A 401(k) plan is a qualified employer-sponsored retirement savings plan. Employee participation is up to each individual employee. There are definite benefits to both the employer and the employee.

For an employer, a 401(k) helps retain good employees at a relatively low cost. The plan is simple to set up and maintain and has modest administration costs. The plan is flexible both in the design and in the choice of investment choices. Employees discuss their plans and it can boost employee morale and loyalty.

If your employer has a plan available and you are not participating, you might want to reconsider. The contribution that you make reduces your taxable income so that so pay no federal tax, social security tax, Medicare tax, etc. (The government sets a maximum contribution amount each year...check with your plan administrator at work.) Your contributions are 100% vested immediately. If you leave the company, you are entitled to all of your own deposits plus interest, if applicable. When you leave a company, you can roll your 401(k) money into another qualified retirement account and incur no penalties. Your money is invested how you choose (within the parameters of the plan) by professional investors.

Many employers will match the contributions that you make with additional money. This makes the plan even more attractive! Check with your human resource representative to see what choices are available. If you are an employer, check with your insurance agent to see if your agent can set up a 401(k) plan.

If there is a charity in which you would like to really make a difference, you might want to consider the option of leaving life insurance proceeds to a favorite charity.

What are some of the advantages?

With a life insurance policy, the proceeds are guaranteed.

You pay the premium in monthly installments which can may be tax deductible as a charitable contribution.

A small outlay creates a meaningful amount.

Your other assets are not affected.

Life insurance proceeds are not subject to federal taxes or included in probate.

If this sounds like an interesting idea and an idea which you would like to pursue, contact your professional insurance agent or financial planner to discuss. You may also need to seek the advice of an attorney.

The standard homeowners policies that are available in most states are NOT designed to insure many in-home businesses.

See – Which Homeowners Policy is Right for Me? for information on which homeowners policy is appropriate for your lifestyle.

The standard homeowners policy doesn’t provide:

• Liability coverage for customer slips and falls.
• Property damage to business property that belongs to others but that is in your care or custody.
• Products or professional liability.
• Personal injury liability (libel, slander, false arrest, wrongful eviction).
• Because there is no liability coverage for business related activities, there is no defense coverage if you are sued.

The standard homeowners policy also DOESN’T PROVIDE workers’ compensation coverage for any employee who can optionally be or must be covered by any workers compensation law.

Medical expense and premises liability coverage is provided for residence employees (maids, butlers, nannies etc.) who are not eligible for coverage under a workers compensation law, but only while the residence employee is performing residence tasks, not business tasks.

For example: You ask your nanny to go to the local photocopy store to make copies of your business proposal. Your nanny is seriously injured in a fall. The homeowners policy will not provide any medical expense coverage for your nanny because your nanny was performing business and not residence related chores.

There is no building coverage to another structures (detached garage, barn, outbuilding) on your residence premises if the other structure is being used in whole or part for business.

Example You store a few supplies that you use in your occupation in your garage. There is no coverage to your garage if your garage burns down or suffers another covered cause of loss.

Insurance companies are just now beginning to recognize the need to provide coverage for in-home businesses. A few special policy forms have been recently introduced. As we learn more about these programs we will advise you about their availability. Until then, here are the most commonly available options:

What is covered under the standard homeowners forms?

• $2,500 coverage for your on premises business personal property against covered causes of loss.
• $250 coverage for your off premises business personal property against covered causes of loss. (There is no coverage for portable electronic equipment capable of being operated by a vehicle’s electrical system while that equipment is AWAY from the vehicle.)
• $2,500 for landlord’s furnishings on your residence premises while in apartments rented to others. There is no theft coverage for landlord furnishings, and the covered causes of loss are not as broad as for other personal property.

A number endorsements can improve coverage for in-home businesses:

• Increase on premises business personal property up to $10,000 and off premises business personal property up to $1,000.
• Coverage for garages and other buildings rented to others.
• Limited coverage for death of livestock that are killed on the roadways in collision with vehicles.
• Coverage for business electronic equipment capable of being operated by a vehicle while this equipment is AWAY from a vehicle.
• Limited theft coverage for theft of landlord property. Theft of landlord property by the tenant, the tenant’s residential employee or members of the tenant’s household are not covered.
• Coverage for the building, and/or other structure and $2,500 on premises personal property coverage for a business operated as a daycare. Premises liability protection is provided, but not for activities involving vehicles, draft or saddle animals, watercraft or aircraft. No workers compensation is provided. (Many companies do not offer this endorsement; and those that do will often attach corporal punishment and sexual and emotional abuse exclusions.)
• Condominium unit owners rented to others for damage to the condominium unit and premises liability for your negligence in maintaining the premises.
• Premises liability coverage (slips and falls by customers) for your residence and/or other on-premises structures, or even at other residences you own for businesses that are specifically described in your policy. (Most companies will cover only office type businesses.)
• Coverage for other structures on your residence premises while used in whole or part for business purposes.
• The business pursuits endorsement can cover corporal punishment by licensed teachers. (Many companies will not write this coverage.)
• Hobby farmers can convert their homeowners policy to include coverages usual to a farmowners policy. (Talk to your company. Some will not provide coverages; some will insure only certain size farms. A farm policy purchased from a farm specialty company may cost less than a homeowners policy with the farmers personal liability endorsement.)

How then do I insure my business?

All types of businesses will need to consider the following:

• Workers compensation for ANY employees.
• Business automobile insurance for delivery vehicles and trucks (including larger pickups).
• Bulldozers and other mobile or contracting equipment may be covered by a commercial automobile or general liability policy for bodily injury and property damage you cause. Which policy is appropriate depends upon how each piece of equipment is used.
• Physical damage coverage to the mobile or contracting equipment may be obtained through the commercial auto policy or a separate equipment physical damage form, again depending upon which policy will cover the equipment.
• An agent who specializes in contractors will know which policy(s) is appropriate for your mobile equipment.

Business types:

Select the type of in-home business you are currently considering operating to find out more about the forms of coverage you should consider:

Sales office:
Professional office:
Landlord:
Daycare or other in-home school:
Retail:
Wholesale:
Service:
Manufacturing:
Contracting:
Repair:
Farms and ranches:
Racing:

What can happen in your company if a key employee dies?

You may suffer a loss in sales.
You may suffer a halt to projects.
You may suffer a halt to credit extended by important creditors or clients.
You may suffer a loss of momentum.
You may incur additional costs to recruit and train a replacement.

How do I insure my business against the death of a key employee?

You can purchase life insurance for the key employee using corporate dollars. Your company will receive several benefits that include:

funds available for the recruitment and hiring of a replacement employee;
an income tax free source of cash to help offset lost profits; and,
a means to assure customers and creditors that business will continue with as little disruption as possible.

What if I insure my key employee and the employee lives until retirement?

While the key person works for you, the life insurance can still be valuable. The cash value life insurance can provide a reserve fund of non-taxable cash; it can reinforce your businesses' credit worthiness; and, it can strengthen your key employee’s loyalty. At retirement it can be used to create or supplement a retirement income. For a basic outline about implementing a plan, see Key Life Insurance-The Basics.

ALL DOLLAR AMOUNTS ARE BASED ON 1997 FIGURES.

Medicare is packaged in two parts. Qualified individuals automatically receive "Part A." Part A is hospitalization insurance and, when all coverage requirements are met, it will help pay for:

limited hospitalization coverage
limited post-hospital skilled nursing home care
home health care
limited hospice care
blood, after the first three pints

Part B is medical insurance and it covers:

physicians’ services
outpatient hospital care
physical therapy
diagnostic care
other services

How much does Part A Pay For Skilled Nursing Care?

It will pay for the first 20 days if you go directly from the hospital to the skilled nursing care facility. It will pay $95 per day for the 21st through the 100th day per benefit period

How much does Part A pay for Inpatient Hospital Care?

During a benefit period, Medicare Part A will help pay for the first 90 days of medically necessary care in a Medicare-certified hospital. During the first 60 days, Medicare will pay all covered costs except the deductible. During a benefit period, you pay the deductible only once, regardless of the number of times you go to the hospital. During the 61st through the 90th day, Medicare pays all covered costs except for coinsurance of $190 per day. You are responsible for paying the coinsurance.

What is a Benefit Period?

Medicare measures coverage for care in hospitals and skilled nursing facilities. If you exceed the allowable benefit period, you are responsible for all charges for each additional day of care.

What is a Reserve Day?

If you are in the hospital for more than 90 days in a benefit period, you can use your reserve days to help pay the bill. If a reserve day is used, Medicare will pay all covered cost except $380 per day. You are responsible for the coinsurance.

Under Part A, Which Hospital Services are Covered?

Part A helps pay for the following while you are in the hospital:

semiprivate room
meals
regular nursing services
rehabilitation services
drugs
medical supplies
lab tests
x-rays
operating room
recovery room
intensive care
coronary care
medically necessary services and supplies

Under Part A, Which Hospital Services are NOT Covered?

telephone
television
private duty nurses
amount between a semiprivate and private room rate unless it is medically necessary

How Do I File A Claim?

The best news yet is that you do not have to file a claim for payment. The facility from which you received care will file the claim for you.

What is the Deductible?

A deductible is an amount that you will pay before Medicare pays anything. As of January 1, 1997, the deductible per benefit period is $760.

Curious about Part B?

What Does Medicare Part B Cover?

Medicare Part B is medical insurance rather than hospital insurance. It helps to pay for:

physician services
outpatient hospital services
emergency room visits when you are treated and released
outpatient surgery
diagnostic tests
clinical lab services
outpatient physical therapy
speech therapy
medial equipment and supplies
rural health clinic services
renal dialysis
other health services and supplies

Effective January 1, 1995, most businesses with more than 50 commercial drivers (drivers who have or should have CDL licenses) are subject to the Controlled Substances and Alcohol Use Testing and Education Program.

Be advised that ALL employers (INCLUDING INDEPENDENT OWNER OPERATORS) must have complied with the act by January 1, 1996.

The rules are described in the Federal Register of February 15, 1994, pages 7302 to 7625. These rules are modifications to existing drug and alcohol driver testing procedures.

Many drivers are unaware of the rules and their implications. Not only are mandatory drug and alcohol testing a requirement for every employed CDL driver, but there are extensive new paperwork and record keeping requirements and new mandatory drug and alcohol education programs.

In a short article we can’t describe everything contained in a 323-page set of rules, but we will give you enough information so that you can explain the basics of the act and its implications for you.

First myth to debunk: “This only applies to truckers, right?” Wrong.

Anyone who operates a “commercial motor vehicle” in interstate or intrastate commerce and who is subject to CDL (Commercial Drivers License) requirements is subject to the act.

A “commercial motor vehicle” is any vehicle that:

• ...has a gross combination weight (GCW)of 26,001 lb. or more inclusive of a towed unit with a gross vehicleweight of more than 10,000 lb.; or
• ...has a gross vehicle weight (GVW) rating of 26,001 or more lb.; or
• ...is designed to transport 16 or more passengers including the driver; or
• ...is of any size and is used in the transportation of materials found to be hazardous for the purpose of the Hazardous Materials Transportation Act and which require the motor vehicle to be placarded under the Hazardous Materials Regulations (49 CFR Part 172, Subpart F). (Essentially any vehicle, private passenger, pickup truck or larger vehicle that must carry a flammable, explosives, corrosive, etc. placard for the cargo it is hauling.)

Driver means any person who operates a commercial motor vehicle.

This includes but is not limited to: full-time, regularly employed drivers; casual, intermittent or occasional drivers; leased drivers and independent owner operator contractors who are either directly employed by or under lease to an employer who operates a commercial motor vehicle at the direction of or with the consent of an employer.

Employer means:

...any person, or political subdivision that owns or leases a commercial motor vehicle or assigns persons to operate a vehicle and employer includes employers, agents, officers and representatives.

...a self-employed driver who employs only himself/herself as a driver also is subject to the regulations and must find a pool of drivers to become a part of in order to satisfy the random drug testing provisions of this act.

A driver is subject to the act:

...during any period in which he/she is actually performing, ready to perform, or immediately available to perform any “safety function.e” A “safety functione” is defined as functions performed in “on duty time” which is further defined as:

• ...all the time at a carrier or shipper plant, terminal, facility or other property, or on any public property, waiting to be dispatched, unless the driver has been relieved from duty by the motor carrier;
• ...all time inspecting the equipment as required by statute or otherwise inspecting, servicing or conditioning any commercial motor vehicle at any time;
• ...all driving time: all the time spent at the driving controls of a commercial motor vehicle in operation;
• ...all time, other than driving time in or upon any commercial motor vehicle except time spent resting in a sleeping berth as defined by statute;
• ...all time loading or unloading a vehicle, supervising or assisting in the loading or unloading, attending a vehicle being loaded or unloaded, remaining in readiness to operate the vehicle, or in giving or receiving receipts for shipments loaded or unloaded;
• ...all time spent performing the drive requirements of rules 392.40 and 392.41 of chapter 49 of the Federal Register relating to accidents;
• ...all time repairing, obtaining assistance, or remaining in attendance upon a disabled vehicle.
Note that only drivers are subject to the act. Understand that the moment anyone gets behind the wheel of a vehicle that can be driven only by someone who possesses a valid CDL, that driver and employer come under the act whether properly licensed or not.

These rules preempt all state alcohol and substance abuse driving laws.

• .004 is the maximum blood alcohol level for anyone performing “safety functions” associated with a commercial motor vehicle.
• Cannot possess any non-manifested drugs or alcohol (can’t have a bottle in the sleeper, or pick up some beer on the way back to the terminal to take home later in a private passenger vehicle.)
• No on-duty use of drugs or alcohol permitted.
• No alcohol consumption within four hours of performing a safety sensitive function or within eight hours following an automobile accident.
• Cannot refuse a drug or alcohol test whether randomly performed or after an accident.

What’s required by the act?

• First pre-employment drug testing is mandatory. Actual testing is not necessary if the driver was tested within six months prior to hire and you have written verification from ALL of the driver’s employers in the past six months that there were no violations of this statute. What about the occasional drivers? If the employer does not employ a driver more than once per year, the employer must assure itself once every 6 months that the driver participates in an alcohol and controlled ubstance testing program that complies with the act.
• What happens if the employer or driver does not comply with these rules? Fines and penalties. Lax standards can also be used as evidence against you in vehicle accident injury claims where there is alcohol or drugs are involved. Penalties for violation of any rule can include fines of up to $2,500. This includes drivers who fail the drug or alcohol tests.
• After any accident that involves the loss of human life, citation of moving violation to the driver or citation as the result of the accident, there must be an alcohol test given within two hours of the accident and a controlled substance test within 32 hours of the accident. There are some limited extensions to these rules, but unless these tests are given on time, the employer must prepare written documents explaining why the testing wasn’t done. The maximum allowable blood alcohol level is .04. Negative is the only allowable controlled substance result. Prior to the accident, the employer must provide the driver the appropriate paperwork and instructions on how to make sure that these tests are performed. All vehicles at all times should be properly equipped with this paperwork, and the employer should be sure that each driver understands exactly what must be done after any motor vehicle accident.
• Random drug testing must be done for a driver who performs “safety functions” associated with “commercial motor vehicles”. Random testing must be unannounced, spread reasonably throughout the year, and can only be given just before, during, or just after the individual performs a “safety function.” Each year, 25% of all drivers must be tested for alcohol, and 50% must be tested for controlled substances, based upon the average number of drivers employed during the calendar year. If you have only one driver, he or she must be part of a testing pool or “consortium”. Employers can get together and create a “consortium” which is nothing more than a group of businesses who form an entity to do the tests as required by the statute. Independent owner operators will need to find a group to belong to so they too can be tested. Check with the DOT, your trip broker or any of the larger carriers you haul for information about local independent owner operator drug and alcohol testing pools. Substance abuse tests can be performed only by Gas chromatography/mass spectrometry equipment (may not be readily available in rural areas). The balloon test is okay for alcohol. The act suggests that random be scientifically valid such as a series of numbers from a random number generator (Lotus 123, Excel and other spreadsheet programs can provide random number functions) that is matched with drivers’ Social Security Numbers, payroll identification number or other such identifying numbers.

  • Failing any alcohol or substance abuse test requires the following:
  • Suspension from performing any “safety functions.”
  • Evaluation by a “substance abuse professional.”
  • Extensive documentation.
  • The driver cannot return to duty without passing an alcohol test with no more than .02 blood alcohol and a negative controlled substance test.

• Alcohol tests are blind as to whether the alcohol is a beverage or medicinal as in mouthwash or cough syrup. The rules make no distinction between medicinal and recreational alcohol.
• Many records must be kept for five years, including any test on which the individual scored .002 or higher on any blood alcohol test, or anything above negative on a substance abuse test. Each employer must maintain an annual calendar-year summary of testing programs and may be asked to submit these test records for FHWA review. Twenty-nine separate forms and records are associated with these rules.
• Drivers performing “safety functions.” must have training in substance abuse avoidance and be given a manual on the company’s alcohol and substance abuse policy. The driver must sign an acknowledgment form after receiving the manual and training. The employer must keep this acknowledgment on file.
• Supervisors who can require testing on reasonable suspicion of abuse must have 60 minutes of substance abuse training and 60 minutes of alcohol abuse training. (The employer should see to it that all supervisors who are associated with drivers are trained to be able to order tests on reasonable abuse.) A number of companies are now offering video-based training packages that will comply with this requirement. Your customers may also find that local schools offer this training. Training does not have to be but should be conducted by a “substance abuse professional” and must include the physical, behavioral, speech and performance indicators of probable alcohol misuse and use of controlled substances. Medical doctors, certified or licensed: social workers, psychologists, employee assistance professionals and NAADC addiction counselors may be qualified as “substance abuse professionals” if they have knowledge of and clinical experience in diagnosis and treatment of alcohol related disorders.
• It is recommended and permitted by statute that the company have a firm policy that the driver must inform the company of any therapeutic or prescription drugs that the driver is taking. The employer should also check driver rescriptions for restrictions against driving vehicles or operating machinery. Strict confidentiality is a must when dealing with an individual’s medical history.
• There is a certain amount of protection for the employee. First, in order for the supervisor to order a test when there is reasonable suspicion of substance abuse, the judgment must be based upon specific, contemporaneous, articulatable observations concerning the appearance, behavior, speech, or body odors of the driver or indications of chronic withdrawal effects of controlled substances. For any test to be given, the driver must be verbally notified that the test is required by the statute. (Better to have the drivers sign a form documenting that they have been informed that the tests are required by the statute). Only a properly trained supervisor can order a drug/alcohol test if there is reasonable suspicion of abuse. Previous rules required two trained supervisors to order the test when there is suspicion of abuse. Random tests must be random. The employer can’t order test after test to “encourage” an employee to resign. Tests must be given just before, during or just after the driver performs a “safety function.” The employer can’t order a drug test five hours after the driver has gone off duty for the weekend and you find the driver sloppy drunk in a bar.
• The driver whom the trained supervisor suspects has substance abuse problems or who has failed any drug or alcohol test must be given the names, addresses and phone numbers of “substance abuse professional” counseling and treatment programs. Prior to returning to duty after failing a drug or alcohol test, the driver must be evaluated by a “substance abuse professional,” must have return-to-duty drug and alcohol tests (maximum blood alcohol level .02 and negative on substance abuse), must be periodically evaluated by the substance abuse professional (the professional decides what periodically is), must be given unannounced follow-up tests (frequency to be determined by the substance abuse professional, but a minimum of six tests in the first 12 months following the driver’s return to duty). The employer does not have to pay for rehabilitation. The employer does not have to fire any employee who fails any test, but that employee cannot perform any “safety function” associated with a commercial motor vehicle until evaluation and release to duty by a “substance abuse professional” and the passing of a return- to-duty alcohol and substance abuse test. There also is no rule that says that the employer can’t fire the employee.

Certainly this isn’t everything contained in the act; and as a result, some of our explanations are highly simplified and will be subject to different interpretation by individuals thoroughly trained in administering the act.

CDL drivers, owner operators...be informed!