a heart with doctors hands holding stethescopes

Health Insurance Open Enrollment: Group Medical Plans

Did you know that open enrollment for group medical insurance plans may help you improve your health insurance coverage?

There is a lot of discussion nationally about health insurance open enrollment these days.  The one thing that we can all agree on is that it seems to get more expensive each year to provide quality health insurance to our families and employees.

Factors that Impact Group Medical Plans

The best benefits/pricing combination for health insurance is often found in group policies.  These are employer-sponsored plans that provide benefits to eligible employees.

In New Jersey, there are several important provisions in qualifying for a small group plan (under 50 full-time equivalent employees).

  • The employer must contribute to the cost of the plan for each employee. The minimum contribution is 10%.
  • 75% of eligible employees must participate in the plan or be covered by another plan (such as one from their spouse’s employer, or under a parent’s policy).  So, if you have 10 employees (and the owner does not count), you must have at least 8 of those employees enroll in the plan or provide a waiver that shows that they have coverage through a spouse or parent group policy.
  • To qualify as a “group” you must have at least one eligible employee and the business owner does not count in that calculation nor does the business owner’s spouse.

However, and this is an important exception, January 1st is open enrollment for small group plans.  This may be the only time of year small employers are not subject to the participation/contribution requirements.

Client Example

For example, we have a client who has over 20 full-time employees.

Most of those employees are laborers who make close to minimum wage, and many of them are covered by low cost or subsidized health insurance or not covered at all.

It is difficult for these employees to afford any premium contribution.  The employer certainly cannot afford to pay most or all the premium, so for years, they had no group plan.

We were able to set them up on a group plan with an effective date of January 1st, with only one employee enrolled in the plan.  This employee happened to be a relative of the owner who works in the company in a management capacity.

Since the participation requirement is waived, this group is eligible, and the owner can participate as well.

This open enrollment exception allowed the company to provide excellent health insurance to the owner and his family and a trusted, high-level employee, while all the other employees chose to opt-out of the coverage.

This could not be done at any other time of the year.

We're Here to Help

If you are a business owner without an employer-sponsored group benefits plan, contact us to see if a January 1st date opens opportunities for you to access better, and less expensive health insurance.

Please note, these plans must be submitted to the carrier between November 15 and December 15.

We can help you with a full range of retirement and employee benefit plans including qualified and non-qualified retirement plans, group medical, group dental, group life, group disability, voluntary benefits, payroll, human resource consulting and outsourcing and more.


family of five on the beach

A Complete & Simple Guide to Life Insurance Coverage

Written by: Jacob Bobick, CSA

Do You Need Life Insurance?

September is Life Insurance Awareness Month!

It’s probably not marked on your calendars - because it doesn’t sound all that exciting - but it’s a good reminder of the importance of covering ourselves and our families.

Most industry estimates suggest that half of Americans don’t have enough life insurance, and that’s a scary proposition.

I know, I know - it’s easy to say “I’m young, I’m healthy, I’m in great shape”; but not having adequate coverage could have severe consequences on the well-being and future of our loved ones.

Protect the Ones Who Matter Most

We all know that it’s expensive to live in New Jersey.  With the cost of food, shelter, taxes, clothing, college, etc., sometimes it seems like more is going out than coming in.

Insurance is never an “exciting” purchase; it obviously can’t compare with a new car, a pool, or even a new pair of shoes.  Insurance, however, is a relieving purchase.

When set up correctly, our insurances protect us if the worst happens - so at least we’re prepared for it.

Just as we have insurance to protect our homes, our cars, our businesses, our health, and our toys, it’s important to consider the impact of a lost income due to an untimely death.

Back to those expenses for a second… heaven forbid, if part of the household income is lost due to the passing of a family member, life insurance can ensure those bills are paid and the family stays afloat.

Life insurance replaces the lost income.  Life insurance keeps a terrible situation from becoming even worse.

Easier Than it Used to Be

With the timing of the global pandemic, I’ve gotten more questions than ever about life insurance.  It makes sense, as people are more “aware” of the number of lives being lost, so they consider their own mortality.

Believe it or not, the life insurance companies have made it easier for most of us to get coverage.

Because of distancing guidelines, many carriers are doing “non-med” underwriting, which means the applicant might not require an in-person exam to get approved.

For those candidates in good to excellent health, we can get policies issued in a week or two, which is comforting in these uncertain times.  If you’ve had some health challenges, we can still get you covered as well- it just might take a little longer.

The bottom line, as in all insurance planning, is to make sure you are fully covered before something happens!

Two Cups of Coffee

People ask us all the time “how much does it cost?”, which is a difficult question to answer.

Every situation is different, so we have to quote it specifically to the needs of the individual, but the fact of the matter is it’s relatively inexpensive to at least have some coverage.

For example, a healthy 40-year-old man could get a $250,000 policy for less than $12/month.  A 40-year-old female could get it for even less.

At those rates, it’s hard to justify “I can’t afford it”- that’s basically two cups of designer coffee to cover the cost.  We can get you some specific quotes to meet your needs in just a few minutes, so just call us - that is what we are here for!

It is Not Just for Families

While “personal” life insurance might be the most common, life insurance for business planning is equally important.

When there are multiple owners of a business, traditionally there is a “buy-sell agreement” in place.  Essentially, this agreement dictates what happens when one of the partners leaves the business or passes away.

Because an untimely death is often sudden, unlike a retirement, this could cause a strain on the surviving owner(s) to buy out the deceased’s share of the business.

Life insurance is one of the most common ways (and the cheapest) to protect the ownership for the survivor and the family of the deceased.

Example: Matt and Max each own 50% of a business valued at $1,000,000.  They each take out a $500,000 life insurance policy listing each other as beneficiaries.  If Matt passes away, the proceeds of the policy are paid to Max, who uses those funds to buy out Matt’s heirs.  Max now has 100% ownership of the business, and did not have to mortgage a home or the business to make it happen.

Nursing Home Costs

Long-term care planning has become a hot topic over the past few decades.

Understandably, most families don’t want to see their hard-earned money lost to a nursing home or assisted living facility, so long-term care insurance policies have grown increasingly popular as a planning tool- designed to offset the costs of care and shelter you from dipping into your savings.

Many of these policies are built on a life insurance platform to retain as much value and flexibility as possible, giving your family options (and protecting your assets) should extended care services become necessary.

Clever Alternatives

Aside from the “traditional” products mentioned above, companies are creating some “clever” ways to help families amass wealth.

Because of some of the tax advantages of life insurance, we can use it in products designed for retirement to create an income stream when you stop working (while keeping a death benefit intact in case you pass away).

Alternatively, we’ve set up “survivorship” policies, also known as “second-to-die” policies, which are a fantastic way to pass on money to your heirs.

Policies like these give some comfort to retirees who sometimes are afraid to spend their money, knowing they want to leave as much possible behind to their children and grandchildren.

We use a small percentage of their “total assets” to fund the policy, and Mr. and Mrs. Smith can utilize the remainder of their money, without fear of spending down the inheritance.

When they pass away, the lump sum is left to their beneficiaries, tax-free!  In the right situation, it’s a perfect wealth-building tool that allows a family to enjoy their retirement.

Necessary Decision

We can all agree that there is not much excitement in a conversation about life insurance.  But we can probably also agree that it’s a necessary component in a family’s financial plan, however informal that plan may be.

We’ve got the experience to guide you to the right coverage, and the insurance companies have made the entire process more streamlined, so really - there’s no excuse to not get this taken care of.  Your family [literally] depends on it!

Jacob Bobick is our newest associate at G. S. Newborn & Associates, Inc.  Jake has over twenty years of experience helping clients with life insurance, business perpetuation planning, and retirement planning.  Jake is a member of the Society of Certified Senior Advisors.

Contact Jake at jake@newborninsurance.com for more information


Life insurance agent headshot

Welcome to the Team, Jake Bobick: Life Insurance Expert

Jacob Bobick, CSA joins G. S. Newborn & Associates with more than twenty years of experience in the insurance industry.  He is licensed in Life, Health, and Property/Casualty Insurance and holds both the Series 6 and 63 licenses as a Financial Advisor.

Jake has built a career on providing for the needs of his clients in the financial services and insurance arena and has built specialties in the following areas:

Retirement Advisory Services

  • Social Security, Pension, and Income Planning
  • 401(k) Rollovers
  • Medicare Supplemental Insurance Programs
  • Legacy planning
  • Long-term Care Planning

Business Perpetuation

  • Funding of business continuation plans (buy/sell)
  • Key-Person Insurance
  • Tax-Qualified Retirement Plans – 401(k), IRA, etc.
  • Non-Qualified Deferred-Compensation Plans
  • Disability Insurance
  • Employee Benefits
  • Business Insurance

Individual Needs

  • Full range of insurance programs including life, long-term care, disability, automobile, and home
  • Financial Advising and Investment Review

Jake is a graduate of The Pennsylvania State University and resides in Milford, New Jersey.  In his free time, he enjoys playing and watching sports, completing projects around the house, and spending time in the great outdoors.

To get in touch with Jake regarding any of your insurance needs, we encourage you to fill out this form.


Tropical Storm Isaias: Filing an Insurance Claim

Today, many of you were hit by Tropical Storm Isaias, and some of you have been left without power and potential property damage.

If you’ve experienced property damage, we want to provide you with what to do next. See below:

  • Contact your carrier
  • Document everything with pictures and video
  • Make necessary repairs to reduce further damage

While you are doing this, please make sure you are doing so safely. If you have minor damages, are not sure if you should call your carrier or still have questions, you can always contact us by:

We are here to help, so please stay safe and take care!


a farm with red barns and a tractor

Who Needs Farm Insurance in NJ & Why it's Important

Who needs farm insurance?  While this sounds like a simple question, we find that many folks who need farm insurance have no idea that this is something that they need, and more importantly – do not already have.  This creates a tremendous gap in their insurance coverage...

If you raise crops, vegetables, trees, or animals used for food – you need farm insurance.

If you live on a farm and rent the land to a farmer or get a farmland tax assessment on your property – you need farm insurance.

If you have children who raise animals for a hobby or as a lifestyle choice – you may need farm insurance.

If you live on a property that once was used as a farm and have outbuildings that were originally used for or designed for farming – you may need farm insurance.

The Coverage Gap

Most homeowner insurance policies exclude from liability coverage any business activities or pursuits.  By definition and in common law (court precedent), farming is a business activity.  This holds even if farming is not your primary source of income and even if you lose money or make very little money at it.  Here is a common situation:

The Smiths live in a renovated farmhouse situated on twelve acres.  Most of the land is wooded, but there is a five-acre field that they arrange to be farmed by a neighbor.  The farmer gives them a small amount of the hay that they use for their children’s pet goat.  The Smiths get a farmland assessment on their property tax statement every year.

The Smiths post their land with 'No Hunting' signs and do not give anyone other than a handful of family and friends permission to hunt on their property.  On the back end of their land, there are trails that the local teens sometimes use to ride their quads (of course without the Smith’s permission).

In this situation, The Smiths have a farm exposure which qualifies as a business that is excluded from coverage on most regular Homeowners Policies.  You may argue that they are not really farmers since they do not do the actual farming, but each year they receive a benefit from the farming of their land which is a business activity.  By getting a farmland assessment they are establishing that they have a business operation on their property.

Without special farm liability coverage added to their policy (if that coverage is available), the Smiths are vulnerable to a declination of coverage arising from any liability claim that arises from their business operations.  In this case, this could be from anything that happens on their property!

One of the local teens hits a rock on the trail and is badly injured when she falls from her quad.  The parents bring a suit against the Smiths for not properly maintain the trail.

While cutting hay, the local farmer brings up a rock that hits a car passing by on the road adjoining the property.  The owner of the car sues the farmer and the Smiths for the damage to the vehicle and the mental anguish and pain and suffering suffered in the event.

One of the Smith’s pet goats escapes the pen and eats the neighbor's prized rose plants.  The damage to the flower bed is extensive.

In all these claim scenarios, the insurance carrier could decline liability coverage because of the business (farm) exposure and the policy’s exclusion for business operations and pursuits.  We are not saying that the Smiths would necessarily lose these cases, but if their insurance company declines to cover them, they will certainly have to spend their own money to hire attorneys, etc. to defend themselves from the allegations.

Property Insurance Issues Too

Up to this point, we have focused solely on liability insurance issues, but the farm situation may also cause property insurance gaps in coverage.  Many standard Homeowners Policies also have a business and/or farm exclusion for property.

This could apply to any other structure on the property that was originally designed for or is currently used for farming.  In the Smith Family example we have been using, this could mean that the old carriage house that is now used as a game room or two-car garage may not be automatically covered by the policy since it was originally designed as a farm building.

The same may be true of the small barn that is now used to house the pet goats and to store the hay that is cut from their property as this building could be considered to be used in the farming operations.

What is the Fix?

An experienced farm insurance agent (like us) has many tools to properly cover everything from a sophisticated farm operation to the smallest hobby farm.  We use specialized policies or endorsements that are designed to cover both your personal and farm liability and property exposures.

Contact us if you have questions on Farm Insurance.


Do I Need a Workers Compensation Policy in NJ?

Written By: Gary Newborn, G. S. Newborn & Associates, Inc.

In New Jersey, the question, “Do I need a Workers Compensation policy” is not as simple as it may appear. If a business has employees, Workers Compensation is mandated by the State of New Jersey and it is a necessary and needed coverage. It gets a bit more complex when a business has no employees. Here’s the reason…

What is Workers Comp?

A Workers Compensation Insurance Policy provides benefits to workers based on each State’s statute. In New Jersey, the statute does not define who is entitled to these benefits other than the term, “employee”. The problem is that you may not know who exactly your “employee” is until after something bad happens and the court makes a ruling in your case. Of course, by that time, it is too late to purchase the coverage.

An Example of Workers Compensation

Let’s say that you are a small business in NJ that does kitchen remodeling and renovations. You are doing a project for a good customer that includes new cabinets, appliances and more. You hire a sub-contractor, George, to do the tile work for the kitchen floor.

You have known George for many years, and he has done work for you often in the past. The day the tile work is scheduled, George’s brother, Harry shows up at the job, tells you that George is sick, and he does the tile installation. The work is fine, and you call George the next day to see how he is feeling. George tells you that Harry put his back out while doing the job and is seeing his doctor. You do not hear anything for several weeks.

Then you get a letter from an attorney representing Harry indicating that Harry was injured on the job and that you should submit the information to your Workers Compensation insurance carrier as they are petitioning for benefits under your policy. In this case, Harry was an occasional worker for George who did not carry a Workers Compensation insurance policy. Because you are the General Contractor in this case, NJ statute makes you responsible for the injuries to Harry (the employee of an uninsured sub-contractor).

The case goes to the special workers compensation court in NJ where they award Harry benefits under your policy. Do you have a policy? If you don’t, you are still responsible to provide Harry with the benefits that the court has awarded him (these will be out of your pocket if you don’t have a policy). In addition, you will face fines and penalties from the State for not having a policy.

This is just one situation where someone who you would never think of as your employee becomes your responsibility under NJ statute. Other situations would include a temporary or occasional worker, a relative who helps you out for the day, or a sub-contractor who is not covered under their own workers compensation policy.

Independent Contractors

This information may be very different than what you have been told by your bookkeeper or accountant. That is because there is a very real difference between an accounting relationship and a legal relationship. Just because you pay someone as a 1099 sub-contractor does not make them one under the various laws that deal with employer-employee relationships. For more about this subject, see our blog about Independent Contractors.

Type of Business Structure

The type of business structure affects your need for Workers Compensation as well. If you are structured as a Corporation, corporate officers are considered employees (even if there is no payroll involved) and are subject to the workers compensation statute. If you are structured as an Individual/Sole-Proprietor, a Partnership, or a Limited Liability Company (LLC), the owners (individual, partners or members of the LLC) are not considered employees and are not automatically eligible for workers compensation benefits under the NJ statute.

However, you may elect coverage for this class of owners to provide coverage if desired. It is not unusual for a General Contractor to require all Sub-Contractors to elect coverage under Workers Compensation.

Contact us if you have questions on your need for a Workers Compensation Insurance Policy.


A blonde white female freelance worker

Independent Contractor vs. Employee: Do You Have A Choice?

Many businesses in various sectors depend on the use of Independent Contractors to supplement their work force.

Deciding when a worker is an Independent Contractor vs. Employee has always been a bit of a sticky issue with varying government and insurance interpretations, and little consistency between Federal and State rules.  The rules regarding Independent Contractors and employees are constantly evolving.

However, in New Jersey due to recent court cases and a renewed interest in the subject by the State government, we have seen a general consolidation of the rules that give us a better view on exactly how the State, at least, determines who is an Independent Contractor and who is an Employee.

Why It Matters To Employers?

There are certain advantages for an employer to consider a worker an Independent Contractor vs. Employee.

Generally, in this type of relationship, the employer does not provide employee benefits, workers compensation insurance, or share in payroll contributions such as State and Federal taxes, FICA (social security and Medicare taxes) and unemployment insurance.  In addition, regulations for things such as Family leave, sick time, prevailing wages, overtime and other hour/wage issues are not in play.

Your Independent Contractor relationships can be overturned by the Federal government (IRS), a State government (Department of Labor), or by court ruling as a consequence of a legal action.  If this happens, the Employer could be responsible for past wages, benefits, overtime, and taxes along with penalties and interest payments.  At the end of the day, any time you set up an Independent Contractor relationship you want to know for sure that it is solid and could withstand scrutiny by the government and the courts.

New Jersey Making It Difficult

The trend across the nation is narrow on those eligible for Independent Contractor relationship.  New Jersey is a leading State in this effort.  In fact, this is a focus point of New Jersey Governor Murphy’s administration.

“Misclassification is an unfair business practice and it is illegal,” Murphy said.  “if you are a contractor engaging in these practices, we are either, A, going to bring you into compliance or, B, we are going to put you out of business.”  To fortify enforcement efforts in this area, the State has added new investigators and has trained Division of Consumer Affairs investigators in misclassification.

We have had numerous clients, mostly in the construction industry report that they have been subject to an inquiry by the State.

What Are The Rules?

Determination of the status of a worker in New Jersey will now likely depend on the ABC Test.

The ABC Test is taken from the New Jersey Unemployment Compensation Law and is now the primary test to determine Employee status with the State of New Jersey.  The test presumes that every worker is an Employee unless three standards are met:

  1. The worker has been and will continue to be free from control or direction over the performance of the work both under the terms of the parties’ contract and in fact.
  2. The work must be outside the usual course of the employer’s business, or, the work is performed outside of all places of the employer’s business
  3. The worker is customarily engaged in an independently established trade, occupation, profession or business.

Control

If the employer (remember the State is presuming that everyone is an employee in these situations) directs the worker in any way, the worker is an Employee vs. Independent Contractor.  Things that illustrate control include directing the work, establishing start and finish times, and use of the employer’s tools, equipment, vehicles, materials or supplies.

Outside Of Usual Course Of Business

To be an Independent Contractor, the work done must be outside of the normal work done by the employer or the work is done away from any premises or job site of the employer.

This is problematic for any business who uses workers to do essentially the same jobs that are done by other employees in the company even for a short-term basis or for a specific project.  It is hard to see how an Electrical Contractor could ever call another electrician an independent or sub-contractor.

It is also difficult to see how a technology firm can utilize a contract programmer working remotely as an independent contractor if some or all their programming employees also work remotely.

Established Business

Part C of the test may be the most difficult, especially in the construction industry.  It is impossible to see how a worker who is only working for one company can ever be called an Independent Contractor.

Under this standard, the Independent Contractor would have business cards of their own, a sign on their truck if applicable, insurance coverage, would invoice the employer for work done rather than have the employer track their hours, and perhaps even have a proposal, purchase order or written agreement for the work to be done.

What To Do?

While this is an evolving area, it is clear that the State of New Jersey is serious about the issue of independent contractor vs. employees and will be stepping up their enforcement efforts.  It is also clear that the construction industry is a primary target for initial efforts.  We will probably see this spread to the health care, hospitality, and technology industries soon.

We strongly recommend that any company using independent or sub-contractors review their procedures, assess their relationships and consult with their attorney and accountant to make sure that they comply with New Jersey (and Federal) statues.

G. S. Newborn & Associates, Inc. can help you meet with an employment attorney to discuss these matters. Make sure to discuss with us the insurance implications of using Independent or Sub-Contractors.