Insurance

How to handle a gap in health care coverage

Posted on May 9, 2018

Health care coverage gaps happen. Whether because of job loss or an extended sabbatical between gigs, you may find yourself without health care for a period. Here are some tax consequences you should know about, as well as tips to fix a coverage gap. Coverage gap tax issues You will have to pay a penalty in 2018 if you don’t have health care coverage for three consecutive months or more. Last year the annual penalty was equal to 2.5 percent of your household income, or $695 per adult (and $347.50 per child), whichever was higher. The 2018 amounts will be slightly higher to adjust for inflation. Example: Susan lost her job-based health insurance on Dec. 31, 2016, and applied for a plan through her state’s insurance marketplace program on Feb. 15, 2017, which went into effect on April 1, 2017. Because she was without coverage for three months, she owes a fourth of the penalty on her 2017 tax return (three of 12 months uncovered, or 1/4 of the year). While the penalty is still in place for tax years 2018 and earlier, it is eliminated starting in the 2019 tax year by the Tax Cuts and Jobs Act. Three ways to handle a gap There are three main ways to handle a gap in health care coverage: COBRA. If you’re in a coverage gap because you’ve left a job, you may be able to keep your previous employer’s health care coverage for up to 18 months through the federal COBRA program. One downside to this is that you’ll have to pay the full premium yourself (it’s typically split between you and your employer while you are employed), plus a potential administrative fee. Marketplace. You can enroll in an insurance marketplace health care plan through Healthcare.gov or your state’s portal. Typically you can only sign up for or change a Marketplace plan once a year, but you can qualify for a 60-day special enrollment period after you’ve had a major life event, such as losing a job, moving to a new home or getting married. Applying for an exemption. If you are without health care coverage for an extended period, you may still avoid paying the penalty by qualifying for an exemption. Valid exemptions include unaffordability (you must prove the cheapest health insurance plan costs more than 8.16 percent of your household income), income below the tax filing threshold (which was $10,400 for single filers below age 65 in 2017), ability to demonstrate certain financial hardships, or membership in certain tribal groups or religious associations. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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3 reasons why your child should (or shouldn’t) have life insurance

Posted on Apr 27, 2018

When determining whether or not to carry life insurance on your children, you’ll find that people have a variety of opinions. Here’s a look at some of the most common considerations for and against life insurance policies on children: Financial security. Traditionally, you take out life insurance to provide for the financial security of dependents. The policy should include funds to replace the insured’s income and to pay off debts. Neither of these reasons applies to young children. They don’t generally have any significant income, and they don’t usually have any debts. Some parents might want to carry a modest amount of insurance to cover funeral costs for their children in case the unthinkable happens. Insurability. Some people believe that by taking out a policy at a young age, it helps guarantee insurability as the child grows older. This could be important if the child develops a major illness later in life. The problem is that if the child does develop a serious illness, insurance will still become very expensive or limited. Insurance as an investment. Some advisors suggest that parents should take out a whole life policy on their children. These policies include a savings component to build up cash value in the policy. You could then use that value for education expenses or other needs. But others say that there are cheaper and more efficient ways to save than by using life insurance. For example, putting money into a tax-advantaged 529 education savings plan is often a better way to save for school tuition costs. Although a majority of advisors may argue against life insurance for children, there may be some situations where people find it makes sense. However, you shouldn’t take out a policy just because it is offered to you or because others are doing it. Make sure to do your homework and know exactly why you need the insurance. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Fraud victims get FTC refund checks

Posted on Apr 2, 2018

The Federal Trade Commission is sending refund checks totaling more than $7.2 million to victims who bought “buy-one-get-one-free” products marketed by the Allstar Marketing Group LLC. The company pitched confusing offers that didn’t disclose the full cost of products like Snuggies and the Magic Mesh Door. Customers who bought these deceptively marketed products can expect refund checks averaging $33 each. If you believe you were a victim of deceptive marketing or other fraud, file a consumer complaint on FTC.gov. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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More tax breaks available for 2017 tax returns

Posted on Mar 2, 2018

Several tax breaks were revived for use in 2017 tax filing by last month’s federal budget bill. Among them are four you may be able to take advantage of: the tuition and fees deduction, the mortgage insurance deduction, the mortgage debt forgiveness exclusion and the energy-efficient home improvement credit. Give us a call if these tax breaks should be considered for your 2017 tax return. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Does your business need cyber insurance?

Posted on Jan 31, 2018

It’s a nightmare scenario few small businesses consider: hackers breach your computer system, steal your customer lists and threaten to exploit sensitive data. Data breaches by malicious individuals don’t just pose a financial risk. They threaten your reputation and can trigger litigation if your customers blame you for the exposure of their data. So far, many of the victims of these high-profile attacks are large corporations. A poster child for this is the massive 2017 cyber breach of the credit reporting agency Equifax, which affected more than 143 million Americans. Equifax’s financial loss was estimated at $125 million, equal to more than a quarter of their net income during 2016. Equifax also reportedly faces more than 50 class action lawsuits, which also may be covered by the company’s insurers. Here are some things to consider regarding the management of your cyber risk with potential insurance coverage: • Do you have coverage? Your insurance policy may already cover some of the risks of cyber attacks. A good place to start is to review your policy and understand what is covered, if anything. Also spend time evaluating your potential risk to determine how it correlates to your insurance coverage. • Comprehensive or partial? Depending upon how you assess your risk, you may consider either comprehensive cyber insurance or partial coverage in the form of a rider or endorsement on an existing policy. Talk to your current insurance firm to determine your alternatives. Because cyber insurance is still a new service, your provider’s options may be limited. The cyber insurance market is currently dominated by four major insurers that offer comprehensive insurance, according to Business Insurance magazine: American International Group, Beazley, Chubb and Zurich Insurance Group. Partial coverage may include riders covering errors and omissions, and the cost of business interruption caused by cyber attacks. • Unique elements of a cyber insurance policy. Most comprehensive cyber insurance policies cover breach-response and forensic costs. This covers the cost of finding the cause of a data breach, fixing it and limiting the damage. Comprehensive policies should provide liability coverage in case you are sued by customers as a result of their data being exposed during the attack. • Know the exclusions. Some cyber insurance policies do not cover breaches caused by infrastructure failure, or attacks by state-sanctioned hackers, according to ThinkAdvisor. There have been many high-profile cyber attacks allegedly attributed to hackers affiliated with the Russian and Chinese governments in recent years, so know how your policy covers this situation. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Business disaster recovery plan essentials

Posted on Nov 15, 2017

Irish writer Oscar Wilde advised us to “expect the unexpected.” He would have made a good disaster planner. Small businesses are the most impacted because they do not usually have a formal disaster recovery plan. As a result, 40 to 60 percent of small businesses close permanently after a disaster, according to Liberty Mutual Insurance. Don’t be a part of that statistic. Now is a great time to review your business’ disaster recovery plan, or to make one if you don’t have one. By focusing on some of the most critical elements of a disaster plan, you can avoid being overwhelmed by the challenge. Set your roster The first step in your disaster plan should be to determine what skill sets you will need in a disaster, and who should be part of the team. The size of your team will vary, but could include IT, HR and operations personnel. Determine who your backups are and what outside resources and personnel you can use. Assess your risk You need to understand your risks before you address them. Consider your physical locations and determine the hazards unique to your region – floods, hurricanes, tornados, earthquakes, etc. Focus on the events most likely to occur, but also save some time to consider outside possibilities. Create your plan Determine and rank the most critical functions and processes for your business. Next, determine how these could be affected by the risks you’ve identified. You should end up with two lists: your most important business factors, and those most at risk. Now you are ready to create a recovery plan that focuses on critical business functions and applies them to the various types of possible business interruption. Your plan should: Consider offsite backups and vendors to help assist with implementing a data storage backup plan. Assess where you store the critical information upon which each of your business functions rely. Establish alternative or remote work arrangements for employees, including their physical, logistical and data needs. Create an annual review of your insurance policies. Evaluate the worth of business interruption coverage within your property and casualty insurance. You may wish to offset some of the potential loss of both business income and recovery expenses within these policies. Consider any opportunities for tax relief from losses sustained as a result of a disaster. Have a plan to keep detailed records and build the appropriate supplier team to help determine the best approach for your business. Make sure you plan for a variety of losses. This can be loss of electricity, a fatal crash of your business systems or material damage to inventory and production capacity. Communicate Document your plan so it is clear, accessible and easy to implement. Share it with everyone on your disaster roster so they know who is responsible for what and how they should act. Review and test your plan at least annually with your roster, and distribute any changes to keep everyone informed. With luck, you will never need to use your business disaster recovery plan. Although we can never prevent disasters, we can do our best to reduce the impact they have on business operations. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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