Insuring Identity

Last updated on May 13th, 2019 at 02:36 pm

An increasing number of business owners in southeastern Wisconsin are offering identity theft coverage as a voluntary benefit for their employees. Some employers may be offering the coverage as just another bonus benefit. But other companies are trying to protect themselves from lawsuits, some industry experts say.

Victims of identity theft, on average, spend between 400 and 600 hours and $1,500, not including legal fees, to restore their credit and identity after it is stolen, said Robert Keefe, an independent associate for Pre-Paid Legal Services Inc.

Offering an identity theft coverage plan to employees as a voluntary benefit can in turn offer multiple benefits to the employer. For instance, in the case that an employee’s identity is compromised or stolen, coverage will help an individual restore his or her identity without requiring a significant absence from work or loss in productivity at work.

Identity theft coverage that is combined with legal services can also be helpful for employees who need legal assistance for other purposes, said David Wierkiwicz, a senior associate for the Milwaukee office of Mercer Health and Benefits, LLC, a unit of Marsh & McLennan Companies, Inc. N.Y.

"We are seeing an increase in identity theft protection and employee assistance programs for rectifying the situation, the idea being that if it is causing an employee stress in their personal life, it will also cause stress at work," Wierkiwicz said.

Less than 20 percent of employers are offering the coverage on a national basis, but as more people fall victim to identity theft and more stories about identity theft are in the news, more employers inquire, Wierkiwicz said.

In 2003, about 10 million Americans experienced a total of $5 billion in losses as a result of identity theft, he said.

"Most often we see identity theft protection alongside a pre-paid legal service package and as a voluntary benefit or legal services benefit," Wierkiwicz said.

Wierkiwicz said he has talked with several employers in the metro Milwaukee area who are looking to add identity theft protection as a voluntary benefit for employees. Employers located on the West Coast tend to foot the bill, while in the Midwest, employees often are paying for their identity theft coverage.

Identity theft coverage plans can offer case managers and legal assistance anywhere in the country, reimbursement for lost wages and restoration of credit, Keefe said.

Some plans that Mercer Health and Benefits offers employers include between $20,000 and $30,000 worth of protection. The identity theft protection, along with legal services, costs between $16 and $18 per month per employee, Wierkiwicz said.

Pre-Paid Legal Services offers identity theft coverage as part of its pre-paid legal services for employers that costs $17 per month. The legal services cover an entire family and the identity theft coverage will protect an employee and his or her spouse, compared to other plans that only cover one social security number, Keefe said.

The Identity Theft Shield offered by Pre-Paid Legal Services includes assistance in identifying the nature of the fraud, assistance in gathering and completing all of the required paperwork, issuing fraud alerts and fraud victim statements, restoring credit accuracy and continuing with the restoration process until it is completed, Keefe said. When purchased at a group rate, there is no enrollment fee, he said.

Pre-Paid has offered the Identity Theft Shield for about two years and has seen a steady increase in inquiries and customers every year, Keefe said.

Keefe expects to see a continued rise in interest from employers as a result of the provision on the Fair and Accurate Credit Transaction Act (FACTA), which went into effect in June. FACTA requires consumer reporting companies to notify consumers of their rights and the steps they can take to protect themselves from identity theft.

The provision allows consumers to receive one free credit report per year, makes creditors more accountable in instances of fraud, and gives consumers the right to sue a company found liable for the theft of his or her identity, according to the Federal Trade Commission.

By offering identity theft protection to employees, employers are protecting themselves from internal issues in case that an employee’s information is not discarded properly and the result is identity theft, Keefe said.

"If employees have the Identity Theft Shield through their employment, everything will be handled for them (in the case of identity theft) and the likelihood of an employee suing the employer is reduced by a great percentage," Keefe said.

In the event that the employer is liable for the identity theft of an employee, the employer would have the responsibility to have that employee’s identity restored, Keefe said.

John Donahue, an employee benefits lawyer with Milwaukee-based Godfrey & Kahn, S.C. said there are no tax benefits to the employer or employee when offering the coverage.

"This issue comes up without fail. It is on people’s minds," said Mike Taibleson of Whyte Hirschboeck Dudek S.C. "If this is as inexpensive as it appears, what a nice benefit."

Some employers may be dissuaded by offering identity theft coverage to employees because there is no tax benefit to doing so, Donahue said.

"There is no tax break for the employee and there is no tax break for the employer," Donahue said. "The bottom line would be that if employees thought this was something that they wanted and needed, they should be prudent shoppers. They should still compare the coverage between companies and if they can find something better somewhere else, then go with somewhere else."

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