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.
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.
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.
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.
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.
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.
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.
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.”
'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.")
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.
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.
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.
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.
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").
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?")
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.")
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."
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.
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.
'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.
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.
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.
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.
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.
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.
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.
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.
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.")
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.”
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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")
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.
Advice for Small Employers Confused by Obamacare
Many small business owners are asking questions about navigating the coming changes in health insurance under health care reform. Bloomberg Businessweek offers answers to some common but complex questions.
Example: If you employ fewer than 50 “full-time equivalent” employees, you will not be mandated to offer coverage in 2014. The FTE calculation considers full-time any employee who is scheduled or has worked more than 40 hours per week, averaged over a month. So if you have two part-timers who work 20 hours a week, they would count as one FTE. A complexity: That calculation determines whether you are mandated to offer coverage, not which of your employees are eligible for coverage. If you are mandated to offer coverage, you’ll have to cover employees working 30 or more hours per week on average, starting 90 days after they are hired.
• Part-timers under 30 hours and seasonal employees who work fewer than 120 days annually do not have to be covered even if your company falls under the mandate.
Individual Market Premiums Expected to Rise
Insurance companies will have to pay out an average of 32 percent more for medical claims on individual health policies under health care reform, the nation's leading group of financial risk analysts has estimated, reports ABCNews.com.
While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.
• The report did not make similar estimates for employer plans, the mainstay for workers and their families.
Employee Health-Plan Options Shrinking to High Deductibles
Increasingly, companies are offering their employees only one option: a plan with a relatively high deductible linked to a savings account for medical expenses, reports the Washington Post.
Surveys reveal that 66 percent of companies with 1,000 or more employees offered at least one such plan this year. This figure is expected to grow to nearly 80 percent next year. At nearly 15 percent of companies surveyed, an account-based plan was the only option — an increase from 7.6 percent in 2010. Nearly a quarter of workers at companies with fewer than 200 workers were covered by such plans last year.
• An analysis by the Robert Wood Johnson Foundation that synthesized research findings on consumer-driven health plans (a term applied to plans with relatively high deductibles and a consumer spending account) found that, on average, they reduced total health-care spending by 5 to 14 percent.
401(k) Loans Usually Not Taken Frivolously, Lawmakers Told
When it comes to sealing the leaks from 401(k) plans, the question that should be asked isn't just how to prevent loans and withdrawals—but why do participants pull cash prematurely from their plans in the first place. That question kept surfacing during a hearing March 19 held by the Senate Committee on Health, Education, Labor and Pensions, reports Pensions & Investments (free registration required).
Evidence shows that workers aren't dipping into their 401(k)s to cover frivolous purchases. Data from Aon Hewitt, Lincolnshire, Ill., found that last year, only 2 percent of participants took a hardship withdrawal and the great majority of those workers did so for sound reasons: In 54 percent of the cases, workers were trying to avert eviction or foreclosure. Medical expenses were the second most common reason for the withdrawals (15 percent), while paying educational expenses came in third.
• Sen. Bill Nelson, D-Fla., and Sen. Mike Enzi, R-Wyo., have proposed a bill that would let workers who have left their jobs and borrowed from their 401(k)s wait until they file their next federal taxes to repay money they've taken from the plan. Currently, employees face a 10 percent penalty if they fail to repay their withdrawals and loans within 60 days of leaving their job.
Health Care Reform Law Uncertainty Grips Small Businesses
Many employers have seen their premiums rise or plans disappear as insurers prepare for the coming changes under health care reform, reports the Washington Post.
• One in eight small-business owners who responded to a survey by the National Federation of Independent Business said their health insurance providers had notified them that their plans would be terminated. A study released last week by Adecco, a human resources consulting firm, showed that nearly a third of employers said they stopped hiring or cut their workforce because of the law.
CEO Pay for Performance Gets Real
More than half of the compensation awarded to leading CEOs last year was tied to their companies' financial or stock-market performance, according to a preliminary review of proxy statements by consulting firm Hay Group and the Wall Street Journal, which reported the findings.
At the 40 companies in the preliminary survey where the CEO has been in place at least two years, compensation more closely mirrored corporate results last year.
• In 2012, median total direct compensation rose 6.9 percent, to $9 million, close to the median 7.6 percent shareholder return posted by the companies. Total direct compensation includes salary, all bonuses, and the value of equity at the time it was granted.
Payroll Audits Put Small Employers on Edge
Internal Revenue Service auditors showed up with little warning at Brian Robinson's staffing firm in Atlanta a year ago, seeking to verify that a dozen outside contractors he had hired to handle his information-technology services weren’t full-time staffers. The audit was part of a government crackdown on employers who misclassify workers as independent contractors to avoid paying payroll taxes, and other employment-related expenses, reports the Wall Street Journal.
The crackdown is aimed in part at boosting tax revenue. Employers don't pay or withhold income taxes, Social Security, Medicare or unemployment taxes for independent contractors, as they do for staff workers.
• The appeal of using outside workers is growing as many small businesses struggle to stay lean. Some employers also are turning to contractors to avoid hitting the 50-employee threshold that would require them to pay for employees' health insurance, starting next year, under the federal health-care law, or pay a penalty.
IBM Defends Limiting 401(k) Match to Year-End
Responding to criticism from Vermont U.S. Senators Patrick Leahy and Bernie Sanders about changes in Big Blue's 401(k) plan that has upset many IBM employees, the company's top human resources executive defended the move as necessary to maintain competitiveness, reports WRAL-TechWire.
Beginning in 2013, IBM ended biweekly matching payments into employee 401(k) accounts and adopted a year-end lump-sum match payment. IBM's contribution, which generally ranges from 6 percent to 10 percent of pay, is considered generous but workers who leave the company before Dec. 15 won't qualify for the match unless they retire.
• A letter IBM Senior Vice President for Human Resources Randy MacDonald sent to the senators said, "This change helps us maintain business competitiveness in an uncertain economic environment, while allowing us to invest billions of dollars in employee compensation and benefits programs each year," and that "A more competitive IBM is in the interests of all our constituents - employees, clients and shareholders."
Employers Blast Fees From New Health Law
Employers are bracing for a little-noticed fee in the federal health care law that will charge them $63 for each person they insure next year, one of the clearest cost increases companies face when the law takes full effect, reports the Wall Street Journal (subscribers only).
Companies and other plan providers will together pay $25 billion over three years to create a fund for insurance companies to offset the cost of covering people with high medical bills. The fees will hit most large U.S. employers, and several have been lobbying to change the program, contending the levy is unfair.
• The per-capita fee applies to employers that self-insure and assume the risk for workers' medical bills, and to most fully insured private plans sold by insurers.
(To learn more, see the SHRM Online article "Final Rule on Comparative Evidence "PCORI" Fees.")
Consumers Don't View Curbing Health Cost as Their Job
A recent study shows that a majority of patients didn’t want to factor costs into their medical decisions, nor did they want their doctors to do so, reports Kaiser Health News.
The participants, researchers said, did not generally understand how insurance works and felt little personal responsibility for helping to solve the problem of rising health care costs. They were unlikely to accept a less expensive treatment option, even if it was nearly as effective as a more expensive choice.
• There was an almost vengeful attitude toward insurance companies, the idea that "I've been paying in and now I'm going to get what I'm owed," or "I'm going to get them back for all the money I've paid in all these years."
Targeting Generational Issues in Retirement Education
Beyond the general education about how to much to save and how to invest, retirement plan participants have issues at different life stages that need to be addressed, reports planadviser.com.
• For all age groups, plan sponsors should be educating participants about the cons of taking a plan loan or hardship distribution if it is not a real necessity. Participants could be jeopardizing their ability to have a successful retirement if they take their savings out of the plan.
More Employers Setting Up Nap Rooms for Weary Workers
Health experts say worker fatigue is an epidemic that is weighing on workers' health and productivity. And employers who have ignored it—most of them—have done so at their own risk, reports USA Today.
• To help its 20 employees in the office fight through a wave of afternoon fatigue, Nationwide Planning Associates Inc. remodeled an unused closet with a recliner, a fountain and a bamboo rug. Nap time these days isn’t just for preschoolers.
It’s About the Work, Not the Office
The question of why so many companies are leery of workplace flexibility is addressed by Jennifer Glass, a sociology professor at the University of Texas, Austin, in the New York Times.
Managers are tempted to use “face time” in the office as the de facto measurement of commitment and productivity. They are often suspicious about employees who work out of sight, believing they will shirk or drift if not under constant supervision.
• As a result, telecommuting is often viewed as a perk to be handed out after employees have proved their worth.
Telecommuting Still Growing, Despite Yahoo and Best Buy
The hubbub surrounding Yahoo CEO Marissa Mayer's recent decision to suspend telecommuting at the Internet giant had not yet faded when word came this week that Minnesota-based Best Buy, the electronics retailer, now wants its corporate employees, who had enjoyed a flexible “performance-based” management system, to start working at the office, reports the Christian Science Monitor.
• Still, more Americans are working remotely. More American employees are working from home at least one day a week—a trend that could lower companies' costs and boost productivity. Some 13.4 million people, or 9.4 percent of U.S. workers, labored at least one day at home per week in 2010, compared with 9.2 million people, or 7 percent of U.S. workers in 1997, according to one Census Bureau report, according to the Wall Street Journal (subscription required).
Benefits of Wellness May Take Time
A new wellness program study shows a surprisingly large drop in hospitalizations for the six conditions targeted by the program, but increased costs for medications and outpatient visits, reports AP via the Washington Post.
• “It’s not easy to change human health outcomes in the short term,” said BJC Healthcare President Steven Lipstein. “When you make an investment in wellness and prevention you shouldn’t expect an immediate return.”
401(k) Plans Limit Access to Company Stock
"A Callan survey of 103 defined contribution plan executives found that 44.1 percent offered company stock in their DC plans in 2012, down from 48 percent in 2009. Among those, the survey found 14.8 percent plan to freeze company stock funds, 7.3 percent will eliminate stock from the lineup and 3.7 percent will place a limit on holding stock this year, reports Pensions & Investments (via Benefitslink.com).
• One recent example of a stock-fund freeze is the $625 million 401(k) plan of Flowserve Corp., Irving, Texas, which closed its company stock fund to new contributions on Jan. 1. The stock fund accounts for about 12 percent of the plan's assets.
(To learn more, see the SHRM Online article "Reducing Liability for Company Stock in 401(k) Plans.")
Dozens of Big U.S. Companies Back Same-Sex Marriage
Dozens of American corporations, including Apple, Alcoa, Facebook, eBay, Intel, and Morgan Stanley submitted an amicus brief in the landmark case before the U.S. Supreme Court arguing that laws banning same-sex marriages are unconstitutional under the Due Process and Equal Protection Clauses, reports the Los Angeles Times.
• Employers must compete in order to attract the best employees, and they do so by offering benefits packages, which help promote employee loyalty. But the federal Defense of Marriage Act "forces amici to consider the gender of the spouses of our lawfully married employees when determining the scope and manner of benefits that may be extended to the spouses," the brief argues.
Yahoo Work-at-Home Policy Riles Workers Everywhere
Yahoo is ending its work-from-home policy. The change, announced Monday by Yahoo human resources chief Jackie Reses, is expected to affect hundreds of employees. It is one of many changes CEO Marissa Mayer has made since being hired last July, reports CNN.com.
• On Tuesday Yahoo issued a short statement, saying "This isn't a broad industry view on working from home -- this is about what is right for Yahoo right now."
Wellness Incentives on the Rise
The top three ways employees are encouraged by their employers to participate in wellness programs are: encouragement by management (20 percent); lower health insurance costs to those who participate (20 percent); or allotted time for participation during the workday (20 percent, up from 9 percent), reports Wolters Kluwer Law & Business, citing recent research from Principal Financial.
• Only 36 percent of employees said that their employers do not offer any encouragement to participate in wellness benefits, a significant divergence from the previous three years, when about half of participants said their employer did nothing to encourage wellness program participation.
The Temptation to Drop Spousal Health Coverage
By denying coverage to spouses, employers not only save the annual premiums but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional, reports MarketWatch.com.
While surcharges for spousal coverage are more common, last year 6 percent of large employers excluded spouses, up from 5 percent in 2010, as did 4 percent of huge companies with at least 20,000 employees—twice as many as in 2010, according to Mercer. These “spousal carve-outs” or “working spouse provisions” generally prohibit only people who could get coverage through their own job from enrolling in their spouse’s plan.
• Experts say more firms are likely to drop spouses altogether, whether they work or not—especially when the new federal health-care exchanges open in 2014.
New Federal Rule Requires Insurers to Offer Mental Health Coverage
The Obama administration issued a final rule defining “essential health benefits” that must be offered by most health insurance plans next year, and it said that 32 million people would gain access to coverage of mental health care as a result, reports the New York Times.
The federal rule requires non-grandfathered individual and small group market plans to cover treatment of mental illnesses, behavioral disorders, drug addiction and alcohol abuse, and other conditions.
• Insurers and some business groups had unsuccessfully lobbied the federal government to scale back the scope of mandated coverage categories because of concerns that such coverage would make policies too costly, reports CaliforniaHealthline, citing a subscriber-only story in the Wall Street Journal.
Small Employers Weigh Self-Insured Plans
Faced with mandates to offer richer benefits with less cost-sharing, small and midsize employers in particular are increasingly considering self-insuring, reports the New York Times.
Large employers with hundreds or thousands of employees have historically been much more likely to insure themselves because they have cash to pay most claims directly. Now, employee benefit consultants are promoting self-insurance for employers with as few as 10 or 20 employees.
• Companies with less healthy work forces may find self-insuring more difficult. Insurance regulators worry that commercial insurers—and the insurance exchanges being set up in every state to offer a range of plan options to consumers—will be left with disproportionate numbers of older, sicker people who are more expensive to insure.
Tobacco Surcharge Is Controversial
A health care law provision that allows insurance companies to charge smokers 50 percent more than patients who do not use tobacco is provoking opposition, reports the Washington Post Wonkblog.
Cigarette makers such as Altria say the policy amounts to discrimination against smokers. Meanwhile, the American Cancer Society worries that the high surcharges could make health insurance unaffordable to cigarette smokers, who are disproportionately low income. Health insurance companies tend to support the provision, which they argue allows them to adequately charge tobacco users for the additional health care costs they incur.
• Five states already barred insurance companies from charging tobacco users more prior to the Affordable Care Act. Now, others are weighing the issue and are coming to disparate conclusions on the best path forward.
(Also from the Washington Post Wonkblog: Under Obamacare, Who Even Counts As a Tobacco User?)
Account Balances of 401(k) Faithful Quadrupled in Past Decade
U.S. workers who stayed put in the same company 401(k) plan for the past decade saw the size of their accounts quadruple to an average of nearly $200,000, despite major stock market turmoil, reports Reuters, citing research by Fidelity Investments
The results underscore the stock market's recent resurgence and how important it is for 401(k) participants to keep contributing to their accounts, especially when their balances decline, as they did during the height of the financial crisis.
• The message to "stay the course" should be conveyed to young workers, experts said, as more 401(k) plans automatically enroll them in retirement plans while escalating their contribution rates each year.
More Employers Ask – and Pay – for Second Medical Opinions
Companies are increasingly encouraging workers to seek additional medical opinions before proceeding with expensive medical treatments—and they’re using both financial carrots and sticks. For example, getting a second opinion before surgery might earn someone a lower deductible on their health insurance, reports marketwatch.com.
Second-opinion services, which employers pay for, ask independent specialists to remotely review medical case files and recommend a course of treatment. In most cases, employees never see the doctor at all.
• Experts say the second opinions also often convince people to choose less invasive or cheaper treatments.
Obama's Call for Higher Minimum Wage Will Be Contentious
President Obama's proposal to raise the federal minimum wage to $9 an hour is likely to rekindle debates over whether the measure helps or hurts low-income workers, reports the Wall Street Journal.
White House officials say the move to boost the wage from $7.25 is aimed at addressing poverty and helping low-income Americans. But business groups argue raising the minimum wage discourages companies from hiring low-skilled workers.
• The administration's proposal comes while economic growth remains slow and unemployment high at 7.9 percent.
Men Face a ‘Flexibility Stigma’ at Work
Fathers now describe higher levels of work-family conflict than mothers do, reports the Washington Post. A 2011 Families and Work Institute study found that 60 percent of fathers in dual-earner households say they experience some or a lot of work-life conflict, compared with just 35 percent in 1977. Meanwhile, the level of work-life conflict reported by similar working mothers has not changed significantly in three decades.
Researchers found that men and women are equally likely to want a flexible schedule. But men were much less likely to say they planned to ask for one, and those who did take the risk of making the request were likely to shy away from asking for as much flexibility as they really wanted.
• Creating flex policies is only half the battle. Until workplaces eliminate the stigma often associated with these benefits — for men as well as women — leaders will only be addressing half the problem for half their workforce.
Bellwether? Massachusetts Health Costs Are Rising
Representatives from the state’s nonprofit health plans as well as national for-profit insurers doing business in Massachusetts estimated the “medical cost trend,” a key industry measure, will climb between 6 and 12 percent this year — higher than last year’s cost bump and more than double the 3.6 percent increase set as a target in a state law passed last year, reports the Boston Globe.
Premium rates charged by insurers to employers and individuals can sometimes be lower than the overall cost trend, especially when businesses shift costs to workers through higher deductibles or co-pays. But generally, the cost trend and premiums run in tandem.
• Among the cost drivers cited by executives were an improving economy, the flu outbreak, a continuing rise in obesity and the impact of new taxes and rules under President Obama’s health care overhaul.
Most Employers Say Workers’ Health Is Their Business
About 87 percent of employers believe it’s their role to manage worker health, according to a new survey by Buck Consultants. Improving worker productivity and reducing “presenteeism”—where workers come in sick—were top wellness-program objectives, reports the Cincinnati Business Courier
• “With productivity having a direct tie to bottom-line revenue, organizations now consider health promotion as a core business value that positively impacts their ability to compete,” Dave Ratcliffe, a principal with the New York-based Buck Consultants.
CBO: Fewer Employers Will Provide Health Insurance
The Congressional Budget Office (CBO) released a new budget outlook, finding that millions of Americans will stop receiving health insurance from their employers as health care reform takes effect, reports the Washington Post and CNNMoney.com.
The CBO always expected that some Americans would lose their employer-health insurance under the Patient Protection and Affordable Care Act (PPACA), as some companies may direct their workers to the publicly subsidized options available on government-run exchanges. In this report though, they significantly increase that number, from 4 to 7 million.
• If fewer employers offer health insurance, as the CBO projects, then more will be subject to a fine for not providing coverage (the penalty applies to companies with 50 or more full-time equivalent employees). The CBO now expects that employers will end up paying $13 billion more in fines for non-compliance with the PPACA.
(To learn more, see the SHRM Online article "Making the ‘Play or Pay’ Decision.")
Companies to Pour Cash Into Pensions
Ford Motor Co. expects to spend $5 billion this year shoring up its pension funds, almost as much as the auto maker spent last year building plants, buying equipment and developing new cars, reports the Wall Street Journal. Verizon Communications Inc. contributed $1.7 billion to its pension plan in the fourth quarter and—highlighting companies' sensitivity to this issue—Boeing Co. now reports "core earnings" to separate out pension expenses.
The drain on corporate cash is a side effect of the U.S. monetary policy aimed at encouraging borrowing to stimulate the economy. Companies are required to calculate the present value of the future pension liabilities by using a so-called discount rate, based on corporate bond yields. As those rates fall, the liabilities rise.
• According to the U.S. Department of Labor, the number of defined benefit plans fell to 46,543 in 2010 from 103,346 in 1975. Consulting firm Towers Watson tallies 584 of the Fortune 1000 companies had defined benefit plans at the end of 2011, down from 633 in 2004.
Some Families That Can’t Afford Coverage Won't Get Subsidies
Some families that can’t afford the employer-sponsored health coverage will not be able to get financial assistance from the government to buy private health insurance on their own, reports the AP (via the Washington Post).
If the employer isn’t willing to chip in for family premiums — as most big companies already do — some families will be out of luck. They may not be able to afford the full premium on their own, and they’d be locked out of the subsidies in the health care overhaul law.
• Employers, however, are relieved that the Obama administration didn’t try to put the cost of providing family coverage on them.
Not All Preventive Care Saves Money
A new report by the nonprofit Trust for America's Health outlined a plan "to move from sick care to health care" by putting more resources into preventing chronic disease rather than treating it, as the current system does. However, a growing body of research suggests that blanket preventive care isn't cost effective, while some disease-prevention programs do produce net savings, reports foxnews.com.
Childhood immunizations and some adult immunizations (such as for pneumonia and the flu) are cost-saving, found a 2009 analysis for the Robert Wood Johnson Foundation. Counseling adults about using baby aspirin to prevent cardiovascular disease also produces net savings. Screening for hypertension and for some cancers (such as colorectal and breast) are good investments, while other cancer screenings when given to those with no symptoms—including for ovarian cancer and testicular cancer, and for prostate cancer via PSA tests—produce essentially no health benefits, causing the U.S. Preventive Services Task Force to recommend against their routine use.
• Some of the most common chronic, preventable diseases might be best addressed outside the clinical setting, according to the Trust for America's Health.
At Boeing, Measuring Profit Before Pensions
Boeing Co. rolled out a new look for its financial results — a measure called “core operating earnings” designed to draw attention away from the growing sums it owes its retirees, according to the Wall Street Journal, which reports, "If this flies, other companies with big, old-fashioned pension trusts might be tempted to follow."
• Boeing is not alone in wrestling with the impact of traditional defined benefit pension plans. Ford Motor Co. and General Motors Co., which still have significant defined benefit pension funds, have also signaled rising liabilities related to calculations based on low interest rates, and telecommunications giant Verizon reported a $4.23 billion fourth quarter loss earlier this month mainly because big non-cash pension charges overwhelmed operating profits.
Likely Employee Suits Against Group Plans under PPACA
When patients or others try to enforce private claims in court related to the Patient Protection and Affordable Care Act (PPACA), the targets could include benefit plans and the plans' fiduciaries as well as insurers, reports LifeHealthPro.com.
• Workers could sue to seek coverage for essential health benefits, to challenge employers that try to stick with old, pre-PPACA rules by claiming grandfather status, and to challenge employer efforts to use the state health insurance exchanges to be created by PPACA.
Flu Season Fuels Debate Over Paid Sick Days
An unusually early and vigorous flu season is drawing attention to a cause that has scored victories but also hit roadblocks in recent years: mandatory paid sick leave for a third of civilian workers — more than 40 million people — who don't have it, reports the AP (via foxnews.com).
Supporters and opponents are particularly watching New York City, where lawmakers are weighing a sick leave proposal amid a competitive mayoral race.
• Employees without sick days are more likely to go to work with a contagious illness, but many employees entitled to sick time go to work ill anyway.
Pre-Retirement Withdrawals Undermine 401(k)s
A large and growing share of American workers are tapping their retirement savings accounts for non-retirement needs, raising broad questions about the effectiveness of one of the most important savings vehicles for old age, reports the Washington Post.
“We’re going from bad to worse,” said Diane Oakley, executive director of the National Institute on Retirement Security. “Already, fewer private-sector workers have access to stable pension plans. And the savings in individual retirement savings accounts like 401(k) plans — which already are severely underfunded — continue to leak out at a high rate.”
• Fresh data from Vanguard, one of the nation’s largest 401(k) managers, show a 12 percent increase in the number of workers who took loans against their retirement accounts or withdrew money outright since 2008.
How Much Will Federal Health Law Cost Employers?
How much will the new federal health care law will cost businesses? The answers are all over the map, reports AP (via the Sarasota Herald-Tribune).
• Jon Urbanek, a senior vice president with Blue Cross and Blue Shield of Florida, warned that because of new requirements in the federal law, many small business employers will have to increase the benefits they currently offer in their packages, which means spending more money.
Payroll Tax Change Surprises Many Workers
The first paycheck of 2013 contained a nasty surprise for many workers: a tax hike that shrank their take-home earnings by 2 percent or more, reports the Sacramento Bee (via the Kansas City Star).
The higher payroll taxes surprised many wage earners. The high-profile fiscal cliff debate that consumed Congress in the waning days of 2012 mostly centered on income tax rates and government spending cuts. Little attention was paid to Social Security and Medicare tax increases, which loomed in the background of the debate.
• For someone making $50,000 a year, the increase in the FICA payroll tax is $1,000 annually, which for many is a significant amount. One likely result: reduced 401(k) plan contributions.
Office Weight-Loss Contests Rise
Team-based weight-loss, exercise and nutrition competitions are expanding rapidly from reality television into the cubicle world. Employer use of cash, gift cards and other prizes to reward employees for adopting healthier lifestyles has risen 69 percent since 2009, reports the Wall Street Journal.
Experts say the contests reflect a broader trend of companies incentivizing employees financially for healthy behavior, from regular gym use to quitting smoking.
• Companies like the programs because they deliver quick, measurable weight loss, promising lower absenteeism and health care costs. But critics call the contests divisive.
(To learn more, see the SHRM Online article "Launching a ‘Winning’ Wellness Contest.")
Health Insurers Raise Some Rates by Double Digits
Health insurance companies across the U.S. are seeking and winning double-digit increases in premiums for some customers; particularly vulnerable to the high rates are small businesses, reports the New York Times.
The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy. PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers.
• Insurers counter that medical costs for some policy holders are rising much faster than the average due to the poorer health of the covered population.
401(k) Features, Fees and Matches Vary
About two in five workers are in 401(k) plans that match up to 6 percent, and 10 percent match more than that, according to federal data, reports the Wall Street Journal.
Most plan sponsors match 50 cents for every dollar participants contribute. About 9 percent match 51 cents to 99 cents on the dollar, and 36 percent match at 100 percent.
• A study for the Investment Company Institute found that the median defined contribution plan participant pays 0.78 percent a year in plan administrative fees.
(To learn more, see the SHRM Online article "401(k) Match: 'Thresholds' Drive Participation More than Rates.")
2013: All Health Care, All the Time
As the national conversation changes in 2013, we’ll find that by year-end we’re talking about health care all the time, whether the ostensible topic is politics, government, the economy, our jobs, or our families, reports Fortune.
The employer mandate takes effect on Jan. 1, 2014, so companies are deciding what kind of health insurance, if any, to offer employees. Some employers that currently offer insurance will find they can save money by dropping it and paying the required penalty. America's largest private medical insurer, WellPoint), is planning on it, says executive vice president Lori Beer: "There will be a transition from employer-based [coverage] to more consumers as purchasers."
• The exchanges are scheduled to open for enrollment on Oct. 1, but so far only 20 states are setting them up. Many of the other states' exchanges will have to be run by Washington, and it still isn't clear how they will work.
Small Businesses Struggle with Health Care Law
Small businesses have enough to worry about without having to wade through the intricacies of hundreds of pages of the health care reform legislation. And even if they have spent time learning about the law, questions remain unanswered, according to the Journal of Accountancy.
• Management needs support in understanding the provisions and the penalties that can accompany those provisions. CPAs are advised to work with businesses to create strategies to avoid the penalties and to advise businesses on issues such as recruitment, retention of full- and part-time workers, employee satisfaction and possible effects on brand and reputation.
'Fiscal Cliff' Bill Lifts Restrictions on Roth 401(k) Conversions
The bill Congress passed on Jan. 1 to avert the so-called fiscal cliff seeks to raise revenue by encouraging investors to roll over 401(k) plans into Roth versions of those accounts, reports InvestmentNews.com.
Previously, unless a plan included in-service distributions—or was amended to specifically allow a distribution from the traditional 401(k) into the available Roth option—401(k) participants could only roll their money into a Roth 401(k) after three qualifying events: changing jobs, retirement or reaching age 59 and 1/2. But under the fiscal cliff bill, workers with 401(k)s, 403(b)s and similar defined contribution plans would be able to convert to a Roth 401(k), if designated in their benefit plan, at any time.
• Lawmakers believe that easing restrictions on the conversions will produce federal funds because participants must pay tax on the money when they put it into the Roth plan. Disbursements paid during their retirement years are then made tax-free.