2b:["$","$L2c",null,{"category":"$2d","relatedArticles":[{"id":"cG9zdDoyMTU2NDI=","databaseId":215642,"postId":215642,"author":{"node":{"id":"dXNlcjoz","databaseId":3,"userId":3,"avatar":{"url":"https://secure.gravatar.com/avatar/47938df052bf0a5283bd6b77ab786737?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"SmartAsset employs a team of writers and editors with years of experience in the editorial, news and personal finance industries. Some staff members also hold the Certified Educator in Personal Finance (CEPF®) designation from the Institute for Financial Literacy.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Michael","fullName":"SmartAsset Team","lastName":"Carvin","name":"SmartAsset Team","postCount":{"pageInfo":{"offsetPagination":{"total":1323,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mcarvin","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybTo5MQ==","children":{"nodes":[{"name":"Disability Insurance","slug":"disability-insurance","__typename":"Category"},{"name":"Health Insurance","slug":"health-insurance","__typename":"Category"},{"name":"Home Insurance","slug":"home-insurance","__typename":"Category"},{"name":"Liability Insurance","slug":"liability-insurance","__typename":"Category"},{"name":"Life Insurance","slug":"life-insurance-policies","__typename":"Category"},{"name":"Long-Term Care Insurance","slug":"long-term-care-insurance","__typename":"Category"},{"name":"Other","slug":"other-insurance","__typename":"Category"},{"name":"Vehicle Insurance","slug":"vehicle-insurance","__typename":"Category"}],"__typename":"CategoryToCategoryConnection"},"databaseId":91,"categoryId":91,"link":"https://smartasset.com/insurance/articles","name":"Insurance","postCount":{"pageInfo":{"offsetPagination":{"total":56,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"insurance","ancestors":null,"parent":null,"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$2e","date":"2023-10-06T12:43:15","excerpt":"

In the dynamic world of business, mistakes are bound to happen. But when these errors result in financial setbacks for clients, it can result in pricey lawsuits for businesses. Errors and omissions (E&O) insurance protects businesses from claims of negligence or inadequate work, serving as a critical safeguard for individuals and businesses in various industries. […]

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","

A financial advisor can help you assess your insurance needs. Speak with a fiduciary advisor today.

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How Errors and Omissions Insurance Works

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When professionals provide services or advice to clients, they are expected to meet certain standards of care and competence. However, mistakes can happen or clients may perceive that they have received inadequate service. In such cases, clients may file lawsuits seeking damages.

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Also known as professional liability insurance, E&O can help spare professionals from significant financial losses, including legal defense costs, as well as settlements or judgments. This type of insurance is not a one-size-fits-all solution since policies are typically tailored to the specific needs and risks of a profession.

","

Take a real estate agent who unintentionally fails to disclose a property defect to a customer. If the buyer identifies the defect post-purchase and decides to sue, E&O insurance would shoulder the legal defense costs and any settlements or judgments, saving the agent from potentially catastrophic financial losses.

","

To benefit from E&O insurance, professionals need to understand their policy terms, including coverage limits and any exclusions that may apply. It’s crucial to report potential claims or incidents to the insurer promptly.

","

Expected Costs of E&O Insurance

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","

The cost of E&O insurance can vary since it’s influenced by factors like business size, location, coverage limits and deductible. The industry in which a business operates can also play a substantial role in determining the premiums. Professions with a higher perceived risk of errors or omissions, such as medical practitioners or financial advisors, typically face higher premiums when compared with lower-risk industries.

","

Higher coverage limits will naturally result in higher premiums. Businesses and professionals should carefully assess their potential liability exposure and select a coverage limit that aligns with their specific needs and budget.

","

Furthermore, the size and revenue of a business can impact the cost of E&O insurance. Larger businesses with more extensive operations often pay higher premiums due to increased exposure. Smaller businesses may find more affordable options tailored to their scale.

","

According to The Hartford, an insurance company that sells home, auto and business policies, E&O insurance for small businesses can range from $500 to $1,000 per employee. As a result, a small business with 15 employees could pay between $7,500 and $15,000 in annual premiums.

","

However, businesses do have options to potentially curtail these premiums without compromising on the coverage, such as implementing risk management procedures or increasing their deductible.

","

What E&O Insurance Covers

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E&O insurance primarily safeguards against allegations of negligence, misrepresentation, good faith and fair dealing violations, as well as inaccurate advice.

","

To understand this in practical terms, consider a scenario where an engineer makes an error in the project blueprint, leading to construction losses. E&O insurance would cover defense costs, settlements and judgments, therefore shielding the engineer’s firm. But it’s vital to remember that E&O coverage may differ across policies and insurers, calling for cautious review and consultations with insurance professionals for a comprehensive understanding.

","

E&O insurance typically operates on a “claims-made” basis. This means that it covers claims made during the policy period, regardless of when the alleged error or omission occurred. However, it’s crucial to maintain continuous coverage because a gap in coverage could leave you exposed.

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What E&O Insurance Does Not Cover

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","

While E&O insurance guards against many incidents, it typically does not cover intentional wrongdoing, illegal activities or claims under the purview of other insurance types such as general liability or workers’ compensation.

","

These exclusions stem from the principle that insurance shouldn’t provide a safe harbor for intentional harm or illegal actions. Businesses need to understand these coverage limitations fully to avoid unwelcome surprises at the time of claims.

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When You Might Need E&O Insurance

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Businesses providing profit-based advice, professional services or consulting might find a greater need for E&O insurance. They face higher risks thanks to potential issues such as a recommended system failure, leading to client losses. Without E&O insurance, the resulting lawsuit could financially break them. Therefore, E&O insurance becomes an essential element of a business’s risk management strategy, particularly for high-risk industries or those dealing with substantial client funds.

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Bottom Line

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E&O insurance plays a pivotal role in insuring businesses against claims of negligence or inadequate work. However, it doesn’t guarantee complete protection from such claims and shouldn’t be seen as a fail-safe solution to mitigate business risks. Despite covering legal defense costs and damages, businesses should remain proactive in maintaining a high standard of professional service.

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Insurance Tips

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If you’re in the market for life insurance, chances are you’re wondering how much coverage you should have. SmartAsset’s life insurance calculator can help you estimate how much coverage you should buy to ensure your loved ones are cared for in the even that something happens to you.

","$43","

Photo credit: ©iStock.com/AzmanL, ©iStock.com/Mohamad Faizal Bin Ramli, ©iStock.com/PeopleImages

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Life insurance can supply financial protection for your loved ones in case of your untimely passing. Many different types of life insurance exist, most of which call for policyholders to pay unvarying premiums in exchange for set coverage amounts. Adjustable life insurance, also known as universal life insurance, offers more flexibility. The policyholder can change […]

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","

Adjustable Life Insurance Basics

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Life insurance is a contract with an insurance company that gives a policyholder a way to provide financial support for family members or other dependents upon the death of the insured. In exchange for premium payments by the policyholder, the insurance company pays a named beneficiary a sum of money called a death benefit when the insured dies.

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The insurance industry has developed many different types of life insurance. The broadest categories consist of term life insurance, which covers the insured’s life for a specific time period and permanent life insurance, which is intended to remain in effect for as long as the insured lives.

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Adjustable life insurance, also called universal life, is a kind of permanent coverage. Adjustable life stands out because it allows policyholders to adjust various components of their policies.

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For instance, whole life insurance, another type of permanent coverage, has fixed premiums and coverage amounts for life. With adjustable life, policyholders can alter premiums, death benefits and cash value. This can provide helpful flexibility to help the policyholder adapt to changes in their insurance needs or financial situation.

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Adjusting Premium Payments

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One key feature of adjustable life insurance is the ability to change your premium payments. You can pay lump sums, skip payments, increase the payment amount or decrease the payment amount.

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Premium flexibility can be a valuable resource if your budget changes. For instance, if you experience a short-term loss of income due to illness, unemployment or another cause, you can opt to pay a smaller premium for a time until your income recovers. This can let you keep a policy in force when otherwise it might lapse due to not paying the premiums.

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Changing the Cash Value Amount

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A portion of each premium a policyholder pays goes toward building cash value that earns interest. Policyholders may be able to borrow against this cash value, depending on the policy terms.

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Unlike other types of life insurance with cash value features, adjustable life policyholders can adjust the cash value allocation up or down. Increasing cash value means you will have more funds you can borrow from later. Lowering it can let an adjustable policyholder decrease the current premium due, at the cost of reducing the funds that will be available in the future.

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Modifying the Death Benefit

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Adjustable life policyholders can also raise or lower their death benefit amounts within limits set by their policy. Raising your death benefit increases costs but better protects your beneficiaries. Lowering it reduces expenses but provides less payout for dependents.

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As your income and family obligations change, you may want to adjust your death benefit. For instance, as children reach adulthood and become able to financially support themselves, you may want to reduce the death benefit. Conversely, if a spouse or child develops health issues that increase their financial dependence on you, raising the death benefit can provide them with greater support in the event of your passing.

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Adjustable Life Insurance Pros and Cons

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Adjustable life insurance offers more flexibility than other types, so you can modify your policy as your needs change. Any changes you choose to make may come with advantages and potential disadvantages, however. Flexible premiums let you adjust the amount you pay as a premium. The risk here is that if you lower your premiums, it may reduce the death benefit or cause the policy to lapse.

","

An adjustable death benefit makes it possible to increase or decrease the death benefit as your needs change. On the downside, increasing the death benefit may require higher premiums. You may also have to get a new medical exam to be approved for a higher death benefit.

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Adjusting the cash value, which is available with some policies, can help keep the policy affordable or allow you to build up larger amounts to invest. Investing in the cash value component can enable this to grow over time. However, you may have limited investment options and poor investment performance could cause the cash value to decline.

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Bottom Line

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Adjustable life insurance differs from other types of life insurance in that it can adapt over time to policyholders’ changing budgets and insurance needs. You may be able to change the premium, death benefit, cash value and other features of the policy. This flexibility can significantly increase the utility of life insurance in your financial plan. However, making the best use of adjustable life coverage requires diligence on your part to avoid lapsed policies or other unintended consequences.

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Tips for Life Insurance

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Working with a financial advisor can ensure your adjustable life insurance policy aligns with your broader financial goals and estate plans. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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Using SmartAsset’s life insurance quotes can help you find a policy that fits your budget and needs.

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Photo credit: ©iStock.com/Liudmila Chernetska, ©iStock.com/simpson33, ©iStock.com/PeopleImages

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Health savings accounts (HSAs) provide a tax-advantaged way to pay for medical expenses. But once you enroll in Medicare, contributions must stop. You can still use existing funds in the account. Though, to avoid tax penalties, you should plan to stop contributions at least six months before enrolling in Medicare due to retroactive coverage. Even […]

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Some staff members also hold the Certified Educator in Personal Finance (CEPF®) designation from the Institute for Financial Literacy.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Michael","fullName":"SmartAsset Team","lastName":"Carvin","name":"SmartAsset Team","postCount":{"pageInfo":{"offsetPagination":{"total":1323,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mcarvin","__typename":"User"},"factCheckedBy":null,"secondEditor":{"id":"dXNlcjoxMTc=","databaseId":117,"userId":117,"avatar":{"url":"https://secure.gravatar.com/avatar/9fffe2eb35204e151b68731435d247c5?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Arturo Conde is a senior editor at SmartAsset. He has a master’s from the Graduate School of Journalism at Columbia University and a bachelor’s from the College of Arts and Science at New York University. 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A financial advisor can help you make the most of your HSA through contribution strategies, tax benefits and retirement planning.

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What to Know About Using an HSA While on Medicare

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Once you enroll in Medicare, your ability to use a HSA changes. Though you can no longer contribute to your HSA once you’re on Medicare, the good news is that you can still use the funds in your account.

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These savings can help cover a range of qualified medical expenses, including Medicare premiums, deductibles and other healthcare costs. While your HSA can still be used to pay for Medicare premiums, including those for Part B, Part D and Medicare Advantage plans, they cannot be used to pay for Medigap (Medicare Supplement Insurance) premiums. Using HSA funds for other qualified medical expenses, like deductibles and copayments, remains tax-free.

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After age 65, you can also use your HSA funds for non-medical expenses without facing a penalty, but the withdrawals will be taxed as ordinary income. This makes it beneficial to use your HSA primarily for medical costs to take advantage of its tax-free benefits.

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Planning your Medicare enrollment and HSA usage carefully can help you maximize the benefits of both. If you plan to enroll in Medicare, it’s important to stop HSA contributions up to six months before enrolling to avoid penalties. This is due to the fact that if you are six months beyond your full retirement age when you sign up, you will receive six months of retirement benefit backpay, effectively backdating your enrollment as well.

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On the other hand, if you’re delaying Medicare enrollment and maintaining a high-deductible health plan, you can keep contributing to your HSA until you enroll in Medicare. Once you do enroll, contributions must stop, but the HSA funds you’ve already saved can still be used for qualified expenses without penalty.

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When You Can Face a Penalty While Enrolled in Medicare

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When you enroll in Medicare, you can no longer contribute to your HSA, and continuing to do so can result in penalties. If you make contributions after your Medicare enrollment date, you could face a tax penalty of 6% on the excess contributions, as well as any interest those contributions accrue before they are removed from your account. To avoid these penalties, it’s important to stop contributions once you’re enrolled in any part of Medicare.

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That said, you will not face a penalty for using the funds already in your HSA after enrolling in Medicare. You can still use these funds to pay for qualified medical expenses. If you use your HSA funds for non-medical expenses after age 65 (some people enroll in medicare before age 65), you won’t face an additional penalty, but the withdrawals will be taxed as ordinary income tax rates. This applies to anyone over the age of 65, whether or not they are enrolled in Medicare.

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Finally, plan your Medicare enrollment and HSA contributions carefully. If you delay enrolling in Medicare and remain eligible for an HSA, you can continue making contributions, but at least six months prior to enrollment, contributions typically must stop to avoid penalties.

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What an HSA Can Pay for When Enrolled in Medicare

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When you are enrolled in Medicare, you can use your HSA to pay for a variety of qualified medical expenses. These include Medicare premiums for Part B, Part D and Medicare Advantage plans. However, you cannot use HSA funds to pay for Medigap premiums.

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You can also use your HSA to cover out-of-pocket medical costs such as copayments, deductibles and coinsurance for Medicare services. This helps reduce the financial burden of healthcare expenses that are not fully covered by Medicare.

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HSA funds also can be used for services that Medicare doesn’t typically cover, like dental care, vision services and hearing aids. These expenses are considered qualified medical costs and can be paid for with tax-free HSA withdrawals.

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Bottom Line

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While you can no longer contribute to an HSA after enrolling in Medicare, you can still use the funds already in your account to cover qualified medical expenses, including Medicare premiums, deductibles and other out-of-pocket healthcare costs. This flexibility allows your HSA to continue serving as a valuable tool in managing healthcare expenses during retirement. However, it’s important to stop making contributions before enrolling in Medicare to avoid potential tax penalties.

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Healthcare Planning Tips

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Medicaid is a program is designed to assist families with limited income and resources. Medicaid covers various medical services, including hospitalization, doctor’s visits and nursing home care. It may also cover home care services, but it depends on the state …

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A financial advisor can also help you determine if you qualify for Medicaid and other benefits.

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Understanding Medicaid and Home Healthcare

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Home healthcare is a type of healthcare service provided at the patient’s home. It is typically provided by trained healthcare professionals such as nurses, home health aides, therapists and social workers. Home healthcare services can include a wide range of services such as skilled nursing care, personal care services, physical therapy, occupational therapy and speech therapy.

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Medicaid is a government-funded healthcare program designed to assist eligible individuals and families with low incomes and resources. The program is funded both by federal and state governments.

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However, the program is generally administered at the state level. Medicaid provides coverage for various medical services, including hospitalization, doctor’s visits, prescription drugs and long-term care services. These services include nursing home care and may include home care in some cases.

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To be eligible for Medicaid home healthcare coverage, an individual must meet certain eligibility requirements, including income and resource limitations. However, eligibility requirements vary by state. Generally, individuals must have a low income and limited resources to qualify for Medicaid. Additionally, the services must be deemed medically necessary by a physician.

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To find out if Medicaid covers home care services in your state and if you are eligible, contact your state’s Medicaid agency or a local Medicaid office. They can provide you with more information about the services available under your specific Medicaid program and the eligibility requirements.

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Medicaid Coverage for Home Care

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For those who prefer to receive care at home rather than at a nursing home, there is the option for home care. As mentioned, Medicaid may cover home care, provided the one receiving care meets the eligibility requirements. One might receive many types of care during home care, including personal care, home healthcare and homemaker services. Personal care involves assistance with basic day-to-day activities such as dressing, bathing and using the toilet.

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With home healthcare, licensed medical professionals provide care to patients. These include nursing care, physical therapy, occupational therapy, and speech therapy. Homemaker services include help with household tasks like meal preparation, cleaning and laundry.

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Medicaid Waivers

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Although certain eligibility criteria apply to receive Medicaid coverage for home care, there is also the possibility one can receive a Medicaid waiver. Also known as home and community-based services (HCBS) waivers, Medicaid waivers can expand access to those who may not normally be eligible for Medicaid coverage. These waivers also enable states to provide a broader range of services and support to individuals who wish to remain in their homes or community settings.

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These programs, too, vary by state. However, some of the common features are:

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Expanded eligibility: While the eligibility requirements for Medicaid can be strict, those who won’t meet the requirements may still be able to receive coverage with a waiver.
Additional services: These programs may cover a wider range of services than Medicaid, including coordination of care, home modifications and assistive technologies.
Patient-specific planning: Medicaid waiver programs are often tailored to meet the patient’s needs and preferences.

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Medicaid waivers provide expanded access to care and cover a broader range of services, which improves patient outcomes and overall well-being.

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Alternatives to Medicaid for Home Care Coverage

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While Medicaid is invaluable for millions, it won’t work for everyone. For those patients, one of the many Medicaid alternatives might be a better choice. For instance, with private pay home services, patients pay out of pocket and don’t receive government assistance. These services can offer greater flexibility than relying on government assistance but can be costly.

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Other options include long-term care insurance and Veterans Affairs (VA) health benefits. Long-term care insurance is an insurance policy that can pay for personal care, home healthcare and homemaker services. These policies typically pay a daily or monthly benefit amount, but they, too, can be expensive and have eligibility requirements.

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VA health benefits help eligible veterans and their families pay for home care services. Options include VA home healthcare, VA aid & attendance (A&A) benefits and the VA Homemaker and Home Health Aide program. Each of these programs covers patients who may be receiving care at home.

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Bottom Line

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Medicaid is a government-funded healthcare program designed to provide healthcare to those with low incomes and resources. It will sometimes cover home healthcare, but there can be strict income limits to receive Medicaid for these services. Eligibility requirements also vary by state. Contact your state’s Medicaid agency or local office to learn more about your options.

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Tips for Retirement

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