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For Small Firms, A Cybersecurity Plan Need Not Be Complex to Be Effective

Cybersecurity

Image Courtesy of Bay Area Council

Staying current with events going on in your industry is crucial if you want to keep your business on the front line of progress.  You wouldn’t think of walling yourself off from news about your community, our country or the world.  Similarly, you should stay abreast about news events, product development, business development and more within your industry.

 

A couple of years ago there was an article in Contracting Business Magazine by Dominic Guarino about the need to have a cybersecurity plan for your business.  If you run a medium to large size business, you almost certainly do.  But what if you run a small business, a “mom-and-pop shop?”  You may not.  If so, this article represents a good place for you to start in developing a plan for your business.

 

The article cites research by the National Cyber Security Alliance which says that two thirds of small businesses say they are dependent on the Internet for day-to-day operations.  The research indicates that 69% of such businesses handle sensitive information, including customer data, while 49% have financial records and reports.  The research also indicates that 77% of small business respondents to their surveys do not have a formal written Internet security policy for employees.  What would you do if your information was lost or hacked?  How would that affect your company and its operations?  The article suggests that there are seven key areas to address in such a plan.  They are listed below.

 

  1. The type of data you collect, as well as where and how you store it. This includes customer data, company business and financial data, and personal employee data.
  2. Who has access to your data, your company network, Wi-Fi as well as protections you have in place.
  3. Employee password protection and use of company computers and devices. You should also address social media policy.
  4. Cataloging company hardware including computers, smart devices, external hard drives and backup media. You should also have a policy to address the proper disposal of such devices.
  5. Protecting company computers with antivirus and malware protection software, along with physical security of critical computers and servers.
  6. Protection of your data on the Internet, including your website, online databases, information stored in the cloud and credit card processors.
  7. A response plan in the event of theft or loss of data as well as the catastrophic failure of your company’s computer systems or network.

 

This is an excellent article in giving you an actionable starting point for addressing this critical aspect of your business.  If you would like more or more in depth information, you might check out the Cybersecurity Planning Guide published by the FCC.  You can find this article at the link below.

https://transition.fcc.gov/cyber/cyberplanner.pdf

 

 


Thanksgiving

cr-td16This week we will celebrate the beginning of the holiday season with a traditional American holiday, Thanksgiving.  For some, it will be a joyous time of getting together to celebrate family, food and football.  For others however, it will be a time to once again remember how much you don’t have in common with your in-laws.  After the recent contentious election, the opportunity for discord will only be magnified by getting together with relatives.  Perhaps lost in all the hustle and bustle is the reason we celebrate Thanksgiving in the first place.

 

Three hundred and ninety-six years ago a small ship carrying 102 passengers left Plymouth, England in September for the New World, lured by the promise of prosperity and land ownership.  They were also seeking a place where they could freely practice their faith.  Following a difficult 66 day journey, passengers of the Mayflower dropped anchor far north of their intended destination.  One month later, they crossed Massachusetts Bay and established a village at Plymouth.  During that first brutal winter, most of the colonists remained on board the ship, where they suffered from exposure and outbreaks of disease.  Only half of the original passengers and crew lived to see spring.  The following March, the remaining settlers moved to shore, thereby starting a wave of immigration that continues to this day.  Far from being shunned by the natives, the settlers received an astonishing visit from an Indian who greeted them in English.  Several days later, he returned with another Native American named Squanto, who was a member of the Pawtuxet tribe.  Squanto had been kidnapped by an English sea captain and sold into slavery before escaping to London and returning to his homeland.  Squanto taught the pilgrims, weakened by malnutrition and illness, how to cultivate corn, extract sap from maple trees, catch fish in the rivers and avoid poisonous plants.  He also helped the settlers forge an alliance with a local Indian tribe, one which would endure for more than 50 years.  In November 1621 after the pilgrims first harvest proved successful, Gov. William Bradford organized a celebratory feast and invited a group of native American allies to join them in giving thanks.  This is now remembered as America’s “first Thanksgiving.”

 

The trend by retailers to get you thinking about Christmas giftgiving is not a recent one either.  Abraham Lincoln established Thanksgiving is a national holiday in 1863, designating the final Thursday in November for its celebration.  Franklin Roosevelt moved the holiday up a week in 1939 however in an attempt to spur retail sales during the Great Depression.  Opponents referred to his plan as “Franksgiving”, and Roosevelt reluctantly had to move the holiday back to the fourth Thursday in November in 1941.

 

So if you are already dreading the journey over the river and through the woods, remember to think about why we celebrate Thanksgiving in the first place and remember the blessing that is your family, your career and this country.  Now, if you could please pass the turkey!

Happy Thanksgiving from Callahan Roach!


Everything You Wanted to Know about Integrated Energy Efficiency Ratios (IEER)

Old-timers in the HVAC industry remember the days when we rated the efficiency of equipment according to its EER (energy efficiency ratio) rating.  This was calculated by dividing the BTU capacity of a unit by the wattage consumed by it.  This was a steady-state rating however, and did not recognize a units seasonality or real-life consumption.  Therefore, AHRI (Air-Conditioning Heating & Refrigeration Institute) developed the rating we use today known as SEER.  This is calculated by taking the cooling output of a unit during a typical cooling season and dividing it by the total electrical energy input during that same time.  This rating is only applicable to units under 6 tons.

 

Larger capacity units than this were rated according to their IPLV or integrated part load value.  This was a single figure based on part load EER, designed to reflect the operating efficiency of equipment under real-world rather than ideal laboratory conditions.  On January 1, 2010 a new methodology was adopted and defined as integrated energy efficiency ratio.  (IEER) This rating methodology was developed by AHRI as an improvement for unitary equipment, and covers all units, even if single stage.  It takes into account constant fan usage in commercial applications and includes mechanical cooling operation only.  Economizer’s and energy recovery is not factored into this rating.  IEER is defined as the weighted average of a units efficiency at four load points – 100%, 75%, 50%, and 25% of full load capacity.  More specifically, this is determined as follows.

 

IEER = (.02*A) + (.617*B) + (.238*C) + (.125*D)

Where:

A = EER at 100% net capacity

B = EER at 75% net capacity

C = EER at 50% net capacity

D = EER at 25% net capacity

 

Weather modeling for cities representing 15 US climate zones was used in developing this calculation and included the percent of time operating in the four net capacity load bins listed above.  Three end use sectors were chosen, office buildings at 40%, schools at 30% and retail spaces at 30%.  The 15 cities defining US climate zones included Miami, Houston, Phoenix, Memphis, El Paso, San Francisco, Baltimore, Albuquerque, Salem, Oregon, Chicago, Boise, Burlington, Vermont, Helena, Duluth and Fairbanks.

 

This rating provides a comprehensive view of larger capacity systems, and a units IEER rating should never be compared to its EER rating.  For more information, please refer to AHRI Standard 340/360, Performance Rating Of Commercial And Industrial Unitary Air-Conditioning And Heat Pump Equipment.

 


Will We Need 92% Efficient Furnaces in Texas?

Infographic courtesy of American Public Gas AssociationIn March, 2015 the Department of Energy issued a proposed rule mandating that all furnaces will have to have a minimum efficiency rating of 92% beginning in January, 2021.   The Natural Resources Defense Council recommended that efficiencies should be even higher.   The current minimum efficiency rating required by law is 80%.  This ruling would apply to furnaces sold to distributors as of that date, the rule does not comment regarding status of lower efficiency product existing in distributor inventory.  The American Gas Association filed a freedom of information act request with the Department of Energy to find out how they justified this proposed ruling.   In addition, many industry groups and manufacturers petitioned the Department of Energy against this ruling, citing increased costs to consumers that wouldn’t be justified by energy savings, as well as existing building and energy codes and physical limitations in older or multi family structures that would make such installations virtually impossible.  The Department of Energy remained silent on all this until September, 2016 when they released a supplemental notice of proposed rulemaking.  The rule encompassed 488 pages, not including an 1198 page technical support document.  In that notice, the Department of Energy refused to back off its rule mandating minimum 92% efficient furnaces, granting only a small exemption to furnaces of 55,000 BTUH or less.  As we all know, the number of homes that would qualify for this exemption is quite small.  This ruling could even affect the manufactured housing market, as furnaces for this application are typically designed to fit in tight spaces.  In addition, this ruling will likely cause consumers to continue to repair aging equipment, which is even more inefficient than today’s standard, non-condensing furnace.

 

Many industry groups think this rule will ultimately undermine energy efficiency, because they believe many consumers, especially those in the South, will be compelled to change their natural gas furnaces to electric heat pumps.  The due date for final comments to the Department of Energy was January 6, 2017.  Nothing has been heard since.  At this point, the industry is waiting to see if the new administration vacates or mitigates this proposed rule.  If it does not, many major industry associations and manufacturers have publicly stated they will sue the Department of Energy to keep the rule from going into effect.  Stay tuned…

 

 

Infographic courtesy of American Public Gas Association


Will You Be among the 65,000?

If it exists in the HVACR industry, you’ll find it here!

If it exists in the HVACR industry, you’ll find it here!

Will you be among the 65,000 attendees that are expected to attend the upcoming AHR Expo in Chicago?  The world’s largest HVACR marketplace got its start 86 years ago as a heating and ventilation show, but it has grown over the years into the event of the year for the industry.  Attending industry professionals will come from every state in the union and 165 countries worldwide.  They will be joined by more than 2000 exhibitors, who will come together to share new products, technologies and ideas.  What kinds of new technologies?  Take a look at the end of this article for just a sampling.

 

This year’s event will once again be held at McCormick Place in Chicago, from January 22-24.  Most people in the industry are familiar with this Expo, commonly called “The ASHRAE Show,” but if you have never been it is hard to imagine the sheer size of this event.  When we mentioned 2000 exhibitors above, we didn’t mean 2000 people.  We meant 2000 different organizations, each coming to exhibit their company’s product offerings!  That is why this international show, held only once every four years, exhibits at the nation’s largest convention center which has over 2,600,000 ft.² of exhibition space.  Fortunately for the attendee, only about 500,000 ft.² of exhibition space will be needed for the HVACR show!  If you are looking for new product lines to boost your company’s sales, or if you’re looking to change product suppliers, or just want to do some first-hand competitive and new product research, there simply is no other opportunity like this show.  This is the granddaddy of them all.

 

Many people do not realize there is much more to this show than just the exposition.  The AHR Expo is also a major educational symposium as well.  There are over 50 free seminars offered on a wide range of topics, most lasting only 1 to 2 hours.  In addition, The ASHRAE Learning Institute will offer continuing education courses where you can choose from half day to full day professional development seminars that offer professional development hour and continuing education unit credits.

 

Finally, if you have never been to Chicago this provides a great excuse to visit a truly world-class city.  Take a stroll along the Magnificent Mile, one of the great avenues of the world, a 13 block stretch of North Michigan Ave. that runs from the Chicago River north to Oak St.  Along the way you will see the famous Chicago Water Tower, one of the few structures to survive the great Chicago fire of 1871.  From world-class museums (i.e. The Museum of Science and Industry, Shedd Aquarium, The Art Institute of Chicago, The Field Museum Of Natural History) to iconic sports stadiums (Wrigley Field) to taking in unprecedented views from atop the tallest building in the Western Hemisphere, (Willis Tower) the “City of Big Shoulders” will quickly become your kind of town.

 

Giordano’s Deep Dish Pizza

Did we mention that you can find nearly every type of food there is in Chicago, ranging from affordable to world-class cuisine?  If you are not familiar with Chicago however, we will pass on a contractor’s tip which you will only find here.  If you are looking for genuine deep dish Chicago pizza, there is only one place to go –Giordanos Pizzeria!  Fortunately, you are not limited to just one location, as there are 18 scattered around the city and even more in the suburbs.  The secret is for you, but just remember, you heard it here first!

 

Sample of Innovations To Be Seen at the AHR Expo

 

  • A digitally controlled mixing valve that provides precise temperature control for domestic hot water applications
  • A self contained HVAC system for hazardous locations, designed to prevent an explosion
  • New bionic impeller technology with a special blade designed to ensure optimized airflow angles and reduced flow separation
  • An oscilloscope for testing motor shaft voltages, allowing contractors to determine if motors are at risk of premature bearing failure

 

For more information, see September 14, 2017 ACHR news article.


Making Your Business Better

Have you ever driven home at the end of a long day or week, feeling the need for a personal recharge?  Have you ever felt that there must be a better way to run your business?  Have you ever wondered if there are others feeling and experiencing the same things as you?  Of course you have, we all have.  Ernesto Bertarelli, an Italian born Swiss entrepreneur once said, “You can’t change who you are, but you can change what you have in your head.  You can refresh what you’re thinking about, you can put some fresh air in your brain.”  If you want to change what you have in your head and refresh what you are thinking about, you should definitely consider attending Service World Expo in September!  What is that, you ask?

 

Service World Expo (SWE) 2017 is a veritable learning event and tradeshow fiesta, and it is being held at the Mandalay Bay, in Las Vegas on September 7-8.  SWE 2017 provides learning events for residential contractors on business, management, hiring, and product development.  The tradeshow side of the event showcases cutting-edge products and services in plumbing, HVAC and the electrical home service industries.  What makes the show so special?  Well consider what you will have access to.  (Only a partial list)

 

 Don’t Forget about The Industry’s Best Tradeshow With the Newest Products and Latest Trends


Don’t Forget about The Industry’s Best Tradeshow With the Newest Products and Latest Trends

 

Keynotes

Ryan Estis is one of America’s leading business performance experts, and he will talk about the importance of promoting your brand as well as understanding the impact of social connections and technology on your brand.

 

Traci Brown is a body language and persuasion expert, speaker, author and three-time US collegiate cycling champion.  In this fast-paced keynote, you will learn how to use her system to separate lies from the truth in today’s headlines as well as your own life.  She will tell you how to instantly tell if someone is lying, decipher the important lies and quickly uncover the truth.

 

J.R. Martinez, American Actor, author, motivational speaker, and retired U.S. Army soldier.  Martinez received burns to over 34% of his body when his Humvee hit a roadside bomb in Iraq.  He will talk about how true potential can only be realized by believing, trusting and not quitting.

General Business Information

– How to avoid theft in your business, by Ruth King.

– Getting reviews your business deserves, by Daniel Lemin.

– Where to spend most of your time, by Adam Thompson.

– Recruiting and leading millennials, by Kenny Chapman.

– Getting a 10 X return on your time, by Allan Ferguson.

– Industry forecast panel, with Vicki Laplant, Jen Anesi, Mike Murphy & Steve Miles.

 

Service Department Information

– The five blockers of service management success, by Tab Hunter.

– Understanding the minds of technicians, by Nathan Broughton.

 

Sales and Marketing

– Making more sales in a fair, honest, and dignified manner, by Charlie Greer.

– Selling in the replacement market, by Bill Ligon.

– Web marketing, what works and what doesn’t, by David Squires.

– Making another million dollars by adding more trade lines, by MikeAgugliaro.

– The five step system to generating more qualified leads, by Matt Jones and Will Wang.

 

This does not include of course opportunities to rub shoulders with industry leaders and top performers.  The value of networking and making new connections for your business often exceeds the cost of attendance just by itself!  This is a Las Vegas bet you will be sure to win, so don’t miss this opportunity to participate in the service industry’s most impactful event of 2017!  Follow the link below for more details.

 

Service World Expo (SWE) 2017


Golfing for a Cause

Golf Tournament for Joseph Groh Foundation

If you have ever scrolled down through the Callahan Roach website, (and who hasn’t!)  you’ll notice that they support and have a link to the Joseph Groh Foundation.  You may have found yourself wondering who this organization is and what they are all about.  If that is the case, you have come to the right blog!

 

The Joseph Groh Foundation is a 501©(3) Texas public charity that provides financial assistance to those with a connection to the construction trades industry and who are now living with a life altering disability.  What does “connection” mean?  It means that you have either worked in the trades yourself, or have an immediate family relative (i.e. sibling, child or parent) who has.  What does “life altering disability” refer to?  That could mean many different things, and could be the result of an injury, illness or genetic disorder.  It also means that you are now severely and permanently disabled.  How about “provides financial assistance.”  What does that mean?  That can also mean a number of things.  Unlike some organizations, The Joseph Groh Foundation is not tied to a strict list of items that it will provide.  Their objectives is to work with the individual in order to help provide what they most need.  That is one of the things that makes them unique.  The other is that they are the only 501©(3) organization that we are aware of which exclusively benefits individuals from the HVAC and construction trades.  They do not provide cash however, and benefits are paid directly to the supplier of products and services, not to the recipient.  What kinds of products and services?  Historically, the most requested items have included wheelchair accessible vans, home and bath remodels, assistive technology products and rehabilitative equipment.

 

How do they raise money for these items?  The primary method is through golf tournaments which they host annually in Dallas, Texas, Chicago, Illinois and Minneapolis, Minnesota.  In fact, the Chicago tournament is coming up on August 28, and the Minneapolis tournament on September 11.  That means you can enjoy a fun day on the golf course, all in the name of supporting a great cause!  It is perfect for sponsorship opportunities, where you can bring customers.  In fact, one major distributor in the Chicago area holds an air-conditioning promotion for their customers, and top performers earn a spot in the tournament.  Therefore, if you are a golf enthusiast and would like to help further this organization’s mission, simply go to their website (address listed below) and click on the Chicago or Minneapolis golf tab.  You will find additional instructions and participation forms there.  Hope to see you in Chicago or Minneapolis!

 

http://www.josephgrohfoundation.org/


National Signing Day

Countering a Major Threat to the HVAC Industry

National Signing Day, or National Letter of Intent Day as it is known in some circles, is a noteworthy one.  Not only is it noteworthy for the student athlete, but it is also a big day for their parents, their coaches, and anyone else who has played a significant role in helping the student athlete with this achievement.  For those who may not be familiar with what this is, National Signing Day is the day when high school sports players publicly pledge their allegiance to specific universities.  What does this have to do with the HVAC industry?

 

I refer you to the ACH&R news article in the June 19 edition, written by Nick Kostora.  Nick’s article highlights the brainchild of Clark Coco, Dean of Washburn University Institute of Technology in Topeka, Kansas.  Clark was looking for an “out-of-the-box” way to get kids interested in the skilled trades that had not been tried before.  Now in its fourth year, National Technical Letter of Intent Signing Day is helping thousands of students achieve their moments of glory in more than 40 schools across the country.  National Signing Day events have been held at schools in Arizona, Kansas, North Carolina, Oregon, Tennessee, Wisconsin, Florida, Alabama, Minnesota, and Oklahoma.

 

National Signing Day had a remarkable impact on Washburn.  According to Coco, “When I got here, we were referred to as a tired and outdated facility.  We didn’t wear uniforms, we weren’t associated with NC3, (National Coalition of Certification Centers) there were weeds in the sidewalks etc.  Luckily, people really bought into what we were doing.  The school has seen 45% growth in enrollment over the past five years.”

 

Numerous articles have been, and continue to be written about the need for new talent coming into the industry.  This seems to represent an idea that you can latch onto in your local community.  Local ACCA chapters could set this up with local high schools and trade schools for example.  It is often said the HVAC industry is not very glamorous, but this is certainly an idea that can help it seem more so in the eyes of a young person.  It can help elevate the idea of going into the trades as a realistic alternative to college.  The shortage of skilled workers could very well become the biggest impediment to growth for companies in the HVAC industry in the very near future.  A recent article in BISNOW stated that 74% of construction companies in Texas say they are having a hard time hiring carpenters, electricians or plumbers.  Not only that, the HVAC industry is aging far more than other industries, meaning the average age of HVAC trade workers is older than the national average for other industries.  Ideas like this could very well represent part of the solution to this growing threat.

 

Countering a Major Threat to the HVAC Industry

Photo courtesy of The Topeka Capital Journal


The Case for Disability Insurance: Part 2

A major disability is something that happens to someone else… until it doesn’t!  The sad fact is most Americans are better prepared to die than they are to deal with disabilities.  In the last blog, we made the case for having disability insurance.  In this blog, we will make the case for affording disability insurance.

 

 

The Bureau of Labor Statistics estimates that as of April, 2016 there are about 122.74 million people working on a full-time basis.  According to the chart below, only about 37% of private sector employees are covered by long-term disability insurance.  This would suggest that only about 45 million full-time workers are covered by long-term disability.

 

 

According to Kaiser Health News, only 47% of employers offer long-term disability coverage to their employees, and companies with at least 100 employees are almost certain to offer some sort of disability benefit.  Furthermore, they report that the majority of people with disability coverage get it through their jobs.  The chart below offers a glimpse of disability insurance coverage by occupation group.

 

Access to disability benefit combinations, by occupation group, private industry workers, March 2014
Occupation group Percent with access to both short- and long-term disability insurance Percent with access to only short-term disability insurance Percent with access to only long-term disability insurance Percent with no access to insurance
All workers 25 15 9 51
Management, professional, and related 42 12 17 29
Service 6 14 4 76
Sales and office 25 13 9 53
Natural resources, construction, and maintenance 21 18 6 55
Production, transportation, and material moving 25 22 7 47
Note: Costs calculated from Employer Cost for Employee Compensation (ECEC) published estimates.

Source: National Compensation Survey, U.S. Bureau of Labor Statistics.


The cost of providing both short- and long-term disability insurance access to all private sector workers would be approximately 1.0 percent of total compensation. This would cost an employer $624 each year for a full-time (2,080 hour) worker, as illustrated below.


Estimated cost of access to short- and long-term disability insurance, by occupation group, private industry workers, March 2014
Occupation group Short-term disability insurance Long-term disability insurance
Percent with Access Benefit cost per hour worked Employer access cost per hour worked Percent with Access Benefit cost per hour worked Employer access cost per hour worked
All workers 40 $0.06 $0.15 34 $0.05 $0.15
Management, professional, and related 54 $0.10 $0.19 59 $0.09 $0.15
Service 20 10
Sales and office 38 $0.04 $0.11 34 $0.03 $0.09
Natural resources, construction, and maintenance 40 $0.09 $0.23 27 $0.03 $0.11
Production, transportation, and material moving 47 $0.06 $0.13 31 $0.06 $0.19
As seen in table 6, the cost of access for short-term disability and long-term disability across all private industry workers is $0.30 per hour worked ($0.15 each). The estimate ranges from $0.11 for sales and office workers to $0.23 for natural resources, construction, and maintenance workers. There are no reliable estimates for service workers, which is not surprising given that few service workers have access to employer-provided disability insurance. As a whole, however, the cost of providing both short- and long-term disability insurance access to all private sector workers would be approximately 1.0 percent of total compensation cost ($0.30/$29.99). This would cost an employer $624 each year for a full-time (2,080 hour) worker.

Note: Costs calculated from Employer Cost for Employee Compensation (ECEC) published estimates. Dash indicates data not available or applicable.

Source: National Compensation Survey, U.S. Bureau of Labor Statistics.


Of employers that offer disability coverage 37% paid the entire premium in 2010, down from 49% in 2002.  As of 2011, voluntary programs (meaning the employee pays the full cost) make up 50% of all long-term disability offerings, up from 41% in 2002.  According to the Council for disability awareness, however, when employers add disability insurance as a voluntary benefit, participation is only around 40%.

 

Sources

Forbes

Counsel for Disability Awareness

US Bureau of Labor Statistics

Kaiser Health News


The Case for Disability Insurance

A major disability is something that happens to someone else… until it doesn’t!  The sad fact is most Americans are better prepared to die than they are to deal with disabilities.  If you are in your twenties, the chances are you rarely think about this.  But you should.  Just over one in 4 of today’s 20-year-olds will become disabled before they retire.In fact, over 37 million Americans or about 12% of the total population are classified as disabledMore than 50% of those disabled Americans are between the ages of 18-64.  At the end of 2012, 8.8 million wage earners representing more than 5% of the entire workforce were receiving Social Security disability insurance, (SSDI) 2.5 million of these were in their twenties, thirties or forties.  But I’m careful, I eat healthy and work out you say.  As it turns out, accidents are NOT usually the culprit.  Statistically, about 90% of disabilities are caused by illness.  Cancer, heart disease and other illnesses cause the majority of long-term absences.  Consider the following statistic for a 35-year-old male.

These costs are immediate, expensive and often not covered by insurance!

These costs are immediate, expensive and often not covered by insurance!

A non-smoking male, 5’10”, 170 pounds, who works an office job with some outdoor physical responsibilities and who leads a healthy lifestyle has the following risks:

  • A 21% chance of becoming disabled for 3 months or longer during his working career
    • Of these, 38% run the chance that the disability will last 5 years or longer
    • the average disability length for this person is 82 months

 

Similarly, a 35-year-old female weighing 125 pounds has a 24% chance of becoming disabled for 3 months or more during her working career.  As you can see, the chances are simply too great to ignore for the average working person.  Furthermore, most people think that Workers Comp or Social Security Disability insurance will cover their needs if they become disabled.  According to the Council for Disability Awareness, less than 5% of disabling accidents and illnesses are work-related.  The other 95% are not, meaning Workers Compensation does not cover them.  In addition, according to the Social Security Administration, 65% of initial SSDI claim applications were denied in 2012.  The average SSDI monthly benefit payment for males was $1256 and for females was $993, with 93% of all recipients receiving less than $2000 per month.

 

Given these numbers, how well prepared are American workers for disability?  Not very.  Forty-eight percent of US families do not save any of their annual income, and one third of working families have no retirement savings.  Consider the following chilling statistics.

  • 68% of adult Americans have no savings earmarked for emergencies
  • 65% of working Americans say they could not cover normal living expenses even for one year if their employment income was lost.
  • 38% could not pay their bills for more than 3 months.

So what does the average family do when confronted with a disability?  They begin running up expenses on their credit cards, get a 2nd mortgage, cash in their 401(k) or take out a home equity line of credit and ask family and friends for assistance through sites like go fund me.  As you might guess from the above numbers however, these solutions are inadequate.  According to a Harvard study, 62% of all personal bankruptcies and over 50% of mortgage foreclosures are a consequence of disability, and many end up on Medicaid for insurance.  Keep in mind that while Medicaid rules vary from state to state, the general requirements for income are less than $931 per month and countable assets of $2000 per person, not including your primary residence (with limitations based on your home equity), personal property and household belongings and up to one motor vehicle.  ($3000 per couple living in the same household)

 

What is the answer then?  Disability insurance!  How common is it?  Consider:

  • 65-70 % of workers in the private sector have no long-term disability insurance
  • That equates to about 75-80 million private-sector workers who are without long-term disability income insurance
  • Worse yet, only 46% of workers have even discussed disability planning

 

Next Blog: Access To And Cost of Disability Insurance

 

Sources

American Journal of Medicine

US Social Security Administration

Counsel for Disability Awareness

US Federal Reserve Board

American Payroll Association

Get Sick, Get out: The Medical Causes of Home Mortgage Foreclosures