Workers’ Compensation vs. Nonsubscribers

As business owners in the state of Texas, we are fortunate to have options when it comes to choosing workers’ compensation insurance in that we have the option to opt out of the state’s system and become a “nonsubscriber.” Employers can choose to implement their own insurance programs that provide medical benefits, wage replacement benefits, disability benefits and death benefits. In the past, this has been a much more affordable option and approximately 44% of Texas businesses operate as non-subscribers today.

However, alternative coverages and accident policies are not exact substitutes for workers’ compensation. Since “tort reform” in 1993, the cost of workers’ compensation insurance has decreased dramatically, many times bringing the cost to about the same as non-subscriber plans. There are many advantages associated with workers’ compensation and you could most likely benefit by revisiting your options when it comes to workers’ compensation and accidental insurance.

As a non-subscriber, you forfeit your common-law defenses if sued because of a work-related injury, meaning, as an employer, you cannot argue that the employee’s negligence contributed to the accident or that the employee knew the risk of injury and voluntarily assumed it. Furthermore, the court could order you to assume legal fees for the employee as well as compensation for suffering and punitive damages. Employers who subscribe to the state’s workers’ compensation program are protected by the Texas Workers’ Compensation Act which prevents employees from suing.

View the following chart provided by the Texas Department of Insurance to compare the various coverage types:

Coverage Comparison

Workers´ Compensation “Alternative” Policy Unauthorized Policy No Coverage
Who determines benefit levels? Texas law Court Court Court
Who pays medical and lost-income benefits? Insurance carrier Insurance company up to policy limits; employer pays rest Depends on the policy Employer
Who pays employer’s legal fees? Insurance company Governed by policy Depends on the policy Employer
Are benefits protected by a guaranty association? Yes Limited No No
Can aninjured worker win judgments for pain and suffering and punitive damages? No Yes, up to certain limits Yes, up to certain limits Yes, up to certain limits

ERA is a professional employer organization that provides workers’ compensation coverage to its client companies. If you have any questions about workers’ compensation or what we can do to assist you, please feel free to contact us at (214)739-0695 or visit our website at www.erapeo.com.

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Maximize Your FSA Before 2012

As the year end approaches, we want to offer some suggestions to you about how to effectively utilize the funds still remaining in your flexible spending account, or FSA. Unlike a health savings account, the funds in your FSA cannot be carried over to the next plan year, so it is best to use them before your current plan year expires.

1. There is a substantial list of eligible expenses that can be purchased with your FSA, or that could potentially qualify for reimbursement if you have already purchased these items. Please note, this is a sample of common items and is not a complete list. Please check with your FSA provider first for a complete list of eligible expenses.

  • Acne Treatment Proactive, Stidrex, Clean & Clear Eligible
  • Acupuncture
  • Ambulance
  • Bandages Elastic, Gauze Pads, Band Aids
  • Birth Control Pills
  • Birthing Classes
  • Blood Pressure Monitoring Devices
  • Carpal Tunnel Wrist Supports
  • Chiropractors
  • Co-Insurance Amounts
  • Contact Lenses, Materials & Equipment
  • Contraceptives
  • Co-Payments
  • Crowns, Dental
  • Crutches
  • Deductibles
  • Dental Care Toothache Relief, Temporary Filling, Denture Adhesives
  • Diabetic Supplies
  • Ear Care, Ear Drops, Ear Wax Removal
  • Egg Donor Fees
  • Eye Examinations
  • Fertility Treatments
  • Adhesive Pads, Band-Aids
  • First Aid Kits
  • Flu Shots
  • Gambling Problem Treatment
  • Genetic Testing
  • Guide Dog: Other Aid Animals
  • Hearing Aids & Its Batteries
  • Immunizations
  • Infertility Treatments
  • Insulin
  • Laser Eye Surgery LASIK
  • Medical Alert Bracelet or Necklace
  • Medical Records Charges
  • Mileage for Medical Appointment Expenses for Transportation Primarily for & Essential to Medical Care
  • Nasal Strips or Sprays
  • Nicotine Gum or Patches Nicoderm, Nicorrett Eligible
  • Occlusal Guards to Prevent Teeth Grinding
  • Oxygen
  • Sleep Aids Tylenol PM, Sominex, Unisom
  • Smoking Cessation Medications Patches, Gums
  • Stomach/Digestive Relief Pepto-Bismol, Imodium, Colace, Lactaid
  • Tooth & Mouth Pain Relief Oragel, Anbesol
  • Vitamins
  • Walkers
  • Wheelchair
  • X-ray Fees

2. If you have any receipts for health care related expenses or dependent care related expenses, be sure to submit them as soon as possible in order to be reimbursed. This will help you verify how much you have left in you FSA account.

3. If you regularly purchase medical supplies that are eligible to purchase with your FSA, you can stock up on them before your plan year expires with your leftover funds.

4. Make sure you and your family members are caught up on all doctor appointments. Your FSA funds can often be used toward your co-pay and coinsurance at your physician, dentist and optometrist, as well as some specialty doctors as long as they are listed on your eligible expenses list.

5. Make sure you and your family members are up to date on your vaccinations, including the flu shot.

6. As always, keeping up with your wellness is an essential step to keeping your medical expenses to a minimum. Weight loss counseling and methods to help you quit smoking are eligible expenses for your FSA, as long as you have a doctor’s note of medical necessity.

If you have questions about any of these items, please feel free to contact your health care experts at MedCon Benefit Systems Group, Inc. (214)739-5215.

The Cost of Unemployment

As reported by Sara Murray in her blog for the Wall Street Journal, our nation has totaled “nearly $19 billion in state unemployment benefits paid in error during the three years that ended in June [2011].” Is this staggering figure worrisome to you as a business owner? The article also states that the majority of the benefits paid in error were due to “recipients claiming benefits even though they have returned to work.”

If you struggle with unemployment claims, ERA can help you a great deal. As a co-employer with several business owners, we fight claims diligently to keep our unemployment rate down. As a small business owner, you don’t have the time or the resources to investigate claims and make sure your previous employee is actively looking for other work, or is perhaps already working (and receiving compensation) for another employer.  We do. We have a fully staffed human resources department who follows up on each claim to make sure you don’t have to pay fraudulent claims. Now, more than ever, as unemployment continues to be extended, it is important that you are able to manage the claims being filed against you.

Reducing the risks and costs of unemployment claims is just one of the areas ERA can help you not only save money, but more importantly, refocus attention on core business projects and opportunities.

Contact us today to learn more.

Have You Ever Wondered If You Have Properly Classified: Employee vs. Independent Contractor

A person working for a business as an employee or independent contractor is a very important classification. If you think you ultimately make that decision, it is in actuality the IRS. The real question is how and when?

In the event of an IRS audit of your business, an unemployment claim filed by a former worker, worker’s compensation benefit claim filed by a worker, a former contractor filing a Form SS-8 (Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding) to mention a few.

Next question is what happens when the  classification of Independent Contractor is changed to Employee? The employer now becomes responsible for both the employer’s and employee’s FICA, FUTA and federal income tax. The IRS could bring in the state as well. The employer may face a penalty equal to the amount of back taxes owed as well as interest from due dates.

The following is a list of twenty questions the IRS uses to determine if a worker is an independent contractor or employee. The answer “yes” to any of these (with the exception of #16) may mean the worker is an employee.

  1. Is the worker required to comply with instructions about when, where and how the work is done?
  2. Is the worker provided training that would enable him/her to perform a job in a particular method or manner?
  3. Are the services provided by the worker an integral part of the business’ operations?
  4. Must the services be rendered personally?
  5. Does the business hire, supervise or pay assistants to help the worker on the job?
  6. Is there a continuing relationship between the worker and the person for whom the services are performed?
  7. Does the recipient of the services set the work schedule?
  8. Is the worker required to devote his/her full time to the person he/she performs services for?
  9. Is the work performed at the place of business of the company or at specific places set by the company?
  10. Does the recipient of the services direct the sequence in which the work must be done?
  11. Are regular oral or written reports required to be submitted by the worker?
  12. Is the method of payment hourly, weekly, monthly (as opposed to commission or by the job)?
  13. Are business and/or traveling expenses reimbursed?
  14. Does the company furnish tools and materials used by the worker?
  15. Has the worker failed to invest in equipment or facilities used to provide the services?
  16. Does the arrangement put the person in a position of realizing either a profit or loss on the work?
  17. Does the worker perform services exclusively for the company rather than working for a number of companies at the same time?
  18. Does the worker in fact make his/her services regularly available to the general public?
  19. Is the worker subject to dismissal for reasons other than non-performance of the contract specifications?
  20. Can the worker terminate his/her relationship without incurring a liability for failure to complete the job?

These are all questions a PEO like ERA can help you answer and correctly submit.

 

ERA – How Outsourcing Can Benefit Your Business

As an entrepreneur/operator of your own business or the executive of a company with ultimate responsibility for its success, you are in a state of continual competition. Of course you’re competing against your commercial rivals for the business of your customers, but you are also competing against the age old adversary – passage of time.

To be more precise you are not actually competing with time itself, but you are competing with your business rivals to make better use of time. Undoubtedly some do this better than others, and that is where the real competition takes place. Naturally this is not news to you. As a business manager you understand the importance of productivity and time management as it is impacted by your employees.

On the other hand maybe you haven’t given too much thought to your own productivity and that of your top management. After all you are the planner, motivator and operational backbone. It is certainly fair to say that the success of your company depends upon your skills and creativity in steering your organization in the direction that will maximize success. Is it possible you are not as productive as you might be in your own battle against time? Are you as competitive as your business rivals? Consider this:

According to the United States Small Business Administration (SBA), small business owners/managers spend almost 25% of their time on paperwork related to their employees – that is to say paperwork that is non income producing.

Of course this is not to say that you necessarily spend that much time on paperwork. Perhaps you have already recognized such tasks are not a cost effective use of your time, and you have delegated these tasks to another management person down the line. The question remains, “Is your top management as productive as it can be?”

If not, you will find that not only much of the repetitious tedious paperwork can be shifted to a more cost effective solution, but that you can avail yourself of expertise that could help your company avoid costly litigation and potential financial disasters. Employee Resource Administration has professional Human Resource personnel that will guide you through the perilous pitfalls of employee hiring and termination, as well as managing EEOC, State Employment Commission, and OSHA encounters. Carefully planned outsourcing can greatly enhance your productivity, competitiveness and effective use of time.