Also visit our Health Care Reform Resource Page for the latest on the health care reform front, the Retirement Plans Resource Page for developments regarding retirement benefits, and the Workplace Flexibility Resource Page for postings on work/life issues.
For links/summaries to some of the best external compensation/benefits stories on the web, see below.
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Obamacare’s Big Question: What’s It Going to Cost Me?
The cost of health coverage under Obamacare remains one the biggest mysteries of the nation’s health care overhaul. But nagging cost questions will slowly be answered this summer as insurers and state officials set 2014 health plan rates for people who buy coverage outside of work or purchase it through small employers, reports McClatchy Newspapers.
The new rates and rules for individual and small group coverage won’t directly affect roughly 84 percent of Americans with job-based health insurance—about 125 million people. About 24.5 million people have small-group coverage through companies with 50 or fewer employees, according to federal estimates.
• But the changes will resonate throughout the health insurance universe and will go a long way toward shaping, and possibly changing, public opinion about Obamacare.
6/17/13
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Obama Under Pressure on Gay Rights
With the Supreme Court only days away from major rulings on same-sex marriage, gay rights advocates are already pressing President Obama to immediately broaden the federal government’s recognition of legally married same-sex couples if the court strikes down a ban on providing federal benefits to them, reports the Washington Post.
If the Supreme Court overturns the Defense of Marriage Act, full benefits would be available to same-sex couples who marry and live in the dozen states that legally recognize their relationships. But legally married gay couples that live in states that don’t recognize their marriages would be ineligible for a range of federal benefits.
• Advocates say Obama could eliminate the discrepancy with an executive order or new regulations setting a couple’s “place of celebration” as the deciding factor in whether the U.S. government recognizes a marriage for the purposes of providing benefits.
6/15/13
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Why Dads Don't Take Paternity Leave
Yahoo Inc. announced in April that new fathers can take eight weeks off at full pay. Bank of America Corp. offers 12 weeks of paid leave, and Ernst & Young a few years ago bumped its leave policy from two weeks to six. Fifteen percent of U.S. firms provide some paid leave for new fathers, according to a survey from the Society for Human Resource Management to be released on Father's Day, reports the Wall Street Journal.
It sounds like progress, but in reality men are reluctant to take time off for a variety of reasons, ranging from a fear of losing status at work to lingering stereotypes about a father's role in the family.
• Approximately 85 percent of new fathers take some time off after the birth of a child, but of those, the vast majority take a week or two.
6/13/13
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Companies Allow Workers to Buy Extra Vacation Time
Want more time off work to hang out at the beach? Need a little cash and have vacation days to spare? Some companies allow their workers to buy and sell vacation time, a perk that gives workers more flexibility in managing their time off, reports the AP (via the Miami Herald).
A soon-to-be released survey by the Society for Human Resource Management found that 9 percent of employers allowed workers to cash out unused vacation time. Five percent let employees purchase additional vacation days through a payroll deduction. An additional 7 percent allowed employees to donate vacation time to a general pool that can be used by other workers.
• The approach is even more popular with employers that have "paid time off" or PTO plans that combine vacation time, sick leave and personal days into one comprehensive plan. About 52 percent of employers reported offering such plans.
6/11/13
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Will New Health Insurance Be Too Expensive for America’s Lowest-Paid?
"Of course I prefer to have health insurance because I need it for my children, for my family," says Romérico Herrera, a 48-year-old crewman at a landscaping service in Santa Clarita, Calif., who earns $11.50 an hour. But Mr. Herrera would like to find out what kind of coverage he would get before signing up for health insurance. He says that he wouldn't be able to contribute more than $100 a month. "I make so little that [contributing] more would mean working just to pay for insurance," he said, reports the Wall Street Journal.
• His employer says he is working with a broker to find a plan that will be as affordable as possible for his workers. As he evaluates different plans, he must also consider his company's bottom line. For instance, in one scenario, where all 270 employees participate and pay no more than 9.5 percent of their income to the premiums, it would cost the company $1 million a year—essentially wiping out the company's profits.
6/10/13
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Small Firms with Young, Healthy Employees Will Pay More
The younger and healthier a small business's workforce, the greater its chances of facing a big spike in health-insurance premiums next year, reports the Wall Street Journal.
Starting in January, insurers will no longer be able to set premiums for small-group plans—which apply to employers with fewer than 50 or 100 employees, depending on the state—based on a firm's industry or the health or gender of its staff. Insurers will still be able to take into account the age of a firm's workers, though to a lesser extent, and whether or not those people use tobacco.
• The rebalancing will drive up premiums for some companies in industries with lots of young, healthy workers, such as technology, while moderating rate increases for firms with older and sicker workers, and in higher-risk industries such as industrial manufacturing.
6/7/13
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Health Plan Costs: Are Employers Too Optimistic?
Many employers expect health care reform to have a limited impact on their group health plan costs. That may be short-sighted, according to Wolters Kluwer Law & Business, citing a recent presentation by Milliman USA.
The Patient Centered Outcomes Research Institute (PCORI) fee and the Transitional Reinsurance Program fee alone will cause increases (see the SHRM Online articles Final Rule on Comparative Evidence "PCORI" Fees and HHS Issues Final Rule on Transitional Reinsurance Fees).
• Currently uninsured employees may increasingly opt for employer plans as the amount of the individual mandate tax rises over the next few years.
6/7/13
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Smoking Employees Cost $6,000 a Year More, Study Finds
Smokers cost their employers nearly $6,000 a year more than staff who don’t smoke, reports NBCNews.com, the first comprehensive look at the issue by researchers at Ohio State University.
Smoking status negatively impacts productivity separately and apart from lost work time due to smoking breaks and absenteeism.
• In addition to the lost productivity, the excess health care costs of smokers, who have higher rates of lung disease, heart disease, various cancers and other illnesses, is $2,055.77.
(To learn more, see the SHRM Online article Encourage Smokers to Try, Try Again to Quit.)
6/5/13
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Free Lunch vs. Other Perks: Let Employees Vote
How much of a voice do your employees have in making decisions such as benefits they’d prefer, or how their workspaces are set up? Plenty of research shows that millennials in particular want a say in these things, so enterprises big and small are trying harder to oblige, reports CNNMoney.com.
• One place where it's working is daily-bargain website 1SaleADay. Involving workers in decisions that affect them has led to "higher retention, increased trust, and happier employees.
6/3/13
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How 3 Small Firms Are Coping With Health Law
Small employers across the U.S. are struggling to get a handle on their health-care costs under the Affordable Care Act. Many of them say they expect their operating expenses to jump in 2014, when the law’s employee health-insurance requirements take effect. But they acknowledge that their forecasts are back-of-the-envelope calculations based on only partial information, reports the Wall Street Journal.
Owners with between 50 and 200 full-time employees are in a particularly tough spot. These businesses are big enough to meet the government's threshold for penalties, but they lack the purchasing power to negotiate the best rates with insurers.
• Employees may see less take-home pay because their total compensation is increasing from the employer's perspective. Managers' bonuses tied to company profits may decrease as the cost of health care benefits erode profits.
5/30/18
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High-End Health Plans Scale Back to Avoid ‘Cadillac Tax’
Beginning in 2018, the so-called Cadillac tax will penalizes companies that offer high-end health care plans to their employees. Companies hoping to avoid the tax are beginning to scale back the more generous health benefits they have traditionally offered, reports the New York Times. Under the law, an employer or health insurer offering a plan that costs more than $10,200 for an individual and $27,500 for a family would typically pay a 40 percent excise tax on the amount exceeding the threshold.
Although the tax does not start until 2018, employers say they have to start now to meet the deadline and they are doing whatever they can to bring down the cost of their plans.
• The percentage of employers revising their plans as a result of the tax has increased to 17 percent this year from 11 percent in 2011, according to a survey of United States companies released this month by the International Foundation of Employee Benefit Plans.
5/29/18
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Smaller Firms Consider Self-Insurance
As businesses cast about for ways to minimize new costs related to the federal health care reform law, health insurers are allowing ever-smaller companies to switch to self-insurance, reports the Wall Street Journal.
For small businesses, being self-insured would let them avoid new requirements under the law that call for traditional small group plans to include richer benefits, such as mental-health and maternity care. Self-insured companies can also avoid changes to pricing rules that could increase costs for groups of healthy workers.
• The approach is part of a growing playbook of strategies to minimize the effects—and potential costs—of the health law. Insurers are also letting small companies renew their yearlong health-benefit plans early, before the end of 2013. That would delay the impact of health-law provisions that broadly kick in on Jan. 1, but would only affect plans once they renew after that date.
5/27/13
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Low Interest Rates Are Final Straw for Many Pensions
Many private firms stopped offering traditional defined benefit pensions and switched to 401(k)-type accounts, in large part because government rules aimed at ensuring the financial viability of the traditional plans made it more expensive for employers to provide them, reports the Washington Post in a look at the causes behind the ever-dwindling number of private-sector pension plans.
To calculate pension obligations, companies must factor in the future value of money. Accounting rules peg that value to interest rates on corporate bonds. When interest rates go down, the projected obligations go up, requiring the firms to set aside more cash to pay retirees in the future. For many pension plan sponsors, the expense was too high to keep it up. Over the past decade most Fortune 100 firms have shifted from offering traditional pensions to offering new hires either 401(k)-type or hybrid "cash balance" plans that reduce company liability.
• Other firms are moving pension liabilities off their books. Last year, Verizon Communications transferred $7.5 billion in pension obligations — about a quarter of its total — to Prudential Insurance, to limit its liabilities and bolster its financial profile. The move came after General Motors paid Prudential to assume $25 billion of its pension risks.
5/24/13
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Some Businesses Resist Providing Contraceptive Coverage
Religiously devout business owners are waging a broad rebellion against providing their employees with contraceptive coverage, bringing dozens of lawsuits that seem certain to land the issue before the Supreme Court, reports the Washington Post. The company owners say their religious beliefs take precedence over the impending mandate under health care reform, which requires employers to provide no-cost coverage of all contraceptives approved by the Food and Drug Administration.
The legal battle took an important step forward this week when an appeals court here heard arguments in two cases brought by business owners who are Catholic. Another challenge is scheduled to be heard Thursday by an appeals court in Denver, and two other courts are set to hear similar cases over the next two weeks.
• There currently are 60 cases filed nationwide objecting to the contraceptive coverage mandate.
5/23/13
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Pensions Funds Again Outpace 401(k)s
Defined benefit pension funds outperform 401(k) plans year after year, reports Reuters, citing research by Towers Watson.
Pension funds have the benefit of investing for a large pool of people, and they can look longer term and take different risks. That's one reason why the study also found that bigger pension funds beat smaller ones, and that participants in large 401(k)s did better than participants in small plans.
• Companies that offer pension funds tend to pay the cost of the fund and not count those fees when reporting investment returns. But 401(k) administrative expenses are often buried in the fees that participants pay, and that lowers returns. That difference alone gave pension plans a 0.66 percent annual advantage over the last 17 years, Towers Watson found.
5/23/13
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Employers Weigh Obamacare's Strong Penalty vs. Weak Penalty
A follow-up to the Wall Street Journal article linked to below. Health care reform's employer mandate actually consists of two different penalties, based on two different categories of employer behavior, according to an analysis in Forbes. Under the strong penalty, an employer that fails to offer full-time employees minimal essential coverage risks a fine of $2,000 times the total number of full-time equivalent employees minus 30. Under the weak penalty, an employer that offers any health insurance plan available in the small or large group market within the state risks a penalty of $3,000 for each full-time employee that purchases coverage through a public exchange and qualifies for a premium tax credit or subsidy.
• There is an emerging recognition among employers that they can reduce their health care costs by offering minimal coverage costing around $600 per employee per year and avoid the $2,000 per employee penalty, while paying $3,000 per each employee that seeks exchange-based coverage and qualifies for a government subsidy, assuming that many of the low-income employees that would qualify for a subsidy won't actually want to pay for coverage beyond the minimal plan that the employer provides.
5/22/13
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Some Large Employers Consider "Skinny" Health Plans
I generally don't link to articles behind a subscriber firewall, but the 5/20 Wall Street Journal article "Employers Eye Bare-Bones Health Plans Under New Law" is worth noting for those with a printed copy or online access (you can also try Googling the title in quotes and "Wall Street Journal"). It reports that large employer group plans have mandated coverage requirements that actually are less comprehensive, and thus less expensive, than small-employer group plans due to a quirk in the law, allowing large employers to provided limited-benefit or "skinny" plans covering preventative services and doctor visits but not hospitalization and surgery without incurring the $2,000-per-worker penalty. However, they would still face a $3,000 individual fee for any employee who opts out and gets a subsidized policy on the exchanges.
• "The approach could appeal to companies with a lot of low-wage workers such as retailers and restaurant operators, who are willing to bet that those fees would add up slowly because even with subsidies, many workers won't want to pay the cost of the richer exchange coverage," the Journal reports.
5/20/13
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HSAs Can Coexist with Exchange-Based Coverage
Low-income people will be able to use health savings accounts (HSAs) and still purchase coverage through a public health care exchange after Jan. 1, 2014, reports LifeHealthPro.
Officials at the Center for Consumer Information and Insurance Oversight (CCIIO), in a new set of FAQs, addressed conflicts between HSA plan design rules, which set minimum deductible levels for HSA-compatible health plans, and the new Patient Protections and Affordable Care Act "cost-sharing reduction" rules, which provide subsidies to help low-income people cover the cost of health insurance deductibles, co-payment requirements and co-insurance.
For low-income people who want to use HSAs, getting help with paying deductibles could make it impossible for a "qualified health plan" (QHP) purchased through an exchange to meet the HSA program "high-deductible health plan" requirements, which are intended to encourage consumers to avoid over-use of unecessary health services and to consider costs when selecting health services .
• "An individual who would not be eligible for the tax advantages of an HSA because the plan variation to which he or she would be assigned does not qualify as a [high-deductible health plan] may purchase the plan without cost-sharing reductions," CCIIO officials said. Why individuals would choose to turn down the federal government's cost-sharing subsidies in order to have an HSA was not addressed.
5/17/13
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Carriers Keep Plan Rates Steady in Advance of Reforms
Between Feb. 1 and May 1, 2013, health insurance premiums increased by an average of 1.2 percent per plan nationwide. But in some states plan premiums increased 5 percent or more over this period, according to a report by HealthPocket.
• The tope 10 states by percentage increase in plan premiums for the second quarter of 2013 were: Wyoming, Illinois, Wisconsin, Delaware, Montana, Connecticut, California, Indiana, New Jersey and Arizona.
5/16/13
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401(k) Sponsors Take to Social Media
Sixty-three percent of defined contribution retirement plan sponsors are using social media to communicate with account holders, reports Financial Advisor, citing a new survey by Cogent Research.
The use of social media, including Web sites and blogs, LinkedIn, Facebook, You Tube and Twitter, is strongest among mid-sized plan sponsors, who represent plans with total assets of $20 million to $100 million. Among this group, 77 percent use some form of social media, with websites or blogs being the most popular and LinkedIn being the second most popular.
• “The prevalence of social media activity among DC plan sponsors is much higher than we anticipated,” said Linda York, practice director of syndicated research at Cogent. “These results indicate that a social media strategy, if it isn’t already, should be an integral component of any provider’s overall communication plan.”
5/16/13
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'Why Won’t Employers Offer Me a Fair Salary?'
"Will the unfairness in salary range among employees ever end," asks an employee in an open letter to the “Evil HR Lady” columnist, via MarketWatch.com.
The response can be useful in explaining to employees generally how salaries are set. For instance:
It's a matter of supply and demand. Businesses know that they can get a qualified worker to do the job for $17 an hour, so shy should they offer a penny more?
When you are shoe shopping, if two stores carried the shoe you wanted and one store was asking $17 for the shoes and the other was asking $35, we'd say you were a fool if you paid $35. Likewise, an employer is a fool for paying $35 an hour when he can get someone to do the job for $17.
I understand that you have student loans and a mortgage and other expenses. Welcome to adulthood. But it's not the employer's obligation to pay your mortgage. Salaries are not determined by that. Imagine if your coworker got a big raise purely because he went out and bought a bigger house? You'd be livid.
(To learn more, see the SHRM Online article "Tie Pay to Value, Not Market Data," and the HR Magazine article "The Art of Setting Pay.")
5/15/13
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A Self-Funded Employer's Worst Nightmare
A recent case from Alabama highlights the risk of a disconnect between the employer’s self-funded health plan and stop-loss coverage, reports Leonard, Street and Deinard's BenefitNotes.
A participant in the employer’s plan gave birth to premature twins, one of whom had a serious medical condition and quickly amassed costly medical bills, amounting to over $2.8 million in claims over a several year period. That series of claims exhausted the maximum stop-loss reimbursement and the employer found itself paying an additional $1.8 million dollars in claims above the stop-loss.
• Make sure that if your plan is self-funded, your stop-loss coverage does not have restrictions and limitations not reflected in your plan design – or that you are aware of those differences and are comfortable accepting the risk.
5/14/13
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Health Insurance Tax Frightens Small-Business Owners
Many small-business owners worry that a new tax on insurance providers in the health care law will mean higher premiums for them, undermining the law’s capacity to lower their health-care costs, reports the Washington Post.
Starting next year, the federal government will charge a new fee on health insurance firms based on the plans they sell to individuals and companies, known as the fully insured market.
• Because most large corporations self-insure their workforce, experts warn that insurance companies will pass the costs directly to small businesses. The vast majority purchase coverage in the fully insured market.
5/13/13
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NYC OKs Paid Sick Days Plan
Amid a push for paid sick time laws around the country, New York City lawmakers voted to make businesses provide the benefit to an estimated 1 million workers who don't have it now, reports the AP (via NBC 4 New York).
Advocates see the measure as a signal accomplishment. "It's very important that it's happening in the biggest city," said Ellen Bravo, executive director of Family Values at Work.
• Critics say some small businesses can't afford the benefit and government should let employers and employees work out sick time arrangements on their own. Some restaurants, for example, have shift-switching systems instead of paid time off, partly on the premise that servers would rather not lose out on tips.
5/9/13
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Maryland: State Workers' DPs Must Marry to Get Benefits
In Maryland, state employees whose domestic partners and children receive health insurance coverage are going to have to get married in order to keep those benefits after January 2014, when same-sex marriages will be recognized by the state, reports the Washington Examiner.
"When the state opened enrollment to same-sex domestic partners and their children in 2009, the rationale was that these individuals could not legally marry in Maryland, and therefore did not have access to the same benefits that heterosexual couples could attain through marriage," according to a statement from Gov. Martin O'Malley's office. "Once same-sex couples could marry in Maryland in January of this year, that rationale no longer applied."
• Maryland will stop accepting applications for domestic partnerships next month, but couples in a domestic partnership will receive health benefits through December.
5/8/13
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Will Reform Mean Millions More Part-Time Workers?
"If part-time workers offer an easy way to dodge an expensive mandate, why haven’t more employers jumped on board?," asked the Washington Post's WonkBlog.
If a large employer moves to a larger part-time workforce, but still wants to stay staffed at the same level, that means more administrative work to take on additional workers.
• Some companies—specialty retailers, for example—who find that, even when they pay benefit costs, they still come out ahead financially by having a skilled workforce of more highly-skilled salespeople.
(To learn more, see the SHRM Online article "Let Strategy Guide Health Benefits Decisions").
5/7/13
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Employers Love Wellness Programs. But Do They Work?
Nearly half of large companies have wellness programs that measure workers on such factors as weight, blood pressure, blood sugar, and cholesterol, reports BloombergBusinessweek, and employers spend $2 billion annually on these programs, not counting the cost of programs companies develop in-house.
• While some studies suggest $3 or more in savings for every dollar spent on wellness programs, most of the research compares workers who participate with those who don’t, not accounting for their different levels of motivation. A Rand Corp. analysis last year concluded that there’s not enough evidence “to definitively assess the impact of workplace wellness on health outcomes and cost.”
(To learn more, see the SHRM Online article "ROI of Wellness: How Good Is the Data?")
5/6/13
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IRS Deals Employers a Setback with Wellness Exclusion
Employer-sponsored health care plans cannot include most wellness programs as part of minimum coverage requirements under the health care reform law, dealing a setback to many businesses, according to proposed rules issued by the IRS, reports Reuters.
Under the law, an employer subject to the coverage mandate must pay an excise tax penalty if it fails to provide minimum coverage for even one full-time employee, forcing that employee to get a tax credit to buy insurance through one of the new public insurance exchanges. Businesses and non-profits had hoped to include wellness programs as part of the affordable and bare-bone coverage they must provide workers. Now employers may need to spend more for workers' health coverage, tax lawyers said.
• Only wellness programs designed to prevent smoking will qualify, the IRS said.
(To learn more, see the SHRM Online article "Proposed Rule Clarifies Minimum Value.")
5/2/13
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Employee Benefits Fall as Firms Brace for Reform
Employer spending on benefits rose at the slowest pace on record in the first quarter, as companies began bracing for higher health costs with next year's launch of health care reform, reports Investor's Business Daily.
The 2010 health law is expected to have its biggest impact on modest-wage service-sector industries, where coverage that meets the expanded requirements is less common. Not surprisingly, the abrupt change toward stingier employee benefits was even more evident here.
• Krispy Kreme said in an SEC filing that it has 1,300 workers without coverage who may be entitled to it next year at a potential cost of up to $5 million — before actions it might take "to reduce the number of employees subject to the new requirements."
5/1/13
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California Moves to Protect Smokers
From Higher Insurance Costs
The federal health care reform law allows states to charge smokers up to 50 percent more for a health plan, but legislation is moving forward in the California legislature that will make sure that doesn't happen, reports Kaiser Health News.
If a state opted for the maximum surcharge, health insurance would become unaffordable for those with the lowest incomes, according to Rick Curtis, president of the Institute for Health Policy Solutions. But health policy analyst Micah Weinberg says higher insurance premiums for tobacco users provide the type of financial penalties that work.
• The Centers for Disease Control and Prevention says tobacco use costs the nation about $190 billion in medical care and lost productivity each year.
5/1/13
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As Health Law Changes Loom, A Shift To Part-Time Workers
Some businesses may already be making personnel changes to save money when that provision of the Affordable Care Act kicks in. One option on the table: shifting full-time workers to part time, reports NPR.org.
• Scheduling workers will be a bigger headache if employers rely on more part-time workers, Gleason says. And there's more turnover, which increases a business's training and customer service costs, according to labor advocates.
4/30/13
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'Creative Pension Funding' Makes News
Eastman Kodak has reached a deal to hand over its film business to retirees in lieu of paying monthly benefits, making it the latest strapped corporation to resort to non-cash pension contributions, reports Time magazine.
British food company Dairy Crest transferred 44 million pounds of cheese to its pension. Spirits producer Diageo (Johnny Walker, Smirnoff) gave more than $760 million in “maturing whiskey” to its retirement fund. U.S. Steel transferred 170,000 acres of Alabama timberland to its workers’ pension fund
• Pension systems are starting to look like private equity firms.
4/30/13
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Senators Concerned About Health Care Law Rollout
Democratic senators, at a caucus meeting with White House officials, expressed concerns about how the Obama administration was carrying out the health care law, reports the New York Times.
Sen. Jeanne Shaheen of New Hampshire, who is up for re-election next year, said, “We are hearing from a lot of small businesses in New Hampshire that do not know how to comply with the law.” She added, “restaurants that employ people for about 30 hours a week are trying to figure out whether it would be in their interest to reduce the hours” of those workers, so the restaurants could avoid the law’s requirement to offer health coverage to full-time employees.
• Sen. Ben Cardin of Maryland told White House officials he was concerned about big rate increases being sought by the largest health insurer in his state. The company, CareFirst BlueCross BlueShield, has sought increases averaging 25 percent for individual insurance policies that will be sold in the state insurance exchange, and it is seeking increases of about 15 percent for small businesses. The company said the higher premiums reflected costs of complying with the new law.
4/26/13
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Employers Adding Surcharges for Spousal Coverage
To provide health coverage for employees' spouses, employers are increasingly tacking on spousal surcharges that can run as much as $3,000 a year. And more companies are planning to do so next year, via Forbes.
In a recent survey conducted by the National Business Group on Health and Towers Watson, 20 percent of respondents said they now levy a surcharge of roughly $100 per month on wives who decide not to take advantage of their own employer’s insurance and instead opt for coverage through their husband’s policy. An additional 13 percent said they plan to do so in 2014. These types of surcharges typically range from $500 a year to $3,000. A few years ago, these types of clauses were practically nonexistent.
• Companies often find that spouses are more expensive to insure because covered spouses are often women. As a group, women spend more on health care than men because of childbearing and having more free time, which results in additional doctor’s visits.
4/26/13
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Millennials Are Tightfisted Savers
Also called Generation Y, the Millennials face a new retirement world that puts most of their retirement future on their own shoulders. But retirement savings does not create much top-of-mind awareness among Gen Y. Many of them say that vacations and travel are the most important reasons for saving money, reports USA Today.
They grew up seeing boom and bust cycles, and therefore are skeptical about investing in the stock market. But if millennials continue to shy away from well diversified retirement investments they are ignoring one of their advantages -- asset growth over time.
• Because they have decades before they will retire, they can easily tolerate market volatility and make the most of their investments.
4/26/13
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Concerns over Coverage Mandate and Temporary Workers
At an IRS public hearing on April 23, representatives from businesses and labor unions expressed concern about proposed regulations for health care reform's employer mandate, particularly those concerning temporary employees, reports UPI.
The speakers were concerned about the requirement to cover many temporary workers, due to the lack of stability these types of jobs provide. A possibility exists that as their hours fluctuate, these employees could "ping-pong" between employer-sponsored health insurance and the state-based exchanges the new law sets up.
• While this is an imperfect system, an IRS representative said “churning” is better than letting these workers go long periods without health insurance.
4/25/13
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Employer Health Premiums Rose 170% in California
in Last Decade
Premiums for employer health insurance in California jumped 170 percent over the last decade, more than five times the 32 percent increase in the state's inflation rate, reports the Los Angeles Times.
That escalation in premiums has taken a toll on employers' willingness to offer health benefits, according to an annual survey by the California HealthCare Foundation. The report found that 60 percent of California firms offered health benefits last year, down from 73 percent three years ago. The percentage of California employers offering coverage is comparable to the national rate of 61 percent.
• One silver lining for California employers was that their health insurance premiums increased only 6.4 percent last year, down from 8.1 percent the previous two years.
4/24/13
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Retirement and Health Care: Concerns Off the Charts
Many people nearing retirement don’t have a good feeling about whether they have saved enough to make it through retirement. Add to that worries about health care costs in retirement, and those concerns are off the chart. They should be, reports USA Today.
The Employee Benefit Research Institute says the average 65-year-old couple in retirement should expect to pay $163,000 in out-of-pocket expenses for health care, excluding long-term care. And even then, they have only a 50 percent chance of covering their actual costs.
• Add to that the annual rate of inflation for medical expenses of 5 to 7 percent for health care expenses.
4/23/13
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Use of Non-Emergency Medical Services Declines
As the clock ticks down to the start of a U.S. healthcare overhaul, companies have been surprised to see Americans make even fewer trips to the doctor's office, reports Reuters.
Employers are shifting more of the insurance benefits they offer to high-deductible plans, requiring employees to pay more for their medical care upfront, to buffer new costs they face under health care reform. These consumers may be putting off non-urgent medical care until after they have paid their maximum deductibles in the year.
• UnitedHealth Group Inc, the largest U.S. health insurer, said it had seen an 18 percent rise in the number of consumers enrolled in high-deductible health plans in the first quarter of 2013.
4/22/13
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What Self-Funded Plans Should Know About the
Transitional Reinsurance Fee
Self-insured group health plan should plan to pay the Transitional Reinsurance Program fee under health care reform, submitting “contributions” for plan years beginning in the 3-year period starting Jan. 1, 2014, to the Department of Health and Human Services, reports Bloomber BNA.
Plans must submit their first annual enrollment counts to HHS by Nov. 15, 2014.The estimated fee for each enrollee for 2014 is $63 ($5.25 per month). The IRS has indicated that the payment is a permissible plan expense under ERISA and is deductible as a business expense.
• Plan sponsors should include this fee in their planning for 2014.
(To learn more, see the SHRM Online article "HHS Issues Final Rule on Transitional Reinsurance Fees.")
4/19/13
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Why You Should Care About Employees' Retirement Plans
The benefit plans you offer have an increased importance to your employees in an environment where home equity and savings accounts are tapped. This situation, however, also puts a burden on your company to act wisely in designing a competitive retirement package, according to an opinion piece in Forbes.
The trend of baby boomers planning to stay employed to a latter age is well documented. Although this can be beneficial, it can also mean increased costs for your company: Health care costs may be higher; wages are likely on the high side of the scale for comparable positions; new talent is not being developed, or is leaving for greener pastures.
A competitive retirement plan motivates younger employees as well. They see an opportunity to grow wealth within the company rather than seeking their fortune elsewhere.
• Some retirement plan communications that read more like playbooks than explanations. While it is important that employees understand the “how” of the plan, you first have to sell the “why.”
4/18/13
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More Workers Share Salary Secrets
Comparing salaries among colleagues has long been a taboo of workplace chatter, but that is changing as Millennials—individuals born in the 1980s and 1990s—join the labor force, reports the Wall Street Journal.
Many firms want to keep salary information private, keeping the upper hand on salary negotiation. But for workers, information is power, and young people recognize this.
• Pay differentials, when they become public, can engender resentment, envy and dissatisfaction among workers, especially those who find themselves on the low end of the scale.
4/17/13
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Movie ChaIn Cuts Workweek, Cites Health Reform
The largest movie theater chain in the U.S. cut the hours of thousands of employees, citing health care reform requirements, reports FoxNews.com.
Regal Entertainment Group, which operates more than 500 theaters in 38 states, has rolled back shifts for non-salaried workers to 30 hours per week, putting them under the threshold at which employers are required to provide health insurance starting in 2014.
• Restaurant chains Applebee's and Olive Garden also scaled back the hours of workers.
4/16/13
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Patient 'Engagement' vs. Better Solutions
The focus on increasing patient "engagement" in disease management via coaching and other efforts diverts from some of the bigger health care cost drivers, such as overdiagnosis, overtreatment, and expensive new technologies of marginal value, contends Al Lewis, president of the Disease Management Purchasing Consortium, writing at The Health Care Blog.
• Despite much flawed reporting and analysis, typically only about 10 percent of hospitalizations are for the five most common chronic conditions: asthma, diabetes (and its complications), CAD, COPD and heart failure. In the Medicare population, the percentage and absolute number are much higher – and that is indeed a population where control of chronic disease matters, Lewis writes.
4/15/13
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Report: Employer Health Coverage in U.S. on 10-Year Decline
The share of Americans who get health benefits through work dropped to 60 percent in 2011, continuing a decade-long slide, reports Bloomberg News, citing a new report by the Robert Wood Johnson Foundation.
• U.S. employers provided coverage for 159 million people in 2011, 12 million fewer than in 2000, according to the study, which noted insurance premiums have more than doubled in some cases over this period.
4/12/13
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Companies on the Move Look for Healthy Workers
It may cost less to do business in places where there's what some people call a culture of health. And that's put Colorado, which has the lowest rates of adult obesity in the country, on the map for companies looking to relocate or expand, reports NPR.org.
• The Denver Metro Chamber of Commerce touts Colorado's low rates of common chronic diseases — diabetes, heart disease and cancer — among the ones that cost companies a lot of money in health insurance claims.
4/12/13
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Fewer Californians Getting Health Benefits at Work
A new report shows that 53 percent of Californians get their health insurance through work, down from 62 percent in 2000. About 17.6 million state residents received employer health benefits in 2011, nearly 1.3 million fewer than a decade earlier, reports the Los Angeles Times.
• The report by the Robert Wood Johnson Foundation also shows that the premiums for family coverage through work shot up 146 percent over the same period.
4/11/13
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Retiree Health Benefits Facing Extinction?
Employer-provided health insurance for retirees has been dwindling for decades now, but the trend is accelerating, reports MarketWatch.com.
Mounting costs have caused more employers to scale back or eliminate medical benefits for their former workers. And the government-run exchanges established under health care reform are expected to radically change the landscape for early retirees starting next January.
• Roughly 25 percent of employers who provide health insurance offer some sort of financial assistance to retirees to help with medical costs, down from more than 60 percent in the 1980s, according to research.
4/10/13
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IRS to Consider If Free Lunches at Worksite Are Taxable
The IRS has been examining whether regularly providing free food, including through worksite cafeterias, is a fringe benefit on which employees should pay additional tax, reports the Wall Street Journal, as well as GeekWire and TaxProf Blog.
Tax rules around fringe benefits are complex, but in general they categorize meals regularly provided by an employer as a taxable perk, similar to personal use of a company car. That leads several tax experts to wonder if some companies providing free food may be skirting the rules.
• Google, for instance, has more than 120 cafes world-wide serving over 50,000 meals a day, according to its website, which says the aim is to foster collaboration and healthy eating.
4/9/13
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Some Small Businesses Opt for the Health Care Penalty
Small-business owners across the U.S. are bracing for the health-care law that kicks in next year, fearing it will increase the cost of providing insurance to employees, reports the Wall Street Journal.
One potential drawback to the penalty strategy: taxes. Health insurance is deductible as a business expense, but penalties aren't.
• To avoid the employer mandate, some small firms are considering other strategies, such as increasing employees' share of the premiums, so they don't have to shoulder the entire cost of offering benefits. Others say they will stay under the 50 full-time employee threshold or deliberately turn full-time workers into part-timers.
4/8/13
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Non-Smokers More Likely to Choose High-Deductible Plans
A new study shows that high-deductible health plans (HDHPs) are particularly attractive to individuals who lead healthy lifestyles by choosing not to smoke cigarettes, reports connectyourcare.com.
• Enrollees in an HDHP were less likely to smoke every day compared to those who had another kind of employee-sponsored health coverage, indicating that people who live healthy lifestyles may be inclined to choose HDHPs over other types of health insurance.
4/5/13
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Walgreens to Diagnose, Treat Chronic Conditions
Walgreens is the first retail store chain to expand its health care services to include diagnosing and treating patients for chronic conditions such as asthma, diabetes and high cholesterol, amid continuing concerns about health care costs and a potential shortage of primary care doctors, reports Kaiser Health News.
Other retail store clinics, such as those at Walmart, CVS and Target stores, help customers manage chronic illnesses but generally do so only after they have been diagnosed elsewhere.
• “We’re not trying to take over primary care, but we think we can help support physicians and transform the way care is delivered to provide more access points at a time when people need it the most,” said Heather Helle, a division vice president at Walgreens.
4/4/13
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Small Firms’ Offer of Plan Choices Under Health Law Delayed
Unable to meet tight deadlines in the new health care law, the Obama administration is delaying parts of a program intended to provide affordable health insurance to small businesses and their employees, reports the New York Times. Another view on the delay is provided by a column in Forbes.
The administration is delaying plans for implementing the Small Business Health Options Program (SHOP.) The SHOP will still be open in 2014, but for the 33 states in which the federal government runs the exchange, there will be only one insurance choice. States running their own exchanges have the option to delay having their SHOP open in 2014. In 2015, it is expected that SHOPs will be fully operational as intended.
• The public exchanges are scheduled to start enrolling people on Oct. 1, for coverage that begins in January. However, the administration said that the government and insurers needed “additional time to prepare for an employee choice model” of the type envisioned in the law signed three years ago by President Obama.
(To learn more, see the SHRM Online article "HHS Proposes to Delay Offer of Plan Choices for Small Firms")
4/2/13
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CMS to Review Gender Change Surgery
The Centers for Medicare and Medicaid Services (CMS) said it would reconsider covering gender change surgery under Medicare for patients with gender identity disorder, reports MedPage Today.
CMS's decision to reconsider coverage of surgical treatment triggers an initial 30-day public comment period, which will end April 27. In announcing the review, the agency said it was "particular interested in clinical studies and other scientific information relevant to the topic under review."
• Allowance of Medicare coverage often affect coverage policies for private health plans.
4/1/13