to deliver flowers to the wedding venue, resulting in conflict with the client and possibly terminating their contract. With professional liability insurance, you can hire a lawyer with ease.

Some of the claims that the professional liability covers include:

• Breach of contract
• Accusations of negligence
• Incomplete works
• Inaccurate advice
• Personal injury resulting from libel or slander
• Misrepresentation
• Budget overruns
• Missed deadlines, etc.

Businesses That Should Consider a Professional Liability Insurance

If you are a business owner, you may be wondering if you need professional liability insurance if you already have your general liability insurance. 

The short answer will be: The need for the policy depends on your business.

CONSIDER A SCENARIO;

A doctor who is knee-deep in the service industry bears a lot more business owner's liability than a hardware store owner.
Depending on your business, you can survive with a general liability cover without professional liability insurance.  So, if you are in the professional service industry, you should look into getting a professional liability cover. 

That means that you should make plans to find an affordable professional liability insurance coverage if you:

• Offer professional services directly to your customers
• Regularly advise your clients
• Sign a contract that requires you to carry coverage. 
• This applies to consultants, doctors, lawyers, and other medical professionals. 

Other businesses that should consider professional liability insurance include:

• Architects
• Insurance professionals
• Real estate agents
• Accountants/ auditors
• Consultants
• Market research firms
• Interior designers
• Advertising agencies
• Graphic designers
• Technology professionals
• Engineers

Some states even specify the professions that must have professional liability insurance during their operation. By contacting our office, we can guide you in what your business needs, in regards to coverage.

How Does Professional Liability Insurance Protect Your Business?

Getting professional liability insurance can benefit your business in many ways. Some of them include:

Protects your business from common risks-With this coverage, you can protect your business from common risks such as mistakes, omissions, errors, and breach of contract. So, when your employee mistakenly discloses some information about your client and you end up in court, you do not have to worry about the legal fees. Gives your customers confidence- Professional liability insurance adds to the professionalism of your business. It gives the impression that you are serious about your work and ready to defend your reputation and pride. 

It offers protection, even when you are not at fault. 

Sometimes, you face legal action when you are innocent. Even then, you must endure the long process and spend a lot of money on a lawyer to prove your innocence. Even in such situations, professional liability insurance has got you covered. 

The premiums you pay for your professional liability insurance will, however, depend on your daily operations, the number of employees, coverage limits, the level of risk of your business, and your claim history.

Conclusion

Many small business owners make the mistake of ignoring the importance of professional liability insurance. And since you have learned the importance of it, you should go the extra mile to protect your business. Get yourself a good plan, and you will not regret it. Give us a call today for a Free Quote!

What is the Difference between an Individual Contractor and Sole Proprietor?

If you are thinking of starting a business or entering into contractual agreements, it is important to understand certain terms. A sole proprietor and an individual contractor are two common and confusing terms. Although they may seem similar, they are different. In this article, we will help you understand the two terms to help you make informed entrepreneurial decisions.

A sole proprietorship is the simplest form of business ownership. Therefore, if you are a sole proprietor, you own and operate a business, assuming full responsibility for its success and liabilities. However, an individual contractor is an entity or individual hired by another business/individual to provide specific services or complete a task/project.

Types of Insurance Sole Proprietors and Independent Contractors Should Consider

The insurance implications of independent contractors and sole proprietors can vary because the two business structures are different. Here are some of the policies each entity should consider:

Sole Proprietor:

Liability Insurance

Sole proprietors are personally responsible for the business's liabilities. As such, they must consider liability insurance to protect personal assets in case the business incurs debts or faces legal claims.

Business Property Insurance

If the sole proprietor owns business property, such as equipment or inventory, they may need business property insurance to cover losses due to theft, damage, or other covered events.

Professional Liability Insurance

Depending on the nature of the business, a sole proprietor might also consider professional liability insurance (errors and omissions insurance) to protect against claims of negligence or mistakes when offering professional services.

Health Insurance

Sole proprietors typically need to secure their own health insurance coverage to avoid paying out of pocket when they get sick or involved in an accident. This is a significant consideration, as they do not have access to employer-sponsored health plans.

Independent Contractor:

General Liability Insurance

Independent contractors often need general liability insurance to protect against third-party claims of bodily injury or property damage that may occur when offering services or selling products.

Professional Liability Insurance

Similar to sole proprietors, independent contractors may require professional liability insurance if their work involves providing professional services to clients. Professional liability insurance (E&O) helps protect business owners against losses emerging from professional errors and omissions when offering professional services. You need E&O just in case you or one of your contractors makes a professional mistake.

Worker's Compensation (if applicable)

Independent contractors are not usually eligible for worker's compensation from the entities they work for. However, they might need to provide their own coverage, especially if they have employees working under them. 

Health Insurance

Like sole proprietors, independent contractors are responsible for obtaining their own health insurance coverage and you should always consider health insurance coverage.

Some Shared Insurance Considerations include:

Business Interruption Insurance

Both sole proprietors and independent contractors might want to consider business interruption insurance to help cover lost income if their business operations are disrupted due to unforeseen circumstances (e.g., natural disasters, and fires).

Auto Insurance (if applicable)

If either a sole proprietor or an independent contractor uses a vehicle for business purposes, they should ensure that their auto insurance provides adequate coverage for both personal and business use.

Home-Based Business Insurance (if applicable)

For those operating businesses from home, additional insurance considerations may arise, such as the need for home-based business insurance to cover business-related assets. It might seem unnecessary but you can incur a hefty financial loss if you encounter a fire, damage by extreme weather, theft, etc.

Conclusion

It's important for both sole proprietors and independent contractors to carefully assess their specific business activities, risks, and legal requirements when determining the appropriate insurance coverage. Consulting with an insurance professional can provide personalized guidance based on the unique circumstances of your business. Allow us to be that professional help to guide you in the insurance process, 718-554-3425.

5 Costly Group Health Insurance Mistakes to Avoid

Securing group health insurance is a critical step for any organization looking to provide comprehensive healthcare coverage for its employees. While this benefit is essential, many businesses fall prey to common mistakes that can hinder the effectiveness of their group health insurance plans. In this article, we will explore five prevalent mistakes and discuss how to avoid them to ensure a successful and cost-effective health insurance program for your team.

Firstly, employers need to familiarize themselves with the law to avoid expensive mistakes. Secondly, if the Department of Labor or IRS inquires, you should address the issues promptly to avoid incurring hefty fines. Employers should understand the compliance requirements of The Affordable Care Act (ACA) to help make the right choices. Although it is advisable to hire outside consultants, understanding the ins and outs of your business helps make sound decisions.

Here are 5 mistakes you should avoid:

No Plan Documents

What is a plan document? A plan document describes the operation and administration of an employer’s plan. A plan document is required for each welfare benefit plan an employer maintains according to the Employee Retirement Income Security Act (ERISA). Without a plan document, employers fail to meet set requirements and could face a penalty. Here are some of the details included in a plan document:

• Description of the benefits included
• Amount of money the participant must pay for coverage
• Dates of participation
• Those eligible to participate
• Name of the plan administrator
• How the plan is funded
• How insurer refunds are allocated

If you do not understand what a plan document is or how you can curate one, consult a professional instead of taking unnecessary risks. By law, plan documents should be accessible to employees.

Highly Compensated Discrimination

Highly compensated discrimination refers to situations where a group insurance plan disproportionately favors high-income employees, potentially to the detriment of lower-income workers. In group health insurance, this discrimination can manifest in various ways, such as offering more robust benefits, lower premiums, or better coverage options to highly compensated employees compared to their lower-income counterparts. According to the Internal Revenue Service (IRS), employers should provide similar benefits to highly compensated and non-highly compensated employees.

Highly compensated discrimination in insurance can have significant consequences for both employees and employers in the long run. However, if employers address this problem, businesses can foster a workplace culture that prioritizes equality and fairness in the provision of group insurance benefits. Striving for inclusive policies not only ensures compliance with regulations but also contributes to a positive and supportive work environment for all members of the workforce.

No Summary of Benefits Description (SBD)

A Summary Plan Description (SBD) in group health insurance is a comprehensive document designed to provide employees with a clear and concise overview of their health benefits. The SBD serves as a crucial communication tool, outlining key aspects of the group health insurance plan in a manner that is easy to understand. By law, employers should provide employees with SBD to help them understand their rights and benefits under the group health insurance plan. Providing SBD to employees and beneficiaries ensures transparency and compliance with set regulations. 

HIPAA Privacy Negligence

The Health Insurance Portability and Accountability Act (HIPAA) plays a crucial role in safeguarding medical privacy and security of individuals' health information. Per HIPAA, organizations and healthcare providers must develop and follow procedures that guarantee the privacy and security of protected health information (PHI). Employees are required to sign a HIPAA form and be notified when their medical information is shared.

Negligence in maintaining HIPAA privacy within group health insurance plans can have serious legal and reputational consequences. Employers and insurers must prioritize ongoing compliance efforts, invest in comprehensive training programs, and establish strict safeguards to protect the privacy of individuals' health information.

Poor Communication

One of the most common mistakes employers make is failing to communicate effectively. Lack of clear communication can lead to confusion among employees, resulting in dissatisfaction and underutilization of the benefits offered. To avoid this, employers should provide detailed information about the coverage, including in-network providers, co-pays, deductibles, and any additional perks or wellness programs.

Employers must notify employees of any plan modifications. You should provide a Summary of Benefits & Coverage (SBC) within 90 days to participants and beneficiaries before rolling out a new plan.

Regularly organizations should conduct educational sessions to help employees understand their benefits and address any questions or concerns they may have. Utilize various communication channels such as email, company newsletters, and intranet platforms to ensure that the information reaches all employees/ plan participants.

Conclusion

Avoiding these common group health insurance mistakes requires a proactive and informed approach. Prioritizing communication, involving employees in decision-making, customizing plans, ensuring compliance, and embracing wellness programs can contribute to the success of a group health insurance program. It is prudent to always consult a reputable Compliance Specialist to avoid incurring penalties. Finally, do not hesitate to reach out to your Broker if you have any questions or concerns. To Get a Free Group Health Quote Call us Today, 718-554-3425

Ghost Kitchen & Virtual Kitchen Industry Insights

A ghost kitchen, also known as a dark kitchen, cyber kitchen, cloud kitchen, or virtual kitchen, is a professional food preparation and cooking facility set up for the sole purpose of fulfilling online orders for food delivery. Unlike traditional restaurants, ghost kitchens do not have a physical storefront for walk-in customers or a dine-in area. Instead, they operate primarily through online platforms and cater to the growing demand for food delivery services. Uber Eats and DoorDash are primary examples of ghost kitchens that became famous after the pandemic.

It is important to understand that ghost kitchens differ from takeaway model kitchens. Takeaway restaurants allow customers on their property to place an order. However, ghost kitchens do not allow customers into their property. Therefore, customers place an order virtually and get it delivered to their preferred destination/address. 

What Are the Key Features of a Ghost Kitchen?

Ghost kitchens vary greatly from a traditional kitchen in the following ways:

They do not have a physical dining space - Ghost kitchens focus exclusively on the preparation and cooking of food for delivery. They eliminate the need for a traditional restaurant set-up with seating and other amenities.

Multiple food brands can operate in one location - Ghost kitchens often house multiple restaurant brands or concepts within the same facility. This allows for more efficient use of space, resources, and kitchen equipment. Different virtual brands can operate from the same kitchen, each catering to specific cuisines or customer preferences.

They are optimized for delivery - The kitchen layout and processes in ghost kitchens are designed to prioritize speed and efficiency in fulfilling online orders. This includes optimized workflows for packaging and handling delivery orders.

They emphasize on cost efficiency - By operating in less expensive or unconventional locations and sharing resources among multiple brands, ghost kitchens can be a cost-effective way for businesses to enter the food delivery market without the overhead costs associated with maintaining a physical restaurant space. 

Ghost kitchens became popular during the pandemic after the quarantine was imposed. Most people had to order their food online and virtual kitchens offered much-needed essential services. With time, business owners realized that the business is lucrative. Nowadays, most people rely on ghost kitchens while working from home, at the office, or engaging in other activities.

Just like any other business, insurance companies have stepped in to offer coverage options tailored to cover ghost kitchens’ needs. If you are a small business owner invested in a ghost kitchen business, you must invest in real estate business coverage. This means you should purchase a general liability policy, property insurance, and fire insurance to protect your business against possible financial loss. 

Types of Insurance Policies Ghost Kitchens Should Purchase

Product Liability Insurance

This insurance policy protects the ghost or virtual kitchen against legal claims arising from injury or illness caused by its food products. It covers the legal costs, settlements, or judgments associated with product liability claims. In the food industry, there is always a risk that a consumer may experience harm or illness due to contamination, allergens, or other issues. Product liability insurance helps mitigate the financial impact of such claims and safeguards the business against potential legal action.

Contamination & foodborne illness insurance

This policy is specifically designed to address financial losses resulting from foodborne illnesses or contamination. It may cover costs associated with product recalls, business interruption, and liability claims from affected customers.

It is important to understand that contamination events or foodborne illness outbreaks can be detrimental to a ghost or virtual kitchen's reputation and financial stability. This insurance protects businesses from a financial fallout from incidents that lead to the loss of inventory, business interruption, and legal liabilities.

Commercial automobile insurance

Also referred to as commercial auto insurance, this policy protects businesses that use vehicles for commercial purposes. Ghost kitchens rely on delivering food to their customers using vehicles. Therefore, these businesses hire drivers or purchase automobiles to get the job done. 

The policy covers bodily injury and property damage if the vehicle is involved in an accident. Fortunately, the policy can cover a wide range of vehicles, including cars, vans, trucks, and specialized business vehicles. Remember, commercial automobile insurance covers your business, employees, and sometimes non-employees. 

Given the nature of the ghost restaurant business, where delivery is a central component, having comprehensive and appropriate commercial automobile insurance is crucial for protecting the business from financial losses associated with accidents, damage to vehicles, or liability claims.

Cyberattack Insurance

Also known as cyber insurance or cybersecurity insurance policy is a vital coverage because it protects ghost kitchens from the financial losses and liabilities associated with data breaches and cyber threats. Ghost kitchens mainly operate in a digital landscape and are prone to cyberattacks. Therefore, to safely handle customer data and orders, business owners should purchase adequate cyber insurance. 

With data breach coverage, business owners can rest assured that the costs associated with data breaches, including notification costs, costs related to public relations, and credit monitoring are taken care of. Instead of taking unnecessary risks, business owners are advised to purchase a comprehensive cyberattack insurance policy from a reputable vendor. 

Contingent Business Interruption (CBI)

Contingent business interruption policy protects your business from financial losses resulting from disruptions, for example, if there is a disruption in the supply chain and normal business operations are affected. 

Employment Practices Liability Insurance (EPLI)

Although some ghost kitchens might overlook EPLI, you should consider investing in it. This policy protects small business owners against losses resulting from wrongful termination, harassment, or discrimination. Even though you have a few employees, you should always protect yourself and your business from possible financial losses if you are sued.

Final Words

As ghost kitchens get trendier, more investors will consider investing their money. It is evident that ghost kitchens are more profitable than drive-thrus or traditional restaurants. However, as more investors try to get a piece of the big pie, they overlook the fact that they should purchase the right insurance policies. It is not easy for small business owners to determine the policies they should purchase, especially in a business they do not know much about. 

If you own a ghost kitchen, researching thoroughly is crucial to purchasing the right policy. You should also consider talking to an experienced insurance professional who can assess your specific needs and recommend a tailored insurance package. Call us Today (718)554-3425