Office Holiday Parties Are Back, and Just as Weird as Ever
By Christopher Bonanos
Source: Businessweek.com
The corporate holiday party is a night when everyone’s supposed to pretend there are no organizational charts, no office hierarchies. Interns can kick back with the bosses—and theoretically do more intimate things with them—and the next morning everyone’s just supposed to snap back into normal behavior, hangovers be damned.
During the boom years, startups and other profligate spenders would blow colossal amounts on these events, which were as much about chief executive ego and coolness as employee morale. That’s still happening to some extent: In 2010, the Blackstone Group (BX) rented out the Sackler Wing of the Metropolitan Museum of Art; the party centered around cutting a mammoth cake with the word “accountability” emblazoned on top. In 2011, Bridgewater Associates, a hedge fund famous in part for its parties, rented out a 10,000-seat arena for a holiday bash; while details were kept under wraps, past events have included mud wrestling. Billionaire Paul Tudor Jones, of Tudor Investment, puts on an annual light show (the “Jones-a-Palooza”) synchronized to music at his estate in Greenwich, Conn. Are the parties any less awkward for their extravagance? Not really. Even the greenest 22-year-old attendees sense they’re witnessing something unsustainable—a lot of someone’s venture capital being tossed into a fire pit.
In the cold December after the financial crisis of 2008, many companies decided to go the other way, skipping the party entirely. The employee-retention rationale kind of goes out the window when jobs are scarce and nobody is likely to leave anyway. Above the Law, a popular blog about the legal world, recently opined that big firms would be better off forgoing their joyless parties and parceling out the entertainment budget in the form of $100 gift cards to employees. Ho, ho, ho.
Some years back, I worked for a corporation whose stock price was slowly sinking, and I watched each December as the party budget withered away. First, spouses were knocked off the list; then many unrelated divisions of the company were all invited to one shared event; then, finally, the thing was canceled altogether.
Holiday parties are back, if not quite in full force. Even now that the economy is marginally better, throw a party that’s one iota nicer than your staff might expect, and it’s certain that some Grinch will mutter, “I’d rather have had a raise this year.” Battalia Winston, a firm that does an annual survey of corporate merriment, is reporting the first uptick since the crash: 91 percent of companies plan to give a party this year, the most since 2007 and a big bump from the 74 percent figure (a 25-year low) of 2011. Anthony Patrone, co-owner of a Brooklyn party-planning company called Ultra Events & Staffing, says he’s definitely noticed an improvement: “December’s always busy, but many more businesses are asking about rates this year. People are saying ‘enough is enough.’ ” David Stark, a top event planner who runs David Stark Design & Production in Brooklyn, also points to the microtrend of “corporations giving their money to Sandy relief instead of throwing the blowout bash.” Do-gooderism is a neat inoculation against employee grumpiness: They can’t complain about that.
Many parties this year will hit a middle ground between opulent and, well, nonexistent, but that won’t make them any less strange. Consider those held in the office itself. Getting hammered on the premises feels transgressive, whether it is or not. There’s actual science behind that: One British study led by the school of psychology at the University of Birmingham found that drinking in an unusual setting—the conference room, say, as opposed to your local pub—does in fact get you drunker, because your brain compensates for lowered inhibition better in familiar surroundings.
Then there are the hookups. Stark recalls one big corporate event at which he encountered “sex in a bathroom, with vomiting right before they vacated the room.” There’s also the experience of learning that your co-worker, to whom you have barely spoken two words all year, is getting a divorce/having money problems/hates the boss. A survey by Caron Treatment Centers, a drug- and alcohol-treatment service, reveals that fully one quarter of all partygoers have heard someone overshare. Puke notwithstanding, isn’t this all starting to sound like a bit of a blast?
The best thing that ever happened to a holiday party, in my experience, turned out to be its cancellation. After the old employer mentioned above turned austere, our boss said, “Oh, I’ll host something myself,” and had us all over to her house. One senior staffer mixed up gallons of very strong margaritas; three of us prepped hundreds of hors d’oeuvres. The outsiderness of the thing gave it back to us. It was no longer a line in the budget, and an assistant finished out the evening pantsless and asleep in the bathtub. It was the weirdest, warmest party—work-related or not—I can remember attending.
Health insurance methods to shift in post-PPACA world
By Brian M. Kalish
Source: eba.benefitnews.com
With health reform moving full steam ahead, most employers will continue to offer employee coverage, but will make alterations to how they provide it, said a speaker at the Workplace Benefits Transitions conference Tuesday.
An overwhelming majority of employers plan to stay in the health care business, said Cheryl Larson, vice president of the Midwest Business Group on Health, whose members represent senior HR benefits professionals who annually spend more than $4 billion on health care. Her group’s research shows that only 4% of members plan to drop health coverage. They will stay in the game for three main reasons, she said, as they:
- Don’t want to deal with the penalty for not offering coverage;
- Don’t want to “gross up” employer salaries to allow them to buy coverage on their own; and
- Need to stay competitive.
Speaking in the opening keynote at the conference co-sponsored by Employee Benefit Adviser in Chicago, Larson noted, however, that there will be some key differences come 2014, including an exit strategy of dropping coverage for retirees (53%) and part-time employees (33%), according to a National Business Group on Health survey.
In practice, it will be interesting to see what employers actually do, Larson said. While they say publically they are not walking away from providing health care, privately “in the boardroom they will say, ‘If so and so goes, so will we.’ That’s scary,” she said.
Larson also predicted an increased focus on consumerism and wellness. “Ten years ago, that was not important to employers,” she said. “I’ve been a real passionate person about engaging employees and their families with knowledge and information. We’ve forgotten about teaching people how to deal with navigating the health care system.”
An MBGH survey further found that employers of all sizes plan to offer consumer-directed health plans, such as an HSA/HRA option. Of those surveyed, among small group employers – 200 or fewer employees – 50% plan to offer a form of CDHP, for large groups – more than 5,000 — that increases to 100%. Further, employers of all sizes will be shifting their dental and vision coverage to a voluntary offering by 2017-2018. Specifically, 59% of small and 49% of large employers plan to do so.
New Taxes to Take Effect to Fund Health Care Law
By ROBERT PEAR
Source: nytimes.com
WASHINGTON — For more than a year, politicians have been fighting over whether to raise taxes on high-income people. They rarely mention that affluent Americans will soon be hit with new taxes adopted as part of the 2010 health care law.
The new levies, which take effect in January, include an increase in thepayroll tax on wages and a tax on investment income, including interest, dividends and capital gains. The Obama administration proposed rules to enforce both last week.
Affluent people are much more likely than low-income people to havehealth insurance, and now they will, in effect, help pay for coverage for many lower-income families. Among the most affluent fifth of households, those affected will see tax increases averaging $6,000 next year, economists estimate.
To help finance Medicare, employees and employers each now pay a hospital insurance tax equal to 1.45 percent on all wages. Starting in January, the health care law will require workers to pay an additional tax equal to 0.9 percent of any wages over $200,000 for single taxpayers and $250,000 for married couples filing jointly.
The new taxes on wages and investment income are expected to raise $318 billion over 10 years, or about half of all the new revenue collected under the health care law.
Ruth M. Wimer, a tax lawyer at McDermott Will & Emery, said the taxes came with “a shockingly inequitable marriage penalty.” If a single man and a single woman each earn $200,000, she said, neither would owe any additional Medicare payroll tax. But, she said, if they are married, they would owe $1,350. The extra tax is 0.9 percent of their earnings over the $250,000 threshold.
Since the creation of Social Security in the 1930s, payroll taxes have been levied on the wages of each worker as an individual. The new Medicare payroll is different. It will be imposed on the combined earnings of a married couple.
Employers are required to withhold Social Security and Medicare payroll taxes from wages paid to employees. But employers do not necessarily know how much a worker’s spouse earns and may not withhold enough to cover a couple’s Medicare tax liability. Indeed, the new rules say employers may disregard a spouse’s earnings in calculating how much to withhold.
Workers may thus owe more than the amounts withheld by their employers and may have to make up the difference when they file tax returns in April 2014. If they expect to owe additional tax, the government says, they should make estimated tax payments, starting in April 2013, or ask their employers to increase the amount withheld from each paycheck.
In the Affordable Care Act, the new tax on investment income is called an “unearned income Medicare contribution.” However, the law does not provide for the money to be deposited in a specific trust fund. It is added to the government’s general tax revenues and can be used for education, law enforcement, farm subsidies or other purposes.
Donald B. Marron Jr., the director of the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, said the burden of this tax would be borne by the most affluent taxpayers, with about 85 percent of the revenue coming from 1 percent of taxpayers. By contrast, the biggest potential beneficiaries of the law include people with modest incomes who will receive Medicaid coverage or federal subsidies to buy private insurance.
Wealthy people and their tax advisers are already looking for ways to minimize the impact of the investment tax — for example, by selling stocks and bonds this year to avoid the higher tax rates in 2013.
The new 3.8 percent tax applies to the net investment income of certain high-income taxpayers, those with modified adjusted gross incomes above $200,000 for single taxpayers and $250,000 for couples filing jointly.
David J. Kautter, the director of the Kogod Tax Center at American University, offered this example. In 2013, John earns $160,000, and his wife, Jane, earns $200,000. They have some investments, earn $5,000 in dividends and sell some long-held stock for a gain of $40,000, so their investment income is $45,000. They owe 3.8 percent of that amount, or $1,710, in the new investment tax. And they owe $990 in additional payroll tax.
The new tax on unearned income would come on top of other tax increases that might occur automatically next year if President Obama and Congress cannot reach an agreement in talks on the federal deficit and debt. If Congress does nothing, the tax rate on long-term capital gains, now 15 percent, will rise to 20 percent in January. Dividends will be treated as ordinary income and taxed at a maximum rate of 39.6 percent, up from the current 15 percent rate for most dividends.
Under another provision of the health care law, consumers may find it more difficult to obtain a tax break for medical expenses.
Taxpayers now can take an itemized deduction for unreimbursed medical expenses, to the extent that they exceed 7.5 percent of adjusted gross income. The health care law will increase the threshold for most taxpayers to 10 percent next year. The increase is delayed to 2017 for people 65 and older.
In addition, workers face a new $2,500 limit on the amount they can contribute to flexible spending accounts used to pay medical expenses. Such accounts can benefit workers by allowing them to pay out-of-pocket expenses with pretax money.
Taken together, this provision and the change in the medical expense deduction are expected to raise more than $40 billion of revenue over 10 years.
Payroll Tax Issues Remain in Limbo with Many Due to Sunset
By Josie Martinez, Senior Partner and Legal Counsel
With 2013 just weeks away, payroll professionals are getting extremely anxious about various favorable payroll tax provisions affecting individuals and businesses that have yet to be determined relating to 2013 withholdings. The provisions mentioned below may expire as of Jan. 1, 2013, unless Congress acts to extend them. Of great concern to many employers/payroll professionals (not to mention the employees that are affected by such provisions) are the following four issues:
1. Transportation/Commuting Benefit. Unless Congress decides differently in the very near future, the mass transit portion of the commuter benefit ($125 a month in 2012) will remain unconnected to the tax-free exclusion for qualified parking expenses of the commuter benefit ($240 a month in 2012). For 2011, Congress had included a provision that kept the mass transit portion of the commuter benefit equal to the parking tax benefit. Unfortunately, because Congress did not again extend the transit benefit before it expired at the end of 2011, the monthly maximum transit amount was reduced to $125 per month on Jan. 1, 2012. The issue of reinstating parity between the parking and transit benefits through the end of 2013 remains unresolved.
2. Social Security. The 2 percent payroll tax cut in effect in 2011 and 2012 temporarily reduced the Social Security withholding tax rate on wages earned by employees from 6.2 percent to 4.2 percent on the first $110,000 of wages. While this decrease is set to expire as of Jan. 1, 2013, an additional 0.9 percent Medicare payroll tax increase will also apply on employee wages in excess of $200,000 (an increase from 1.45 percent to 2.35 percent).
3. Educational Assistance. Through Dec. 31, 2012, employers were permitted to reimburse employees up to $5,250 on a tax-free basis for educational assistance (pursuant to Section 127 of the Internal Revenue Code). This benefit included reimbursement for higher education courses at the associate, undergraduate and graduate levels and for programs that allowed the employee to qualify for a new position. Should the provision -- which Congress has extended repeatedly since its inception in 1978 -- expire, educational reimbursements will be much more limited.
4. Adoption assistance. This year, employees were able to exclude from gross income up to $12,650 (paid or reimbursed by an employer) for qualifying adoption or attempted adoption expenses under the adoption assistance program. Qualified adoption expenses are those expenses that are reasonable and necessary adoption fees, including court costs, attorney fees, traveling expenses and other expenses directly related to the legal adoption of an eligible child. The income tax exclusion for amounts paid by an employer is also scheduled to expire on Dec. 31, 2012.
Given this tax uncertainty, employers must prepare for changing payroll taxes and have contingency plans in place. Keeping in mind that transparency is essential, employers should inform employees -- particularly those directly affected by these benefits -- of the uncertainty behind these provisions and the potential ramifications should these tax provisions not be extended beyond Jan. 1, 2013. As an employer, consider what changes are necessary should the tax status of these benefits change, in particular from a payroll perspective. An employee may still get the same benefit, however, the value may now be taxable. Even if tax extensions for education assistance, adoption assistance and the 2 percent payroll tax increase are adopted in a new tax bill, employers should note that it is highly unlikely that either the new limits on health care flexible spending accounts or the new 0.9 percent payroll tax increase for high-income employees will be altered or eliminated. The paramount question remains: Will Congress act in time?
10 ways to limit holiday party liquor liability
The holiday season is upon us, and if you’re planning a company party or awards banquet, you might want to give some thought to your policy on alcohol.
Serving employees alcohol at company-sponsored parties and events can have serious and sometimes tragic consequences for your workers and your organization.
For example, if an employee drinks too much and gets into an accident on the way home, you could be held liable. Plus, sexual harassment complaints tend to increase when alcohol consumption goes up.
Here are some suggestions to help prevent alcohol-related problems—including sexual harassment and auto accidents—and limit your exposure to liability if you do decide to serve liquor:
- Don’t serve liquor. The simple solution to the problem is not to serve alcohol at all—though this may not be realistic.
- Limit consumption. You may be able to limit the amount people drink by having a cash bar or by providing tickets good for only two or three drinks. Also, stay away from sweet punches containing alcohol. These can make it difficult for people to tell how much alcohol they have consumed—until it’s too late.
- Close the bar early. One to two hours before the end of the event, stop serving alcohol. If possible, continue serving food even after the bar is closed.
- Have the party off-site. If the party takes place at a hotel or restaurant with a liquor license—and the facility’s employees serve the drinks—you’re less likely to be held responsible.
- Establish an alcohol policy. Institute a company policy to let your employees know that excessive drinking at company functions will not be tolerated. Also remind workers about the dangers of drinking and driving.
- Offer transportation. Make taxi vouchers available to provide the option of cab rides at company expense.
- Avoid company business. To help make the event a social affair, keep any discussion of business to a minimum and hold the party outside of regular business hours.
- Make company functions voluntary. It’s a good idea to make attendance at company parties where liquor is consumed entirely voluntary.
- Invite families. Inviting spouses and dates tends to make the event more of a social occasion rather than a business function.
- Don’t invite customers, clients, or business associates. Inviting the people your company does business with increases the likelihood that the event is an official company function.
- Watch for minors. The law can come down hard on you if you allow minors to drink alcohol. If a significant number of your employees are minors, or if you expect families to attend (e.g., the event is a company picnic), consider serving no alcohol at all.
Although it’s impossible to exercise absolute control over your employees, the key to avoiding liability, as well as keeping workers safe and out of legal trouble, is to do everything you can to prevent them from drinking too much and getting behind the wheel.
6 Simple Rituals To Reach Your Potential Every Day
By: Amber Rae
Source: fastcompany.com
Becoming and staying productive isn't about hard-to-follow programs or logging your every move in an app. It's about self-care. Here are daily to-dos to get you started.
It’s Tuesday morning at 8 a.m. Two San Francisco entrepreneurs are pitching their ventures to potential investors today. They’d both agree that this is one of the most important days of their lives. This is the story of Jane and Joe...
Jane was up until 4 a.m. putting the final touches on her deck. In fact, she spent the entire weekend fixed in her apartment, preparing the presentation. This morning, she woke up late and rushed putting together her most “investor-worthy” attire. She slammed a shot of espresso, grabbed her computer, and ran out the door feeling hungry and tired. She arrived right on time but felt anxious and flustered about the events of the morning.
Joe, on the other hand, went to sleep last night at 11 p.m., as he does most nights of the week. His presentation was ready Friday afternoon, after seven revisions thanks to feedback from advisors. He spent the weekend in nature connecting with friends. This morning, he woke up at 7 a.m., had a glass of water, ran two miles, meditated for 15 minutes, and drank a smoothie. He put on the outfit he picked out the evening before, grabbed his bag, and walked out the door. He arrived 10 minutes early, feeling confident, calm, and eager to share his vision with potential investors.
Which entrepreneur would you bet on?
And, which entrepreneur most closely resembles you?
Jane and Joe are fictional characters but having been immersed in the world of startups in both New York and San Francisco, I see a lot of Janes. They work 16-hour days, seven days per week, and wonder why they aren’t getting the results they’re looking for. The truth is, results don’t come through hours spent. Great results often come by doing less and working smarter.
This past weekend I had the opportunity to speak with my friend Mike Del Ponte, who resembles the character of Joe. Today he launches a Kickstarter campaign for his company Soma, which aims to revolutionize the water industry using sustainable design. (It’s awesome.Check it out.) Surprised by how cool, calm, and collected Mike was so close to launch, I asked him what his secret is.
“Every day I need physical energy, mental clarity, and emotional balance to tackle everything that comes my way,” Mike said. “Self-care is the secret to performing at the highest level.”
Here are the six simple rituals he uses to perform at his highest, which you too can begin implementing right away:
1. Drink a glass of water when you wake up. Your body loses water while you sleep, so you’re naturally dehydrated in the morning. A glass of water when you wake helps start your day fresh. When do you drink your first glass of water each day?
2. Define your top 3. Every morning Mike asks himself, “What are the top three most important tasks that I will complete today?” He prioritizes his day accordingly and doesn’t sleep until the Top 3 are complete. What’s your "Top 3" today?
3. The 50/10 Rule. Solo-task and do more faster by working in 50/10 increments. Use a timer to work for 50 minutes on only one important task with 10 minute breaks in between. Mike spends his 10 minutes getting away from his desk, going outside, calling friends, meditating, or grabbing a glass of water. What’s your most important task for the next 50 minutes?
4. Move and sweat daily. Regular movement keeps us healthy and alert. It boosts energy and mood, and relieves stress. Most mornings you’ll find Mike in a CrossFit or a yoga class. How will you sweat today?
5. Express gratitude. Gratitude fosters happiness, which is why Mike keeps a gratitude journal. Every morning, he writes out at least five things he’s thankful for. In times of stress, he’ll pause and reflect on 10 things he’s grateful for. What are you grateful for today?
6. Reflect daily. Bring closure to your day through 10 minutes of reflection. Mike asks himself, “What went well?” and “What needs improvement?” So... what went well today? How can you do more of it?
Whether you more strongly resemble Jane or Joe, these six rituals will help you up your game, taking your performance to the next level.
We'd love to know the rituals that are most valuable for you! Leave your tips in the comments below.
Benefits at the edge of the fiscal cliff - 4 areas to watch
Source: eba.benefitnews.com
As congressional leaders and President Obama attempt to hammer out a deal to prevent the nation from going over the “fiscal cliff” — a series of tax hikes for individuals and businesses that economists say could imperil the fragile recovery — HR/benefits professionals can prepare now, write benefit attorneys Diane Morgenthaler and Ruth Wimer, partners at law firm McDermott Will & Emery. Just in case we go over the “fiscal cliff,” Morganthaler and Wimer’s report outlines four benefit and payroll areas that should be top of mind for practitioners.
The 2% payroll tax cut from 2011 and 2012, which lowered employees’ Social Security payroll taxes, will expire, effective Jan. 1. Although the increase is on employee contributions, the increase also affects an employer’s withholding obligations, Morgenthaler and Wimer note. At the same time, they write, a new 0.9% Medicare payroll tax increase applies (from 1.45% to 2.35%) under the Patient Protection and Affordable Care Act on wages over $250,000 for married taxpayers filing jointly and $200,000 for single taxpayers. Again, though this increase is not an employer liability, employers must be prepared to withhold the additional 0.9% from wages for any employee with wages over $200,000.
The income tax exclusion for amounts paid by an employer under a qualified adoption assistance program is also set to expire on Dec. 31, Morganthaler and Wimer write. A qualified adoption assistance program allows an employer to reimburse an employee on a tax-free basis for as much as $12,650 in 2012 for expenses related to the adoption or attempted adoption of a child. Qualified adoption expenses include reasonable and necessary adoption fees, including court costs, attorney fees, traveling expenses and other direct adoption-related expenses.
Under PPACA, employee contributions to health care flexible spending accounts will be reduced to $2,500 per year for plan years beginning in 2013, the attorneys note. This new limit must be documented in a flexible benefits plan by Dec. 31, 2014, regardless of the fiscal year of the flexible benefits plan, and this change must be retroactive to the beginning of the 2013 plan year.
Certain reimbursements for employer-provided educational assistance will expire at the end of 2012. Section 127 of the Internal Revenue Code allows an employer to reimburse an employee on a tax-free basis up to $5,250 for certain educational expenses provided through a non-discriminatory educational assistance program. Even if employer-provided educational assistance programs no longer have tax subsidies in 2013, employers can still provide some type of educational reimbursements in a more limited manner if the educational reimbursements qualify as a business expense and meet certain requirements, such as enhancing the employee's performance but not qualifying the employee for a new position or career.
With the uncertainty of the approaching fiscal cliff, Morganthaler and Wimer write that employers should consider advising employees of the ambiguity surrounding educational assistance and adoption assistance benefits for 2013 and the possibility of a 2% payroll tax increase. Even if tax extensions for education assistance, adoption assistance and the 2% payroll tax increase are adopted in a new tax bill, the attorneys say employers should note that it is unlikely that the new limits on health care flexible spending accounts and/or the new 0.9% payroll tax increase for high-income employees will be altered or eliminated.
What Role Did Climate Change Play in Superstorm Sandy?
BY Anya Khalamayzer
Source: PROPERTYCASUALTY360.COM
Superstorm Sandy, a “perfect storm” that was caused by an unusual combination of seasonal weather phenomena converging above the Northeast, has stirred some conversation in the media about whether the storm was caused, or made worse, by climate change.
Scientists have long warned about the risk of a deadly hurricane over the Tri-State area, which would suggest Sandy could be an expected weather event. But recent studies, including a report co-authored by MIT climate scientist Kerry Emanuel in February 2012, note that climate change could combine with the effects of storm surge to cause 100-year-flooding to occur every two decades in New York, suggesting that an event like Sandy may be more than just a long-expected storm.
Insurance, climate and modeling experts weigh in on the role climate change may have played in Superstorm Sandy.
Robert Detlefsen, Ph.D., vice president of public policy, National Association of Mutual Insurance Companies: “The problem that arises when we start talking about whether climate change ought to be considered a separate determining factor in the likelihood of extreme weather events is that nobody knows how particular geographic regions will be affected in the near-term. I would question the assertion of people who have definitively stated that Sandy was caused by climate change as there are many factors responsible for causing any weather event.
"However, one hopes that that we have learned our lesson and will take further steps to determine the laws regulators must adjust in order to allow coverage to continue being written in at-risk areas. The North Atlantic seaboard will be hit by major windstorms in the future, but our society has a short memory, so as other issues come to dominate the news insurers hope policymakers don’t lose sight of the need to address what came to the fore when Sandy came to town.”
Tom Larsen, senior vice president and product architect, Eqecat: “Were the effects of Sandy exacerbated by climate change? Yes, absolutely. Was Sandy caused by climate change? That remains unclear. It certainly wasn’t predicted by our models. There is speculation that steering pressure coming from the north was linked to melting Arctic sea ice, however there is insufficient data- compelling but not convincing- to give us great certainty about it.
“Sea level rise due to climate change does influence how far a storm surge travels. Sandy set a new record at the Battery Park indicator for the first time in 50 years with a 14 foot surge, or four feet higher than the last one set by Hurricane Donna. Melting sea ice has caused a sea change of six to eight inches, which is just a fraction of that total shift. Also, while we did have abnormally warm Atlantic waters at this time of year, it was just one necessary ingredient for a storm like this.”
Dr. Bob Corell, senior policy fellow, American Meteorological Society: “You can’t simply state that climate change caused Sandy, but it made her more intense. It’s very important to make the connection between weather extremes and the warming of the planet, because warmer water contains energy that drives hurricanes.
“Cyclonic storms pick up that energy as they come across the Atlantic from the African coast on their way to the Caribbean, where measurements taken over the past several decades show that water surface temperature has warmed by as much as two degrees.
“That may not sound like much, but it is a huge amount of energy when it is spread over an ocean and sucked into the atmosphere. Put another way, we will have far more Category Three to Five storms than we used to. Sandy was only a Category One storm, but it combined with two other systems that were amplified by the warm atmosphere to become the hybrid that it was.”
Cynthia McHale, insurance program director, CERES:“Many models have been created to understand New York City’s vulnerability to sea level rise, and it has been predictable and predicted that at some point lower Manhattan would be flooded.
“No one knew when it would be hit or how badly. There were many factors in play, including sea level rise and the increased risk of intense Caribbean hurricanes due to higher ocean temperatures. Some scientists also tied in cold air coming up from the Arctic early in the season.
“Underwriters and reinsurers think of the worst-case risk scenario and how it will affect the corporate capital for which they’re on the line. In this case, there was enough concern to say that there is likely to be severe, weather-related flooding down the coast, even without concrete evidence for climate change. And the fact that the term is so politicized steers the industry away from it without first understanding what the risks are.”
Dr. Tim Doggett, principal scientist, AIR Worldwide: “A number of factors influence how active a season is, including sea surface temperatures and wind shear, and whether these are affected by man-made climate change remains uncertain. 2012 was an indeed active in terms of number of tropical storms that formed in the Atlantic basin, but only an average season in terms of the number of storms that actually made landfall in the U.S.
“While there are theories that climate change may increase losses from natural catastrophes in certain regions of the world, as of yet, there is no definitive indication that the frequency of landfalling hurricanes is increasing. AIR scientists have found that variations in Atlantic sea surface temperatures account for less than 1 percent of the variability in U.S. hurricane landfalls. Instead, mid-level steering currents, which are highly variable and unpredictable because they are determined by short-term weather patterns, are responsible for some 80% of the variation in storm tracks.”
Kerry Emmanuel, climate scientist, MIT (from an interview with Slate): “Sandy is an example of what we call a hybrid storm. It works on some of the same principles as the way hurricanes work but it also works on the same principles as winter storms work. Hurricanes and winter storms are powered by completely different energy sources. The hurricane is powered by the evaporation of sea water. Winter storms are powered by horizontal temperature contrasts in the atmosphere. So hybrid storms are able to tap into both energy sources. That’s why they can be so powerful.
“My profession has not compiled a good climatology of hybrid events […] We don’t have very good theoretical or modeling guidance on how hybrid storms might be expected to change with climate. So this is a fancy way of saying my profession doesn’t know how hybrid storms will respond to climate. I feel strongly about that. I think that anyone who says we do know that is not giving you a straight answer. We don’t know. Which is not to say that they are not going to be influenced by climate, it’s really to say honestly we don’t know.”
Chris Hackett, policy expert, director of personal lines, Property Casualty Insurers Association of America (PCI):
“Rather than looking at the specific cause of any one event, events like Sandy and Irene last year drew attention to the need for stronger building codes […] As communities look to rebuild, it’s also an opportunity to revisit responsible land use policies around the coast- what changes could be made for when next Sandy comes through the area? It’s probably not a matter of if but when, even if it doesn’t occur in the next 10, 15 or 20 years.
“It’s difficult to pinpoint whether any particular weather event is related to climate change, because you don’t know if it had. It’s not about climate change; it’s about taking care of people’s needs. I’m not sure that models can predict 15 years ahead. We try to work more from actual historical loss data when setting rates as opposed to projecting into the long-term future of weather events in any geographical area.”
States given more time to work on health exchanges
By David Morgan and Alina Selyukh
WASHINGTON | Fri Nov 9, 2012
(Reuters) - The Obama administration gave states extra time to work toward setting up new health insurance exchanges on Friday, three days after President Barack Obama's re-election ensured the survival of his healthcare reform law.
The move is seen as a concession to dozens of states that delayed compliance with the Patient Protection and Affordable Care Act until after the November 6 election. Republican governors in some states had hoped to see a victory for the party's presidential challenger Mitt Romney, who had vowed to repeal the law.
But with a November 16 deadline to declare their plans looming, many need more time to prepare for the exchanges, which are complex marketplaces designed to allow working families the chance to purchase private insurance at subsidized rates beginning in 2014.
In cases where states decide not to participate at all, the federal government says it will go in and build an exchange on its own. Since Tuesday's election, governors in seven states - including Texas, Kansas, Virginia and Florida - have said they will refuse to proceed with an exchange.
"The administration would like to do whatever it can to bring states in," said Larry Levitt, a healthcare policy expert with the nonpartisan Kaiser Family Foundation, which tracks health issues.
"It's always been expected that if the president got reelected, a lot of states sitting on the sidelines would realize they don't want the federal government building a state health insurance system. That's what we're seeing happening."
U.S. Health and Human Services Secretary Kathleen Sebelius said in a November 9 letter to governors that the administration still expects states to declare whether they intend to operate their own exchanges by next Friday. But they now have until December 14 to file blueprints showing how they would operate the marketplaces. So far, about 13 states are well on their way to setting up their own exchanges.
States can also choose to develop their exchange in partnership with the federal government, and as many as 30 could go that route.
Sebelius said states preferring a partnership now have until February 15, 2013, to declare their intentions and prepare the appropriate paperwork. She said states can still apply to run exchanges in subsequent years but emphasized that the start date for coverage has not changed.
"Consumers in all 50 states and the District of Columbia will have access to insurance through these new marketplaces on January 1, 2014, as scheduled, with no delays," she said in the letter.
The reform law, the most sweeping health legislation since the mid-1960s, would extend health coverage to more than 30 million uninsured Americans. About half would receive coverage through a planned expansion of the Medicaid program for the poor, and the other half through the exchanges.
The list of states that say they will not participate in the healthcare exchanges grew this week when Virginia and Kansas said they would not cooperate with the federal reform.
Texas, South Dakota, South Carolina, Alaska and Florida confirmed to Reuters on Friday that they will not participate in exchanges. Louisiana had also opposed the plan before the election, but officials there did not respond to inquiries about their plans under Obama's second term.
(Writing by David Morgan; Editing by Michele Gershberg, Eric Walsh and Claudia Parsons)
How to Keep Unneeded Lawyers Out of Workers’ Comp
How to Keep Unneeded Lawyers Out of Workers’ Comp (via CFO.com)
Risk Management | November 27, 2012 | CFO.com | US It's no secret that workers’ compensation cases involving attorneys are generally more expensive. In fact, workers’ compensation, started a century ago to remove workers and their employers from the tort system, remains highly litigious. It does…