3 Ways DBL Insurance Opens Doors for P&C Brokers
New York business owners need more than just DBL insurance coverage
The DBL insurance industry recently experienced a shake-up when New York State passed a law requiring mandatory Paid Family Leave coverage, to be written as a rider to NYS DBL policies. Several carriers exited the DBL insurance market because they didn’t want to write PFL riders, which left many brokers looking to replace their DBL policies.
Brokers had two choices: Lose the DBL business or leave their existing carriers to write DBL insurance policies elsewhere. DBL Center brokers who relied on DBL Center as their back-office staff were able to move those DBL policies with ease, impress their customers, and strengthen their position in the marketplace.
DBL Policies Open Doors
These brokers found that DBL insurance policies open doors to more business. This has always been true, but it’s even more relevant now, in 2018, when fewer carriers are writing DBL insurance coverage.
If you are the broker who can write these policies for New York State business owners, provide exemplary service, and build trust with your customers, they will come to you for all their insurance needs.
For P&C brokers, DBL insurance can act as your foot in the door, giving you the chance to write high-commission policies like home, auto or even umbrella policies for business owners and their employees.
Let’s look at some of the opportunities available to P&C brokers to expand their book of business with new and existing DBL insurance customers.
1. Smart business owners will consider expanding employee benefits packages with ancillary lines of coverage.
We’ve talked in-depth about enriching DBL coverage in light of the new PFL law. But business owners can also improve employee retention with ancillary benefits such as vision, dental, and life insurance.
The DBL Center can provide a discounted benefits package when you bundle these ancillary lines with an enriched DBL package, allowing you to provide your customers with even more value.
2. Business owners will rely on someone they can trust to write their personal insurance policies.
In addition to business insurance and employee benefits, business owners also need insurance for their personal assets. As an insurance broker, you know that many business owners possess one or more of the following: high-value homes, vacation homes, automobiles, recreational vehicles, or boats.
Once you’ve established trust as their broker of choice for mandatory DBL insurance or enriched DBL coverage, it’s easy to ask your business customers if they’d like a quote on an umbrella policy to cover their home/auto and other possessions requiring insurance. They might also consider purchasing life insurance through your brokerage.
Most consumers understand that when they do business through one company, they can get the best deals and preferred service as a loyal customer. It’s your job, as their broker, to remind them about your other insurance lines and the savings you can offer them. A new sale and a large commission check could be just that easy.
3. Business owners may refer their employees to you for their personal insurance coverage.
Not only do business owners have cars, homes, and boats to insure, so do many of their employees. What if you could earn referrals from your biggest accounts, just by providing excellent service and low rates to the owner of the company? You can increase your commission checks by writing homeowners’ insurance, auto insurance, umbrella policies, renters’ insurance, or whole- or term-life insurance policies.
More Than Just DBL Insurance
In New York, DBL Center specializes in DBL, PFL and ancillary benefits. We couldn’t tell you how to sell your P&C lines or where to go for the best rates.
But we can remind you that almost every business owner needs DBL coverage. And with our back-office staff providing white-glove service, as well as our new Net Revenue Tracker app giving you fast, convenient access to all your accounts, we make it easy for you to sell DBL and maintain your DBL accounts.
By doing so, the DBL Center opens doors for you to expand your book of business with the lines that you know best such as health, life, home and auto insurance and umbrella policies.
Need more information about DBL and PFL? Need tips on marketing DBL insurance coverage? We are here to help. Give us a call at (631) 293.5100 or get a quick quote now.
DBL Broker Spotlight: Coastal Insurance of Rocky Point, NY
DBL Center helps Coastal Insurance navigate the rocky waters of New York Paid Family Leave
The story begins 14 years ago, as many Long Island stories do, in a diner. Through a referral from another local business owner, David Clausen of Coastal Insurance, an independent insurance agency in NY, met with Michael Cohen of DBL Center. Founded in 2001, Coastal was just three years old at the time, and Clausen was looking for a better way to wr
ite DBL coverage for his New York business customers.
Fourteen years later, Clausen still visits that same diner on Long Island’s North Shore, and still writes his DBL and enriched DBL policies through The DBL Center. “Whenever we need something, Michael is there,” says Clausen. “It’s a product that works at a great price. The process is efficient for our staff and the service is great. What more could you ask for?”
Paid Family Leave Opens Doors for Coastal Insurance
New York State’s Paid Family Leave Act, introduced in 2017, gave The DBL Center an opportunity to over-deliver and exceed Clausen’s high expectations for exemplary service. When one major carrier exited the DBL market to avoid writing PFL riders, Clausen filled that void, strengthening his business relationship with the carrier and opening doors for Coastal Insurance.
“When PFL became mandatory, some carriers had a lot of other business lines they didn’t want to lose, but they no longer wanted to write DBL,” explains Clausen. “They felt that if they canceled DBL they’d lose the other lines of business.”
Clausen took on one carrier’s DBL lines, writing the policies through The DBL Center to provide a friendlier and more robust alternative to the New York State Insurance Fund. He promised the carrier he would not market other lines of business to the carrier’s existing customers.
Through this mutually profitable relationship, the other carrier began sending referrals to Clausen’s office for high-risk homeowners insurance and other business and personal lines. Coastal Insurance also gained the opportunity to write the DBL policies for the insurance carrier’s 30+ offices across the New York Tri-State area. “It was great to reconnect with the agents, and it opened doors to additional streams of revenue for my agency,” says Clausen. “It was a win-win all the way around.”
The DBL Center Makes Business Insurance Easy for Coastal Insurance
Coastal Insurance serves individuals and businesses across the New York Tri-state area, including New York, New Jersey, Pennsylvania, and Connecticut, and even as far south as Florida. With a focus on high net worth individuals on Long Island’s North Shore, 70 percent of Coastal’s business is made up of personal insurance, including home/auto umbrella policies. The other 30 percent of Coastal’s customers are small businesses, from $1 billion retailers to pizzerias, doctor and dentist offices and other small businesses. Clausen describes the bulk of this clientele as “the Main Street USA business owner.” And this is where Clausen’s relationship with DBL Center plays an important role.
With its online “quick quote” interface to bind DBL policies under 50 lives in minutes, The DBL Center excels in serving small businesses under 50 lives. “It couldn’t be easier to go online and quote and bind a policy,” says Clausen. “Some other insurance products are a bit more labor intensive.”
He adds, “DBL Center makes it easy to get the product at the right price, quickly and efficiently. I’ve been with The DBL Center for nearly 15 years. Michael and his team make great partners for the independent agent on Long Island and we value that partnership.”
PFL Claim Forms and More - DBL Center Launches Paid Family Leave Resource Center
New Paid Family Leave Resource Center presents PFL claim forms and more
We are well into 2018 and, as a New York insurance broker, you’ve got the basics of Paid Family Leave down.
It’s the new comprehensive, mandatory insurance that provides the financial support needed for new parents, military spouses, and those caring for aging or ill loved ones. It’s added as rider to your customer’s existing DBL policies in New York. That part should have already been done.
But now the fun for brokers begins, because your customers still have questions.
- How do I make a PFL claim?
- Where can I find PFL claim forms?
- Should I file for DBL or PFL?
- Where does the Family Medical Leave Act fit in?
This is new territory for CEOs, HR directors, and insurance brokers, too.
But the DBL Center, with our commitment to white glove service, has the answers and PFL claim forms our brokers and their customers need.
We recently launched a new Paid Family Leave resource center. It’s a single-scroll page within our InsuranceWholesaler.net website that provides a host of information about Paid Family Leave in New York, including PFL claim forms, handy PDFs, and more.
The PFL Claim Forms and Documents You Need
We’ve heard from our brokers that many of their customers are looking for PFL claim forms. It’s important to note that The DBL Center does not process insurance claims. We are an insurance wholesaler dedicated to providing the best service to our brokers.
Because our job is to serve our brokers, we’ve stocked our Paid Family Leave Resource Center with handy links and PDFs, including the IRS form that describe the tax ramifications of PFL, and a document showing the current PFL rates.
We’ve also provided links to PFL claim forms. There are multiple PFL Claim forms. Which one you use depends on whether the paid leave is for bonding with an infant or adopted child, caring for a sick or aging relative, or caring for a family while a military spouse is deployed. We’ve provided links to all of them.
Finally, we’ve uploaded PFL claim forms branded for each of the three major carriers and have them housed in Dropbox for easy download. Get Shelterpoint, AmTrust, and Standard Security PFL claim forms here.
How Much Will PFL Cost Your Employees?
The DBL Center is proud to be the first insurance wholesaler to provide an interactive PFL calculator right on our website. HR directors, accountants, and CEOs can know the costs of PFL coverage before they call their broker.
Using our PFL calculator, employers will know how much their premiums will be so there are no surprises. After using our calculator, they will have gathered all the necessary information they need to provide so you can write the policy quickly and easily.
Partnering with Carriers to Give Our Brokers the Information They Need
Change can be scary. We started talking about changes in our industry back in February 2017. Now it’s here.
In addition to publishing our PFL Resource Center, we are also partnering with top carriers like Standard Security, Shelterpoint, AmTrust, Hartford, and Guardian to present webinars explaining the specifics of PFL coverage and to better help their brokers answer specific customer questions.
Our marketing team is hard at work sharing our knowledge on LinkedIn and on our blog, and we are even publishing consumer-facing articles on top insurance carriers’ websites to provide actionable insights on transitioning to a world with Paid Family Leave while keeping workflow consistent and maintaining employee morale.
In short, we are deploying all our resources to make it easier for our brokers to continue providing stellar service to their customers, answers to their questions, and the resources and PFL claim forms they need to make a smooth transition.
Creating An Employee Wellness Culture In Your Organization
Focusing on employee wellness can reduce disability insurance claims
State-mandated DBL (New York) and TDB (New Jersey) insurance provide employees with income if they are sick or disabled for an extended period of time. Overall, this insurance coverage can increase employee job satisfaction and overall company morale.
But, even with insurance coverage sick employees still take a toll on the business. You can fight these negative effects by fostering an employee wellness culture within your organization.
Reduce Productivity Losses, Improve Profitability through Employee Wellness
Productivity losses linked to employees who miss work cost employers $225.8 billion, or $1,685 per employee, each year, according to CDC statistics. Of that lost money, more than half ($153 billion) is a result of sick time used by full-time workers who are overweight or obese or have chronic health issues.
Reducing excess weight, high blood pressure, glucose, and cholesterol levels by just 1 percent are employee wellness measures that can save up to $103 annually in medical costs per person.
One way to encourage healthier lifestyles for your workers is by building an employee wellness culture within your organization, modeled by executives and carried down to every employee.
There are many ways to do so—and these small changes don’t have to cost a fortune. And certainly less than the $1,685 spent per employee when people get sick).
1. Make healthy snacks available in the break room.
We all cringe that first week back to work after the New Year. Many of us might be trying to eat healthy or even starting new diets. But others decide to bring those leftover cookies, pies, chocolates, and fruitcake to the office, where “someone will eat them.”
As a leader in your organization, you don’t have to be that “someone.” You can even provide an alternative for everyone and encourage employee wellness through healthy foods.
Stock a mini-fridge with fresh fruits and vegetables, provide herbal teas for those who need a mid-afternoon pick-me-up, and even consider bringing in a healthy catered lunch once a week.
Or send an email to organize a mid-day potluck on a Friday, where everyone brings in their favorite healthy meal and shares the recipe.
2. “Challenge” your employees.
“Challenges” are the new fitness craze, and they work to get people moving by motivating them through the thrill of competition. Oh, and cash prizes.
Here’s how it works: Collect a small amount of money from everyone who wants to participate. Set rules, such as being active for 30 minutes each day. Employees show proof of their activity through a Fitbit, Apple Watch, or even a free downloadable app like MyFitnessPal. At the end of the challenge (typically 30 days) everyone who completed the challenge as per the rules is entered into a random drawing to win the money.
You can also divide the office into teams. The team that shows the most total minutes of physical activity over 30 days wins the challenge.
3. Plan an active office outing.
Color runs. Obstacle races. Walkathons. 5K events. There’s an activity for employees at nearly any ability level. And while the weather may not be conducive to running for anyone but the diehards right now, spring is on the way.
It’s time to catch the early-bird registration pricing for a team-building physical challenge. You can even get healthy while helping others, and engage in a race or event that donates proceeds to charity.
If you’re looking for a winter activity, consider indoor rock-climbing, laser tag, or even bowling.
4. Provide health-related perks
From free or discounted gym memberships to in-office massages, two-thirds of all U.S. workplaces today offer wellness-related benefits. But it’s not enough to provide the benefits.
You must let employees know they are available and make it easy for them to take advantage.
When you get half the office talking about last night’s boot camp, and the other half want to know where to sign up, you know you’ve created an employee wellness culture within your organization.
Mandatory DBL and TDB coverage is there when you need it. But taking small steps toward a healthier workplace can make a big difference in your organization’s overall productivity.
The DBL Center wishes all our brokers, clients, and readers a happy and healthy 2018.
The DBL Center Family Celebrates the Holidays
DBL Center party promotes camaraderie and idea exchange to wind down the year.
As it enters its 42nd year, the DBL Center is and has always been, a family-owned business. The company recently celebrated the holidays with a party at the historic Paramount concert venue, bar and lounge in Huntington Village, Long Island.
Taking over a private VIP room below the theater, the DBL Center hosted a Speakeasy Holiday Party.
For those who’ve never visited, the Founder’s Room at the Paramount features décor of the 1920s, along with music memorabilia for those who wax nostalgic about the earlier days of rock and roll. Absolutely perfect for The DBL Center employees, clients, friends, and peers who were invited to the party. It’s a cliché, but it’s also accurate to say “a good time was had by all.”
In the tradition of The DBL Center, the venue, the food, and of course, the people created an incredible atmosphere of first-class fun.
Concierge Service, High-Tech Capabilities
The DBL Center was founded by David Cohen to offer insurance brokers the type of highly differentiated, personalized service provided by “boutique” companies in other industries.
Those who knew David knew he loved to travel. He loved staying in luxury boutique hotels instead of the bigger chains. He enjoyed not just the personalized service, but the original and unique touches these hotels provided.
What White Glove Service Means To Us
The concept of “concierge service” provided at boutique hotels was the inspiration for our website cover photo. And that philosophy of providing white glove service translates into everything we do.
From giving our brokers the latest resources to help them understand new legislation such as Paid Family Leave, to our app that puts control of our broker’s accounts right at their fingertips, on the road or in the office, everything we do is designed to provide a higher level of service to our brokers and their clients.
No doubt, it takes a lot of work to maintain that level of service and stay ahead of the pack.
But we also have a lot of fun along the way, with our holiday party as just one example!
Nurturing a Family Atmosphere
The family atmosphere that we nurture within the organization welcomes an open exchange of ideas to help The DBL Center continue to improve. Whether in the office or after-hours at a gathering like our holiday party–we listen to our employees and our customers.
We are continually brainstorming new ways to service our agents in areas that matter to them. Our technology, our back-office staff, and the resources we offer can help agents expand their book of business and increase their profits in less time.
Paying Tribute, Saying Thank You
President and CEO Michael Cohen, of course, didn’t stand still during the party. He traveled the room sharing stories, always with a crowd around him, eagerly awaiting the punchline.
Mid-way through the night, Michael took the time to gather everyone near the bar and shared his gratitude and appreciation for The DBL Center family — employees, brokers, clients, contractors, and friends.
Join Us in 2018
No doubt, 2018 has been a year of changes and adaption – for The DBL Center family and for the insurance industry as a whole.
Armed with determination, knowledge, and a team that is stronger than ever, The DBL Center moves forward into 2018 with unprecedented optimism, new ideas to implement, and more opportunities than ever before for our brokers to expand their book of business and make more money with us.
Happy Holidays, from our family to yours.
Are you ready to join The DBL Center family?
Find out how we can help you get the best rates on enriched DBL coverage, ancillary benefits, and more.
FSA v. HSA v. Ancillary Benefits: Which Should Employers Choose?
DBL Center explores FSA v. HSA v. ancillary benefits so you can help your customers make informed choices
If you or your employees have a flexible spending account (FSA) you may be scrambling to spend that money before it expires. That’s one of the main differences in an FSA v. HSA v. ancillary benefits package. Your FSA expires at year-end. (Although, in some cases, that deadline is extended to mid-March.)
Whatever benefits package you have, healthcare is expensive. When you factor in the costs or co-pays of prescription medicines, doctor’s visit co-pays, not to mention vision and dental costs or co-pays, plus the actual cost of healthcare coverage, the average person spent $10,345 in healthcare in 2016. FSA, HSA, or ancillary benefits packages can help defray some of those costs.
When comparing FSA v. HSA v. ancillary benefits, each has advantages for certain people. If you’re an employer interested in offering the most robust benefits package to your employees, combine ancillary benefits that include dental benefits and vision benefits with an FSA to pay other costs, not ordinarily covered by insurance, with pre-tax dollars.
When you’re looking at the differences in FSA v. HSA v. ancillary benefits, one of the biggest drawbacks to an FSA is it expires at year’s end.
Let’s sort through the other differences in FSA v. HSA v. ancillary benefits to better understand employee benefits available. As a broker, you’ll be armed with the knowledge to guide your customers toward the best ancillary benefits package to improve employee loyalty and morale.
What Is An FSA?
An FSA, or flexible spending account, is a pre-tax savings account you can use to pay for a variety of expenses related to health and wellness and, in some cases, dependent care.
The employer withdraws a set amount of money, pre-tax, and provides employees with a debit card to purchase any items or services covered by the FSA. The list includes a number of surprising items, including co-pays, prescription and over-the-counter medicine, childcare, and even items such as bandages and sunscreen.
If you don’t spend the money in the account by the deadline (typically December 31 or March 15), you could lose it, although some plans let you roll up to $500 into the next year.
FSA Advantages:
- You can use the money for a variety of health-related expenses, including childcare
- Money is deducted from your paycheck, pre-tax
- You may also be able to use it to pay for childcare
FSA Disadvantages:
- Use the money or lose it
- No employer matching contributions
What Is an HSA?
An HSA, or a health savings account, is often confused with an FSA. But a Health Savings Account is available only to individuals enrolled in a high-deductible health plan (HDHP). The idea is that the health savings plan can help cover the deductible cost with pre-tax dollars. HSA money can also pay health-related expenses not covered by your insurance, such as vision or dental costs.
Unlike an FSA, you can deduct money from your HSA for other reasons, but you will pay tax on that money, including an additional 20 percent tax penalty.
HSA Advantages:
- For people with a high-deductible health care plan, an HSA helps ensure they have money available for doctor’s visits and other medical expenses
- You can withdraw the money at any time for any reason, but you might pay a penalty
- The HSA does not expire
HSA Disadvantages:
- Not available to everyone
- You’ll pay a tax penalty for using the money for non-eligible costs
What Are Ancillary Benefits?
If you’ve read this far, you understand why an FSA or HSA is not always the best option employers can provide to their workers.
Ancillary benefits, including vision and dental benefits, work like any other insurance plan. Employees pay the premium with pre-tax money deducted from their paychecks and the insurance benefits pay for things like check-ups, corrective lenses, or dental work. In some cases, the employee might have to pay a co-pay.
Most ancillary benefits are completely employee-funded, which means the employer has no added costs. Ancillary benefits are enticing to employees because it’s like money in the bank with no risks involved.
Advantages of Ancillary Benefits:
- No out-of-pocket costs to the employer
- Voluntary benefits means employees can choose their coverage
- Low premiums and high payouts, especially for employees with families
- Healthier employees are happy employees; with good coverage, employees won’t put off important dental work or eye exams
Which Is Better: FSA v. HSA v. Ancillary Benefits – The Answer
Brokers, if your customers ask you, “Which is better: FSA v. HSA v. ancillary benefits?” we encourage you to share this post with them and guide them toward the best conclusion. Flex spending accounts have their place, but as people rush to spend the money in their account this month, it might be a good time to show your customers a better, less frustrating way to pay for common dental and vision expenses.
You can add an ancillary benefits package to any enriched DBL account when the policy renews this winter. Let the DBL Center help as your white-glove, back-office team to help the process go smoothly.
FMLA vs PFL: What’s the Difference?
FMLA vs PFL: The DBL Center explores the differences
Since New York introduced Paid Family Leave, there has been a lot of confusion. Brokers, HR directors, employers and employees are just beginning to understand what PFL means and who it will affect.
One point of confusion: Many people believe the Family and Medical Leave Act (FMLA), the federal law put into place during the Obama administration, is the same as New York’s PFL.
In fact, the two are loosely related, and can be applied in conjunction with each other.
But they are not the same thing.
FMLA vs PFL: What Is The Difference?
For starters, FMLA is a federal level law, while PFL provides benefits to employees at the state level.
The key difference in FMLA vs PFL is that FMLA is not a paid leave. It offers no compensation to employees taking time off. PFL in New York, on the other hand, provides both job protection and income for employees on leave.
Read on as The DBL Center, your expert in Paid Family Leave in the New York Tri-State area, explains more you should know about FMLA vs PFL.
What Is the Family and Medical Leave Act (FMLA)?
The Family Medical Leave Act was signed into law by the federal government to protect the jobs of employees who have to take time off for medical reasons of their own or to care for a sick or disabled family member.
When the employee returns from leave, the employer must be able to provide that employee with the same position they had before or one that is equivalent in pay, benefits, and status. While the employee is out on leave, the employer must also maintain their benefits at the same level as when they were working.
FMLA vs PFL: Who Can Make a Claim?
FMLA legislation applies to people who take medical leave for themselves or take time off to care for a loved one.
On the other hand, Paid Family Leave applies only to employees taking time off to care for family members. Employees can make a PFL claim to take time off to care for ill or disabled family members, infants, adopted or foster children within the first year of care, or any family member while a spouse in the military has been deployed.
Employees who are ill or injured, themselves, would need to file a DBL claim in New York to receive income while they cannot work. They are not eligible for PFL. However, the employee’s job would be protected on the federal level by FMLA if they meet the other requirements, such as total number of hours worked for that employer.
Eligibility Requirements for FMLA vs PFL
FMLA applies to companies with 50+ employees. PFL is available to any eligible employee working for a business with one or more employees. This makes PFL available to more New Yorkers than FMLA.
The employment requirements for PFL are also less stringent. Employees working 20+ hours per week must have worked for 26 consecutive weeks at their current, covered employer to make a PFL claim. Part-time employees who work less than 20 hours per week must have worked at least 175 days for their current employer.
On the other hand, employees must have worked at least 1,250 hours each month for the past 12 months at their current employer to qualify for job protection under FMLA.
FMLA vs PFL: Other Important Differences
There are a few other differences in FMLA vs PFL, such as how the federal government and the state government define family. For instance, the FMLA does not protect the jobs of employees who take time off to care for an in-law. Employees would make a PFL claim, instead, for income and job protection.
The rules of FMLA vs PFL also differ slightly for members of the military and their spouses.
Finally, the federal government offers FMLA time off in increments of 15 minutes, while employees make a PFL claim for time in days, which will gradually increase to a maximum of six weeks by 2021.
NJ Family Leave Act: What Is It?
To further complicate things, if you live in the New York tri-State area, you may also have heard of the New Jersey Family Leave Act. Where does NJ FLA fit in?
New Jersey’s FLA, similarly to the federal FMLA program, does not provide New Jersey workers with paid leave. It only offers job protection to those employees. New Jersey employees would make a TDB (Temporary Disability Benefits) claim to receive income if they are unable to work due to medical reasons.
Similar to PFL in NY, the FLA is broader than the FMLA in its definition of “parents.” New Jersey employees can take time off to care for in-laws, step-parents, foster parents, adoptive parents, or anyone with a parent-child relationship with the employee.
Putting It All Together
New York’s new PFL coverage puts our home state on the cutting edge of protecting and providing for employees caring for family members. It exceeds FMLA coverage in many ways, including a broader scope and paid benefits for claimants.
However, the FMLA was an important stepping stone toward PFL adoption. It is also important to protect employees in other states, who may not have access to PFL benefits to protect their jobs and provide them with a living wage during leave.
As a broker, it’s important to understand the difference in FMLA vs PFL. If your customers ask, you want to be prepared with the right answers. Presenting yourself as an expert in PFL coverage will help you gain the trust of your customers and pave the way to referrals and increased profits through the sale of enriched DBL and ancillary benefits.
PFL is Almost Here:
Visit our PFL resource center to be sure you are ready.
Your Guide to Family Leave Benefits and Employment Taxes
Family leave benefits in New York bring new IRS tax implications
Disability Benefits Law (DBL) brokers in New York State are getting a handle on the new paid family leave benefits, with the new PFL law set to start January 1, 2018.
The DBL Center has provided a host of paid family leave resources and information in a new section on our website. We will also continue to offer webinars and live sessions explaining the intricacies of this new benefit.
While we know tax laws may change across the board in 2018 for businesses and individuals, it’s important to understand the tax ramifications of PFL for employers and employees now.
In short: how should accounting departments, Human Resources, payroll, and benefits departments in small businesses and larger corporations treat family leave employee contributions and benefits?
Family Leave: Taxable Just Like Disability Income
Family leave benefits, just like short-term disability benefits, are taxable as non-wage income and reported by taxpayers using FORM 1099-MISC.
The exception? Employee contributions, deducted after taxes, are not included as part of this taxable income. The insurance provider or employer should send a 1099-G form that employees can use when filing taxes, so they know which portion of their family leave benefits are taxable.
Employees Should Understand Withholding Tax Laws to Budget for An Event
The tax ramifications of paid family leave benefits will take some money out of the pockets of claimants. Smart planning can help employees minimize their tax liability on April 15, when federal and state income taxes are due. Alternately, employees can opt to keep more money in their pockets when they need it most—at the time of the family leave.
Employees can request to have withholding taxes deducted from their family leave benefits before receiving their benefits. This will reduce the size of benefits checks, but may also help reduce tax liability at the end of the year. Depending on the length of the maternity leave, the employees’ personal savings and financial situation, along with their expected tax bill, some employees may choose to have taxes withheld.
More commonly, employees will collect the full amount of their family leave benefits and then pay taxes on that income when they file federal and state income taxes. By that time, it’s expected that employees would be back to work and collecting their full salary, putting them in a better position to pay those taxes.
In the case of family leave taken for childbirth or adoption, the employee may also be able to take advantage of the child tax credit and claim their new family member as a dependent, further reducing their tax liability.
How Family Leave Taxes Affect Brokers
As a broker, it’s good to know the tax implications if Paid Family Leave in order to help educate the c-suite executives and HR professionals who make up your client base. You can be a resource for your customers and the first person they think of when they need an expert in PFL and disability benefits law.
When you inform employers and employees of the potential tax ramifications, this can help them make the best decisions or decide to pursue further information from tax experts. When customers have questions, it’s important to suggest they check with a tax professional to determine the best course of action.
Are Your Customers Ready for Paid Family Leave?
The PFL benefits rider to New York State DBL goes into effect in less than two months, on January 1, 2018. Many of your customers should already be deducting employee and employer contributions.
Now is the time to discuss options, including enriching their DBL benefits package so it is comparable to paid family leave in New York.
Contact The DBL Center now to enrich DBL for your customers and increase your commissions on these important mandatory benefits.
7 Important Ways PFL Differs from DBL Insurance
From the duration to the benefit payouts, DBL and PFL differ significantly.
Brokers in New York can now sell a new mandatory benefit: Paid Family Leave. We’ve been talking about this new coverage since New York State announced the law in April. As January approaches, the benefit becomes reality in two short months.
As news of the coverage begins to spread, employers and employees have questions. It’s important for brokers to establish themselves as trusted experts and to explain the benefits in a simple, straightforward manner to company executives and HR professionals.
What’s The Difference between PFL and DBL?
The main difference is that employees take DBL if they are injured or ill. Employees take PFL to care for someone else. That’s the most important thing to remember.
However, there may be some overlap. For instance, a new mom may file for DBL if she needs time off for her body to recover from childbirth. When that coverage ends, she can collect PFL to spend time with her new baby.
In most cases, it’s pretty obvious to determine which benefit an employee should collect. And there are some pretty big differences between the two benefits.
Let’s explore seven ways DBL and PFL are different.
1. Eligibility Requirements
Both full-time and part-time employees may qualify for PFL or DBL coverage. Requirements vary.
Full-time employees must work 20+ hours a week and have been employed at least 26 consecutive weeks at their current employer to qualify for PFL.
To qualify for DBL, employees must work the number of hours that the employer considers a full-time work week, and have worked at least four consecutive weeks for any covered employer.
Important to Note: DBL coverage eligibility transfers from one job to another in many cases. PFL does not.
Part-time employees must have completed at least 25 work days at any covered employer to qualify for DBL. To qualify for PFL, 175 days at their current employer is required.
2. Waiting Period
The waiting period for DBL is seven days from the date of filing. Paid Family Leave has no waiting period, so employees can begin collecting benefits immediately.
3. Maximum Leave
DBL has the edge here. Employees can take up to 26 weeks in any consecutive 52-week period.
PFL provides 8 weeks of benefits beginning in 2018, increasing to 12 weeks in 2021 in any consecutive 52-week period.
It’s important to note that employees cannot collect PFL and DBL benefits at the same time. One must stop when the other begins. In that situation, the combined duration for both benefits is capped at 26 weeks during any 52-week time span.
4. Job Protection
As part of the Family Medical Leave Act, which is a national law, employees who take Paid Family Leave receive job protection for the duration of their leave, regardless of the size of the company. Employers must hold their position or provide a comparable position when an employee returns from PFL.
DBL offers no job protection for ill or injured employees.
5. Benefit Offsets
You can collect DBL benefits concurrently with Paid Time Off, such as sick days or vacation time. This can help employees make ends meet by collecting a full paycheck plus DBL benefits for a time.
On the other hand, you cannot use PFL with other PTO.
6. Funding
Employee contributions for DBL are capped at 60 cents per week, regardless of the employee’s average weekly wage.
PFL benefit contributions are capped at 0.126 percent of the employees’ weekly wage, to a maximum of $1.65 per week in 2018.
7. Benefit Payouts
DBL pays 50 percent of an employee’s average weekly wage up to $170/week. PFL has a more generous benefit, phased in to start at 50 percent of an employee’s average weekly wage in 2018, and topping out at 67 percent of the employee’s average weekly wage by 2021.
The major difference is the cap. While DBL caps out at a less-than-living wage of $170/week, PFL is capped at New York’s Average Weekly Wage, currently $1,305.92.
Enrich DBL Now
In New York, although the maximum employee contribution for DBL is much lower than PFL, so is the benefit payout. In other states that mandate PFL, disability insurance and Paid Family Leave provide comparable benefits.
Employers are wise to consider enriching New York State DBL coverage now. Enriched DBL benefits packages that are more in line with PFL benefits can help reduce fraud, improve employee morale, and increase retention rates. (We’ll talk more about this in a future post, so stay tuned.)
It’s up to you, the broker, to educate your customers on the options today. DBL Center is here to help.
Contact our disability insurance experts about PFL riders and enriched DBL coverage now.
Ready to Write Enriched DBL? Three Ways We Can Help
Protect yourself from the uncertainty caused by PFL benefits and earn more commissions with enriched DBL coverage.
In our last post, we talked about the challenges inherent in PFL riders. It may not be the cash cow brokers had expected when it was first announced. The amount of commission you’ll earn will depend upon the size of your DBL book. Still, any commission is better than no commission when we are talking about a mandatory benefit that virtually sells itself. And it can make it even easier for brokers to increase their commissions on enriched DBL packages in New York.
PFL is an important benefit with strong societal implications. It gives parents a chance to bond with their children and helps those stuck in the “sandwich generation” to care for aging parents without dashing their own hopes and dreams for the future by destroying their finances. From an insurance broker perspective, this unprecedented benefit can spark discussions and open doors enriched DBL sales.
“DBL commissions will always be higher than PFL, and brokers can use this to their advantage,” says DBL Center President Michael Cohen. “Take the opportunity, when you’re adding the PFL rider, to enrich the client’s DBL package at the same time—or at least begin the discussion so when their DBL is up for renewal, it will be on the client’s mind to enrich the policy.”
Selena Kutschera, Director of DBL and TDB Benefits for The DBL Center, points out an important reason to enrich DBL. “In most states that have mandatory PFL benefits, including New Jersey and California, the DBL and PFL benefits packages are comparable. There’s not this huge gap you see in New York.” New York’s DBL benefits pay a maximum of $170/week for 26 weeks. PFL, on the other hand, will be phased in over four years to ultimately pay 67 percent of an employee’s average weekly wage for 12 weeks.
“Brokers who want to do the right thing by their customers, and offer comparable benefits packages, will show their clients how easy it is to enrich DBL,” says Kutschera.
Just how easy IS it to sell enriched DBL? So easy, Kutschera broke it down into three simple steps for DBL Center brokers.
1. Pinpoint your customers that are the best candidates for enriched DBL.
You can only enrich DBL when a customer’s policy is up for renewal, which means not every customer can enrich DBL at the same time they add PFL to their policy. Some carriers renew all their policies in January, which means the time to contact those customers is NOW. Review your files and determine which customers are up for renewal and create a mailing list.
2. Use The DBL Center’s pre-written letter explaining the benefits of enriched DBL.
The DBL Center does all the work in this regard. We provide our brokers with a letter that lists the insured’s carrier, their current rates, and a chart on the back showing the options to enrich DBL.
Dollar for dollar, DBL is one of the most cost-effective benefits to increase coverage. And the maximum benefit of $850 a week means employees can actually live on DBL insurance if they become ill or get injured. Most employers are already taking an employee contribution for DBL coverage. For just over $5 annually, you can increase DBL coverage by $50 per week. That’s 10 times the return on their investment for employees who make a claim, on a pre-tax paycheck deduction they will barely notice. “If your employees are already paying the whole cost of DBL coverage through employee deductions, you’re giving them something more for it. Who can live on $170 in New York?” says Kutschera.
3. Let The DBL Center do the rest of the work and bind your policy for small businesses under 50 lives in New York.
Once your clients call or write back expressing interest, determine their enriched coverage levels. Let your DBL Center representative know, and, from there, we do it all. As your back-office support staff offering white-glove service at every stage of the sale, we work directly with the carriers to enrich your client’s DBL policies through a paperless process.
Did you know it costs five times as much to acquire a new customer than to retain an existing customer? In addition, the most effective digital method of customer retention is email marketing. If you’re looking for generous commissions with little work on your end and no hard sales, let The DBL Center help you enrich DBL packages for your existing customers and increase your commissions today.