August Newsletter 2016

August Newsletter 2016

  • Indemnification Agreements: Risk Management For Your Vendors
  • Affordable Care Act (ACA) Affordability Contribution Percentage Increases for 2017


Indemnification Agreements: Risk Management For Your Vendors
by Jessica Patrice Gomez, esq

Many nonprofits and small businesses run their businesses using third-party vendors for services such as janitorial, technology, building contractors and transportation. While having a third party vendor can help your organization run more cost efficiently consider the following before signing an agreement with a vendor. 

If you hire third party vendors an important risk management tool your organization should consider is to assess responsibilities for liabilities that may arise in the provision of services provided by third parties. More specifically, you should always be wondering who is responsible for payment in the event of a law suit or claim. 

In order to protect your organization, your contracts should require that your third party vendor is legally responsible for any claims or damages arising out of the work they perform. Your vendor can be held responsible by including an indemnification provision in the contract for their services. An indemnity provision is a contractual promise by which one person or entity accepts full legal responsibility for losses related to certain specified events.

Usually the third party vendor’s insurance carrier is responsible the damage or liability caused by the vendor. These types of agreements are an effective tool for transferring the risk associated with a particular activity and establish clear responsibility in the event of a loss.

This is especially important because most Commercial Insurance Policies will not pay for damages caused by your third party vendor. Further, you should always require the third party vendor to provide proof of insurance. Make sure you always contact your organizations attorney before signing an agreement and make sure it makes sense for your organization.

If you have any questions, please contact us. We are here to help.


Affordable Care Act (ACA) Affordability Contribution Percentage Increases for 2017
by Pamela Akop

The Internal Revenue Service (IRS) released new guidance on the percentages used to determine what is considered “affordable” health coverage on April 12, 2016.

Under the Affordable Care Act (ACA), the affordability of an employer’s plan may be assessed for the individual mandate and the premium tax credit and the employer shared responsibility penalty. The affordability test varies for each provision.

For plan year beginning in 2017, the ACA’s affordability contribution percentages will be adjusted to the following percentages:

  • 8.16 % under an exemption from the individual mandate (2016 it is 8.13%).Individuals that lack access to affordable, minimum value coverage are exempt from the individual mandate.
  • 9.69% under the premium tax credit eligibility rules (2016 it is 9.66%). If employees’ required contributions exceed 9.69%, those employees could be eligible for premium tax credit through the California Marketplace, CoveredCA.
  • 9.69 % under the employer shared responsibility rules ( 2016 it is 9.66%). The shared responsibility rules or pay or play rules, require applicable large employers (those that employee 50 full-time employees or full-time equivalents) to offer coverage that does not exceed 9.69 percent of an employee’s household income for the year.

Failing to meet any of these requirements could trigger significant financial pena

lties for your business. Remember that these percentages only apply to self-only coverage and do not include any additional cost for family coverage.

If you offer multiple health coverage options, the affordability test applies to the lowest-cost option that also satisfies the minimum requirement set by the Ace.

These new percentages are effective for taxable years and plans beginning after December 31, 2016.


*This is intended for informational purposes only and should not be construed as legal advice.