IRS FAQ: 2015 Employer Penalty Payment Update for Large Employers

Recently, the IRS issued additional FAQs regarding the Employer Shared Responsibility Payment (an assessment under the employer mandate). This is the first real guidance on the process of notification and assessment of any employer mandate penalties. It indicates that the IRS appears ready to move forward with this notification and assessment given the failure of further movement on the repeal or revision of the Affordable Care Act (ACA).

Background

Beginning in 2015, Applicable Large Employers (ALEs) may be subject to an assessable payment (referred to as a “penalty”) if any Full-Time Employee or equivalent (FTE) receives a premium tax-credit (a “subsidy”) to purchase health insurance through the Marketplace. While ALEs are generally defined as employers with 50+ FTEs, the IRS generally excluded ALEs with 50-99 FTEs from penalty assessments for 2015 only, subject to specific rules.

The 2015 Penalties

There are two possible penalties – “A” and “B” – depending on the circumstances of the ALE.

  • “A” Penalty – “No Coverage” Penalty — This penalty applies when an ALE does not offer at least 70% of FTEs and their dependent children minimum essential coverage and at least one FTE receives a subsidy in the Marketplace to purchase qualified health plan coverage.
    • The penalty is $173.33/month (or $2,080/year) multiplied by the total number of FTEs
  • “B” Penalty – “Offer Coverage Penalty” — This penalty applies when an ALE offers at least 70% of FTEs and their dependent children minimum essential coverage but the coverage is not affordable, does not provide minimum value or excludes 30% or fewer FTEs and one (or more) of those FTEs receive a subsidy in the Marketplace. The penalty is the lesser of:
    • $260/month (or $3,120/year) multiplied by the total number of FTEs who receive a subsidy; or
    • The “A” penalty.

The above rules are somewhat different for years after 2015 and have not yet been addressed by the IRS.

Making a Shared Responsibility Payment

Briefly, the FAQs:

  • Describe a new Letter 226J that will be issued to ALEs if the IRS determines at least one FTE was enrolled in a qualified health plan for which a premium tax credit was allowed and the ALE did not offer the FTE affordable, minimum value coverage.
  • Provide an opportunity and process for an ALE to follow and respond to Letter 226J before any penalty is assessed and notice and demand for payment is made.
  • Establish a specific notification timeframe (generally 30 days from the letter date) that an ALE will have to respond to the IRS. Failure to respond timely may result in the IRS assessing the penalty and issuing a notice and demand for payment with no further opportunity for the ALE to respond.
  • Describe Notice CP 220J which will be used as formal notice and demand for payment of a penalty.
  • Suggest that, for calendar year 2015, the first Letters 226J will be issued to ALEs in late 2017.

Employer Action

ALEs should consider:

  • For now, keeping an eye out for the new Letter 226J in the mail. Be mindful of the timeline to respond.
  • Ensuring they have records reflecting offers of coverage to identified FTEs for CY 2015. This will include copies of the Forms 1094-C and 1095-C that they filed. These Forms will be helpful when reviewing any IRS notice in determining whether an assessment is correct.
  • Contacting a tax advisor for assistance if they receive the letter and have questions.

For more information, click here for a detailed IRS FAQs on 2015 Employer Penalty Payments flyer or visit the Basi Insurance Compliance and Health Reform Education Center for additional compliance and regulatory information.

This blog is for information purposes only. Basi Insurance Services, Inc. does not provide legal or tax advice.

Important ACA Reminders for Group and Individual Health Plans

Cost-Sharing Reductions Halted

In October 2017, President Trump signed an Executive Order ending the Affordable Care Act’s (ACA) cost-sharing reduction payments to insurance companies effective immediately.

For employers and group plans: The direct impact of this decision was minimal.

For individual health policies (including Covered California): Be aware that lower co-pay and deducible plans, such as the Silver 73, 87 and 94 Plans, could be eliminated or changed. Insurance companies may ask you to choose a different plan and will contact you directly if there are any changes.

Premium Subsidies Left Unchanged

If your household income is 100% — 400% of the Federal Poverty Level, you may be eligible for subsidies that reduce premium costs.

If your household income is 100% — 400% of the Federal Poverty Level, you may be eligible for subsidies that reduce premium costs. Please be sure to review the 2017/18 Federal Poverty Guidelines to see how you may be affected. For example, a family of four may be eligible for some type of assistance with income up to $98,400.

Final Days to Enroll

The last day to sign-up during the 2017 Open Enrollment period is:

  • Medicare: Thursday, December 7th
  • Individual: Friday, December 15th

Call us with any questions about these important health coverage topics: 209-847-3065.

 

Individual Health Insurance – Your 2018 Open Enrollment Starts Soon

November 1, 2017 – December 15, 2017

Are you ready? The Affordable Care Act (ACA) as originally passed continues to be the law of the land. However, important changes took place throughout 2017 that may change your elections effective next year. Keep in mind:

  • 2018 Open Enrollments dates are shortened: You can make changes to your individual health plan, including Covered California™ plans, from November 1, 2017 to December 15, 2017, with a January 1, 2018 effective date. After December 15, you may not be able to enroll again until the 2019 Open Enrollment period without a qualifying life event.
  • Anthem: One of the largest carriers in California, Anthem made changes for their 2018 Individual health plan offerings. Coverage will be discontinued in much of the state, except the Modesto and Stockton areas, as well as Redding and Santa Clara County. For networks, Anthem will offer only an Exclusive Provider Organization (EPO) plan, which will likely change the specific, in-network doctors and practices.
  • Employers: The IRS released draft versions of 2017 Forms 1094-C and 1095-C with instructions. These are not yet final. Remember, the Form 1095-C for CY 2017 is due January 31, 2018 to ACA FTEs. Filings to the IRS are expected electronically by April 2, 2018. To date, there continues to be no guidance if specific penalties apply associated with the Employer Penalty rule.

If you are eligible, Medicare Open Enrollment dates remain the same as prior years: October 15, 2017 to December 7, 2017.  Any changes to Medicare plans will need to be done during this time.

Basi Insurance is here to help you navigate the often-confusing Individual health insurance market. If you have any questions, please call us at 209-847-3065.

This article is for general information purposes only. Basi Insurance Services, Inc. does not offer legal advice.

Reinforce Your Good Agricultural Practices to Comply with the Produce Safety Rule

Most growers will need to comply with the Food Safety Modernization Act (FSMA) over the next few years (see our last blog). Thankfully, while the FDA establishes standards to follow, they have not mandated specific documents or procedures. This gives farmers the flexibility to design their own Produce Safety Manual.

For some growers, this may mean strengthening their existing Good Agricultural Practices (GAP). This articles highlights those areas to help farmers come into compliance with FSMA.

As a reminder, Primary Production Farms (traditional growers) and Secondary Activities Farm (traditional co-op huller/shellers) should have a Produce Safety Plan in place by the following dates based on crop value:

Compliance dates

Jan. 26, 2018 – Greater than $500,000 in crop value

Jan. 28, 2019 — $250,000 – $500,000 in crop value

Jan. 27, 2020 — $25,000 – $250,000 in crop value

Note: Agricultural Water and Soil Amendments are excluded from the four food safety areas mentioned below. Deadlines for these standards have been pushed back at least two years from initial compliance dates.

Employee Qualification and Training

FSMA contains several requirements to build food safety into the daily job duties of supervisors and workers. This begins with at least one supervisor or responsible party successfully completing food safety training. In addition, there should be in place:

  1. Job-specific requirements for supervisors and workers. These should verify individuals are qualified upon-hire to perform their job. In addition, there should be ongoing training to keep workers current on best practices for their role.
  2. Training specific to food hygiene and food safety related to an individual’s job.
  3. Hygiene programs unique to a Farm’s operation, such as restroom locations, sanitation zones and requirements, hand washing and drying procedures, etc.

Growers may want to ensure documents are in place that describe specific training programs given, how often, and an example of the training materials. It may also be helpful to create, use and retain original sign-in sheets (English and Spanish) to validate training took place with verification step.

Worker Hygiene

Once qualified to perform their duties in a manner that helps maintain food safety, FSMA then provides guidance on awareness and training in three, additional areas of hygiene. Specific to protecting covered products and food-contact surfaces from contamination, there should be policies in place to address:

  1. Specific personal hygiene practices, such as cleanliness standards and dress, removal of hand jewelry and other belongings, eating and drinking rules, etc.
  2. Managing sick persons on the worksite.
  3. Visitor contamination prevention.

Building, Tools and Equipment

The portion of FSMA regulations applying to building, tools and equipment are designed to prevent these sources – and the inadequate sanitation of them – from contaminating covered produce. To minimize these chances, growers should document by location a workflow showing how product makes its way through their operation. This will note the buildings, tools and equipment that will come in contact with the crop. For each of these areas, consider describing the steps taken to ensure:

  1. Equipment is designed, installed and stored to allow for adequate cleaning and maintenance; and
  2. Inspected, maintained, and cleaned when appropriate and as frequent as necessary to protect against contamination.

To help show compliance with these measure, growers may wish to develop and use a daily cleaning logs. These reports should record actual dates, times and steps taken when cleaning and sanitizing equipment and transport containers. The logs should be signed and dated by the operator, and verified and signed by a quality supervisor.

A Produce Safety Plan may also want to address these additional topics noted in the regulations:

  1. How potentially contaminated produce is identified and removed from the workflow.
  2. Steps taken to prevent against contamination from known, or reasonably foreseeable, hazards.
  3. The use of packaging, storage and shipping materials are adequate for their intended use and unlikely to support the growth or transfer of microbes.

Domesticated and Wild Animals

If there is a reasonable chance of intrusion by grazing, working, wild or domesticated animals, growers may want to document this likelihood and steps taken to prevent and monitor the situation. To help ensure compliance, consider creating or downloading a simple, site-identified inspection checklist. Be sure to maintain original, signed copies. Consider at least an annual, formal survey of the farming operations and how animal intrusion is being reduced. This portion of the Plan may include:

  • Who is doing the inspections and how often.
  • The preventive steps taken to control contamination from animals, such as the removing traps and dead animals in a timely manner, cleaning procedures for droppings, roof and other scheduled maintenance, etc.
  • Corrective action steps. If there becomes evidence of animal intrusion, what steps will be taken to immediately correct the situation and update the plan to prevent future occurrences.

Recordkeeping

As mentioned, compliance with the Produce Safety Rule may be achieved by using existing GAP documents. In that or any case, there are additional recordkeeping requirements to keep in mind. For the Produce Safety Manual double-check that:

  1. Names and physical addresses of specific locations are on the paperwork.
  2. Actual values and observations are reported. No rounding, strikethroughs or N/As.
  3. An adequate description exists for traceability of covered produce through the operations, such as product type, lot number, source orchard, or other identifiers.
  4. Location of the Growing and/or Post-Harvest zones. An FDA inspection may pay more attention to these areas during inspection.

Records may be print or electronic, so long as they are reasonably the same. For electronic records, this means files should be accessible for daily use, allow for signature capture, kept secure, and allow for verification. There is a two year retention requirement from the date the record was created. Records should also be retrievable within 24 hours of request for official review.

A best practice may be to maintain one Produce Safety Manual in one location. It may reference other documents stored on property, such as in Human Resources or on the production floor.  Employees should be trained about where the manual is located, how it relates to their job, and how they are empowered to create a Food Safety First culture.

FSMA for Almond Farming Operations

It’s Not Who You Are. It’s Who the FDA Says You Are.

The Food Safety Modernization Act (FSMA) has arrived. Depending on your almond operation, the Compliance Date may be rolling out in just a few months or may be past due. That’s why it’s important to understand which of the FSMA rule(s) apply to you – based on the FDA definitions for your business.

 Produce Safety Rule

Called “Primary Production Farms” in the regulations, traditional growers are relatively easy to spot. Falling under the Produce Safety Rule, these producers Grow, Harvest, Hull, Shell and Handle almonds in one general location and under one ownership. Compliance dates start in 2018 depending on crop value (see below).

Also under the Produce Safety Rule are “Secondary Activities Farms” – similar to traditional co-ops. These are operations that Hull, Shell, and/or Handle almonds grown by the primary production farm, including brownskin almond handlers. The caveat is these operations must be under majority ownership by the traditional farm and the majority of product run through the facility must be from the common ownership farm.

Compliance dates

Jan. 26, 2018 – Greater than $500,000 in crop value*

Jan. 28, 2019 — $250,000 – $500,000 in crop value

Jan. 27, 2020 — $25,000 – $250,000 in crop value

*Legislation specifically reads, “…average annual monetary value of produce sold during the previous 3-years period….” Trade associations change “monetary value” to “crop value” to make specific to the almond industry.

Full Exemption

Farms are fully exempt from FSMA if the crop value is under $25,000.  Additional exemptions exist for produce grown only for personal or on-farm consumption.

Direct Marketing Modified Requirements

With Farmer’s Markets in mind, producers can comply with the Produce Safety rule IF they generate less than $500,000 in ALL food sales (not just produce) AND more than 50% of sales is direct to consumers. If this applies to your operation, you should start keeping adequate records now to document your qualified exemption. This documentation should be reviewed and verified annually.

Full Requirements

If you are required to comply with the Full Produce Safety Rule, the guidelines generally require meeting Good Agricultural Practices (GAP) already in place related to:

  • Agricultural water
  • Biological soil amendments
  • Worker hygiene
  • Employee training
  • Building, tools and equipment
  • Domesticated and wild animals

Preventive Controls Rule

This portion of the legislation is also known as the Facilities Rule since it typically applies to a Food Facility already required to register with the FDA.  It is also known under its full name: Current Good Manufacturing Process, Hazard Analysis and Risk-Based Preventive Controls for Human Food (HARPC).

Preventive Controls may apply to your operations if you are not a Primary Production or Secondary Activities Farm, and engage in Hulling/Shelling, Sizing, Sorting, Processing or Manufacturing activities (e.g. if you roast, chop, grind or coat almonds).

Compliance is based on the size of your operations, defined by revenue and headcount:

Compliance dates

Sept. 19, 2016 – 500 or more full-time equivalent (FTE) employees, and $1 million or greater in total annual sales of human food.

Sept. 18, 2017 – Less than 500 FTE employees, and $1 million or greater in total annual sales of human food.

Sept. 17, 2018 – Less than 500 FTE employees, and less than $1 million in total annual sales of human food.

If you are required to comply with the full Preventive Controls rule, you will need to have a Food Safety Plan prepared by a Preventive Controls Qualified Individual (PCQI). The Food Safety Plan must include the following elements. In addition, you will need to document its implementation in records kept and made available to the FDA upon request for review and copying:

  • A hazard analysis
  • Preventive controls
  • Monitoring procedures
  • Corrective action procedures
  • Verification procedures
  • A supply chain program, if appropriate
  • A recall plan

Future blog posts will also be dedicated to explaining key elements of a standard Food Safety Plan.

Additional Rules under FSMA

The Food Safety Modernization Act overhauled many portions of the FDA legislative landscape. Below is a snapshot of the other portions of the regulations that may apply to you:

  • Foreign Supplier Verification Program – started May 30, 2017 for ALL sized importers and consignees who have explicit responsibility to verify their foreign suppliers have adequate preventive controls in place to ensure the food coming into the U.S. meets food safety standards comparable to those in the U.S.
  • Sanitary Food Transportation of Human and Animal Food – With a division point at $27.5 million in annual receipts for an April 6, 2017 or an April 6, 2018 compliance date, this rule puts into practice many of the Good Transportation Practices (GTPs) already in use around food transportation and establishes requirements for vehicles and transportation equipment, records, training and waivers.
  • Mitigation Strategies for Protection of Food Against Intentional Adulteration – begins rolling out to large businesses starting July 26, 2019

Notes

  • Initial capitalization indicates words defined in the legislation.
  • Partial source: Almond Board of California, FSMA is Coming! What You Need to Know for Produce Safety Compliance (Document #2017IR0068), and FSMA Has Arrived! What You Need to Know For Preventive Controls Compliance (Document #2017IR0069).

ERISA – It Covers More Than You Think

Offering a vacation plan, sick time or holiday pay could mean your business has to follow these same federal ERISA requirements.

You probably heard of ERISA – the Employee Retirement Income Security Act of 1974. It’s the federal law regulating most group retirement and health plans. Did you know it extends to many other employer-sponsored benefits as well? Small and medium businesses may still have to follow ERISA requirements for their other group-sponsored benefit Plans, including:

  • Dental and Vision
  • Vacation
  • Holiday
  • Severance Pay
  • Unemployment Benefits

There continues to be certain exceptions for self-insured and voluntary plans. However, there are firm criteria for each of these exemptions that should be looked at carefully.

If your Plans fall under ERISA, there are certain reporting requirements for disclosing Plan information to employees. Of the strategies available, using a “wrap document” is one possible solution to bundle benefits into one plan. Basi Insurance Services, Inc. can help you analyze your group-sponsored employee benefits in light of ERISA. Call us at 209-847-3065 to learn more.

What We Can Learn From the Latest Ransomware Cyberattack

Tips to Recognize and Avoid Phishing

Last week, the world again experienced a wave of Ransomware cyberattacks. This latest round harmed 12,000 computers in 65 countries.

What is becoming clear in the aftermath – and what we can all keep in mind everyday – is that phishing seems to be the primary culprit for infecting individual computers. It’s important to remain vigilant and remind ourselves and our employees of certain safe practices when managing email – at home or at work.

Practicing Safe Email Behavior

Generally, it’s SAFE to:

  • Open and read an email.
  • Preview an email in the reading pane of Microsoft Outlook.
  • Delete or ignore an email.

Do NOT:

  • Open attachments or click on a link unless you know the message is from a safe source.
  • Preview an attachment or link in Outlook – that’s just the same as opening it.
  • Reply to or provide information back to the sender.

Identify the Red Flags of Phishing

These are the most common identifiers associated with phishing attempts. You can use these red flags when reviewing emails, especially from outside your home or business:

  • Weird or unknown email address. If the email descriptor or the signature in the email says it’s from a company, but the email address looks completely different, it’s likely not a legitimate email.
  • Blank or “undisclosed” recipients. Sometimes phishing emails are sent to a lot of people. Other times you see something like “undisclosed recipient list” in the “To:” field. Both of these are potential red flags.
  • Lack of personalization. Did the email use a generic salutation such as ‘Dear Customer’ or nothing at all? Your service providers usually know who you are and typically personalize emails with your name or the last few digits of your account number to get you to read the message.
  • Bad spelling and grammar. Legitimate businesses go out of their way to proofread their email. If an email has lots of spelling mistakes or improperly worded sentences, it’s likely a phish.
  • Urgent request. Messages of an urgent nature, or requesting immediate action, are a common method used to rush people into making mistakes, and is another good indicator of phishing.
  • Strange website links. If you hover your mouse over a website link, you will see the actual destination of the website you’re about to visit. If that location differs from the way the link is written in the email, it’s a good indication of a problem.
  • Suspicious attachments. If you don’t know the sender, or receive something from a friend that looks suspicious, don’t open the attachment. If it is from someone you know, you can always pick up the phone and give them a quick call to make sure they actually sent the email.
  • Requests for sensitive information. Be suspicious of requests for sensitive information, such as user IDs and passwords, financial account numbers, health information or social security numbers.

Remember companies of ANY size — and also individuals — are now victims to cyberattacks. A Cyber Liability and/or ID Theft policy, in addition to Business and Homeowners Insurance, can provide an important layer of protection.

Source: Nationwide Insurance, “Recognize & Avoid Phishing,” accessed June 30, 2017.

Ag Safety – Driving Farm Equipment on Valley Roads

For slow moving vehicles, follow these rules – and laws – of the road to help reduce the chance for vehicle collisions.

Harvest will be here before we know it. As you wrap up your transportation plans, we wanted to remind you of some important vehicle safety laws and rules of the road.

The Basics

Whether it’s Hwy 120 or a small county “J” road, before a tractor or piece of farm equipment enters a public thoroughfare, the driver/operator should:

  1. Mark equipment with Slow-Moving Vehicle (SMV) emblems. The SMV signs are a requirement for moving “implements of husbandry” on public roadways. Implements of husbandry are defined as those vehicles designed and adapted exclusively for agricultural, horticultural or livestock-raising operations.
  2. Use flashing red lights on the rear of the equipment. Though not required by law, consider also reflective markings and flags. Placed on the outmost edges of the equipment, these are effective, low-cost way to identify agricultural equipment when on the road. Make sure to use fluorescent material visible in both daytime and low-light conditions.
  3. Wear seat belts.
Dual violations

On California roadways, using an SMV emblem and flashing red lights is required by law. This is true regardless of the distance you are traveling, visibility, road conditions, or time of day. Failure to comply with these requirements may subject you to violations from both local law enforcement and, later as a result, from CAL-OSHA.

Standard operating procedures

Owners and Operation Managers should establish standardized procedures for the safe movement of farm equipment on public roads. Communicating these consistently and regularly to drivers and employees will enable everyone within your operation to perform these safety task in a consistent way and help reduce your liability in the event of an accident. Managers should know state farm vehicle requirements to ensure compliance.

Safety training tips

Listed below are a few safety tips to share with your drivers and operators. You may want to follow-up with them also in September and October as quick training reminders to help keep safety top-of-mind throughout the season.

Passing cars

When driving a slow-moving vehicle, there will always be other motorists wanting to pass. You should never wave a driver to pass. Ultimately, it’s the passing driver’s responsibility – not yours. You shouldn’t drive with half of your vehicle on the shoulder, either. As the passing vehicle straddles the center line, your equipment may sideswipe it if you have to swerve to avoid an oncoming mail box, road sign or other obstruction. Always drive with the left side of your vehicle to the centerline, even though the width of your equipment extends onto the shoulder. If another vehicle wants to pass, the driver will have to make that decision based on the law and safe opportunity to do so.

Rear-end collisions

On our straight-line roads, it’s easy for cars traveling at high speeds to be surprised by larger, slow-moving vehicle, especially on the occasional bend of the road or after the crest of a hill. You can help avoid rear-end collisions by monitoring your mirrors for fast-approaching vehicles and making sure your equipment’s warning devices, such as SMV signs, are clearly visible. When moving large equipment on heavily traveled paved roads, you should utilize an escort vehicle, which protects the oversize load and warns motorists of an unusual roadway condition.

Left-turn collisions

The left-turn collision is one of the most common accidents involving farm vehicles, pulling a tool bar, nurse tank or other items. When attempting to make a left turn, equipment operators commonly pull to the right in order to make a wide left turn. Motorists behind the equipment may view the movement of the equipment to the right as permission to pass.

Accidents can be prevented if operators use turn signals or hand or arm signals. Before committing to the turn, operators should pay close attention to oncoming traffic and check all mirrors or look over their shoulder to ensure motorists are not trying to pass.

Rural bridges

Large farm equipment and old bridges have never mixed well. Before crossing a bridge, make sure your vehicle weight will not damage the bridge or cause it to collapse. Allow oncoming traffic to clear the bridge before starting across to reduce the total weight on the bridge and gives you more space to maneuver. Remember that tractors and vehicles with large lugs can easily have these come into contact with the guardrail causing equipment to climb the rail or even tip off the bridge.

You and your fleet managers play a key role in reducing the potential for harmful roadway collisions. Thank you for ensuring your equipment is highly visible to other motorists and making our roadways safer for everyone.

References

Nationwide®, MyNSightOnline, Accessed 6/8/2017.

Author

Aaron Canez is the CAL OSHA-certified Safety Specialist at Basi Insurance Services. After a 40-year career in the US Army, Aaron began work as a safety consultant helping clients maintain their OSHA compliance. Through worksite facility tours, recommendations, and job-specific, on-site training in both English and Spanish, Aaron can help ensure employees are well-versed and safe in all areas of their work.

Aaron has extensive background training as a former EMT and firefighter, as well as in chemistry. All clients are invited to take advantage of these free safety service

Highly Subsidized Crop Insurance for Your Farm

Whole Farm Revenue Protection

There is a new revenue safety net allowing you to insure all your crops under one policy. Available in all counties, this Federal Crop Insurance Product protects your farm revenue against low yields, low prices or both.

Whole Farm Revenue Protection (WFRP) is tailored for any farm with up to $8.5 million in insurable revenue. This includes farms producing specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets.

Black Calf Green Fields

Livestock producers qualify for the WFRP

The program was designed to provide a broad based revenue program for commodities that don’t have a good revenue insurance plan today, such as sweet potatoes, pumpkins, melons, broccoli, cattle and squash. It does exclude timber, forest, forest products, and animals for sport, show or pets. Replant costs may be covered, with approval.

What are the features of WFRP?

The WFRP program provides revenue protection coverage levels from 50-85% of your Approved Revenue in 5% increments. There is no catastrophic level available.

All farm revenue is insured together under one policy, and individual commodity losses are not considered. To help further your protection, you may purchase other Federal crop insurance policies covering individual commodities. These must be at buy-up coverage levels and any indemnities will count as revenue earned under WFRP.

Diversification Requirements

The number of commodities produced count toward the diversification requirement within WFRP. Each commodity must provide a calculated percentage of the expected farm revenue. Commodities providing small amounts of revenue may be grouped to meet the qualification. In general:

  • 3 commodities required for the top levels of 80% or 85%.
  • At least 1 commodity for most other levels.
  • Cherry, potato and select other farmers will need to farm at least one additional qualifying commodity in order to be eligible.

Premium Subsidies

WFRP includes premium subsidies based on qualifying commodity counts and % coverage levels. Farms with two or more commodities receive Whole-Farm Subsidies. Farms with one commodity receive a Basic Subsidy.

How is the amount of insured revenue determined?

Approved Revenue is based off of a 5-year history from your farm tax returns and your expected revenue for the upcoming year. Specifically, it is the lower of:

  • Your current year’s expected revenue (determined by your farm plan) at the selected coverage level; or
  • Your historic revenue adjusted for growth at the selected coverage level. The program has a built-in automatic indexing process (with opt-outs allowed) that can account for farm growth. An expanding operations provision also allows for up to a 35% growth over historic average with approval.

What causes a loss payment?

Both natural causes and a decline in market price may trigger claims for loss under WFRP. A loss payment will also be made when revenue-to-count is lower than insured revenue.

In any event, taxes must be filed for the insurance year before any claim can be made. For example, losses in this insurance year of 2017 would require 2017 year farm taxes to be filed first. For commodities that grow each year, like cattle, only the growth for the insurance year counts.

Since taxes are based on cash sales, beginning and ending inventory must be determined and any accounts receivables included to adjust Schedule F revenue accordingly. If your adjusted Schedule F revenue is less than your guarantee, you would have a payable loss.

Who is the best fit for this program?

With the features and benefits of this new Federal program, Whole Farm Revenue Insurance is best suited for farms that are:

  • Highly diverse
  • Produce specialty commodities
  • Sell to direct markets, specialty markets, regional or local markets, and farm-identity preserved markets

Overall, the liability-to-premium ratio is considered very affordable.

We’re Here to Help

For more information, a free farm insurance review or to get a quote, contact Basi Insurance at 209.847.3065.

If you’re ready to get started with Whole Farm Revenue Insurance, please be ready to provide five years of farm tax forms (with exceptions), information about what you plan to produce on the farm during the insured year, and other supporting records specific to your operation.

Reference: United States Department of Agriculture (USDA), Risk Management Agency. www.rma.usda.gov. Accessed May 22, 2017.