Insurance Consultants Of Maine Newsletter

Insurance Consultants of Maine Newsletter
Scott Simmonds, CIC, CPCU, ARM
May, 2005

Unbiased Insurance Info & Advice
www.endwimpyinsurance.com

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Feel free to forward this newsletter to your colleagues. Comments, questions and suggestions are always welcome. Email: scott@icofmaine.com.

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Simplify Your Insurance - Have a Common Expiration Date for All Your Policies - Having all your policies renew at the same time makes life simpler. All the issues are considered at one time. All the information is conveyed to your agent at the same time. There are fewer chances for misunderstandings and oversights.

One cautionary note: If you have a workers' compensation policy with a premium over $5,000, you probably have a rate factor called an experience modification, which adjusts your premium based on your losses compared to similar companies. I rarely recommend changing the dates of workers' compensation policies that have experience modifications. The new date can skew claims used in the calculation, increasing your costs. Talk with your insurance advisor before changing the date of your workers' compensation insurance policy.

Other States Coverage For W/C - The workers' compensation policy language is as easy as it gets. The policy pays the benefits state law says should be paid to an injured worker. The question is, which state?

If an employee lives and works in Maine and is injured in Maine the issues are clear - Maine benefits are paid. What if a Maine employee is injured while at a trade show in Connecticut? The truth is, the employee gets to pick - Maine or Connecticut benefits, whichever is better. What does your policy pay? Maine or Connecticut benefits?

If your employees travel outside your "home" state be sure your policy will provide the correct level of benefits. If you hire employees outside of your primary state be sure the state is listed on the policy to provide the proper benefits.

Personal Insurance Mistake #13 - Not Maximizing Your Medical Reimbursement Account - Maybe this isn’t, strictly speaking, insurance, but it does have to do with deductibles and “uninsured expenses.” Section 125 of the IRS code allows employers to set up “pre-tax” accounts to be used for medical expenses that are not paid by insurance. So, your deductibles, co-payments, eyeglasses, dentist bills, orthodontics, and acupuncture treatments can all be paid for using pre-tax dollars.

Here’s an example: If you make $40,000 a year and the government takes 35% in income taxes, you are taxed $14,000 ($40,000 x .35). You have $26,000 to save and pay bills. If you have $2,000 of un-reimbursed medical expenses you have $24,000 left.

If you make $40,000 a year and the government takes 35% in income taxes and you put $2,000 into a Medical Reimbursement Account you are taxed on $38,000 ($40,000 less the $2,000 in the MRA). Your tax bill is $13,300 ($38,000 x .35). So, you have $24,700 for savings and expenses. Using your Medical Reimbursement Account yielded you a $700 raise.

There is a downside. For some bizarre reason the US Treasury has put a provision into the law that if you set money aside and don’t use it, you loose it. Keep this in mind when you set the amount you will pre-tax into your account. See your human resources department for the details of how your plan works.

NOTE: This tip is from our very popular white paper, “The 20 Biggest Personal Insurance Mistakes.” To get your own copy got to http://www.icofmaine.com/plmistakes.html.

Associate In Risk Management - After several years of study I'm please to brag that I have completed the final exam for the Insurance Institute of America’s Associate In Risk Management professional designation. The courses include risk management, risk control and risk financing techniques. The courses are designed with more of a risk management emphasis than insurance - captives, risk retention groups and self insurance in heavy doses.

Life In Maine - Last month I told you about the melting snow, the deer and the turkeys. Add porcupines to the menagerie we have in our yard. Trees have buds and I saw my first dandelion yesterday. Of course the thermometer did read 29 last week! The lawn will need to be mowed in the next few days.

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Biggest Business Insurance Mistakes White Paper - Get my "20 Biggest Business Insurance Mistakes" ebook in printer friendly form. Send a blank email to bizmistakes@icofmaine.com to receive your no obligation copy.

"The 20 Biggest Personal Insurance Mistakes" White Paper Now Available! - I'm getting calls from insurance agents about my newest white paper. They tell me I bring up issue they hadn't thought of. Hmm? Just send a blank email to personal@icofmaine.com. Your copy will be sent to you immediately; at no cost of course.

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Your Privacy - I will never sell or distribute your email address to any other person or organization.

Do You Have The Right Insurance? Contact me to discuss an unbiased review of your insurance program. Do you have the right coverage? Can your policies be fine-tuned to improve the protection? Can changes be made to ease the administrative burden insurance causes? Are you getting the service you should from your broker? I can help. Call 207.284.0085 or email me at scott@icofmaine.com. Remember, I don't sell insurance so I'm unbiased.

Need A Speaker? I'm pleased to speak to trade, business or service associations about insurance topics. Call 207.284.0085 or email me at scott@icofmaine.com. Also check out my speaker's page at www.icofmaine.com/ispeaker.html. Associated Builders and Contractors members, come see my presentation at the April 21st meeting.

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Scott Simmonds, CIC, CPCU, ARM
Insurance Consultants of Maine, Inc.
20 Sofia Road
Saco, ME 04072-9017
Phone 207 284-0085
Fax 801 991-4027
scott@icofmaine.com
http://www.endwimpyinsurance.com

Unbiased Insurance Solutions

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Insurance Consultants of Maine, Inc. is an unbiased, fee-only insurance and risk management advisory firm. We don't sell insurance and never accept fees or commissions from insurance companies or agents.

Comments regarding insurance policies or products in this newsletter are for information purposes only and do not constitute an endorsement. I accept no fees or payments of any kind from any insurance organization or any company mentioned in this newsletter.