Daily Compensation & Benefits Newswire
News To Use
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and Compensation Discipline.
Also visit SHRM Online's Health Care Reform web page for the latest news on the health care front.
For links/summaries to some of the best external compensation/benefits stories on the web, see below.
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Obama to Sign Jobs Bill with 'Payroll Tax Holiday'
for Hiring the Unemployed
Companies that hire unemployed workers will get a temporary payroll tax holiday under a bill that easily won final congressional approval Wednesday, reports the Washington Examiner.
- A far larger measure that would extend COBRA health insurance subsidies and unemployment benefits has passed both House and Senate but is hung up as the rival chambers wrangle over how to partially finance the legislation. As a result, it may require a third temporary extension of unemployment benefits, which would otherwise expire at the end of March.
3/18/10
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More Workers Value Stability over Pay, for Now
Many workers around the world have given up hopes of advancing in their jobs, but the bad economy is keeping them from finding new ones. Such "walking wounded" workers are increasingly exchanging ambition for job stability, which now even trumps pay as a consideration, reports Reuters, citing a Towers Watson report.
- Workers are more risk-averse because the recession has shown them how quickly jobs can disappear. That may leave more room for companies to hold down compensation costs—but workers may bolt once the economy improves.
3/16/10
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Semi-Annual Bonuses Gain Traction
A growing number of U.S. companies, mainly in the retail and high-tech industries, are replacing their annual incentive structure with bonuses earned twice a year, reports the Wall Street Journal.
In addition to boosting morale at a time of salary freezes and pay cuts, semiannual bonuses help companies retain key players by dangling the carrot of two targets a year, while giving boards a chance to raise those goals quickly if economic conditions improve
- Hay Group found 50 big and midsize companies that have recently disclosed plans to pay semiannual bonuses, with more than half of them having adopted the plans since 2008. Companies that have made the switch include Home Depot Inc., Cisco Systems Inc. and Xerox Corp.
3/15/10
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More Employers Make Room for Work-Life Balance
More U.S. employers are discovering that loosening the traditionally rigid work schedule pays off, and studies show retention and productivity shoot up and more flexible workplaces. More than half of U.S. companies now say they offer flextime, and one-third allow telecommuting at least part-time, reports NPR.org.
On the other hand, research also shows that employees don't find their workplaces nearly as flexible as managers report. Work-family experts say arrangements often appear more generous on paper than in practice and can be highly dependent on the generosity of immediate supervisors.
- A hurdle for nonexmpet employees: U.S. labor laws are perfectly suited to 1960, says University of Minnesota sociologist Phyllis Moen. The 40-hour workweek and 9-to-5 workday were all codified in an era when men went off to an assembly line and women stayed home.
(To learn more, see the SHRM Online stories Flexible Work Might Improve Employees' Health and Secrets to a Robust Telework Program: The 'STIR' Model.)
3/15/2010
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Are Unemployment Benefits No Longer Temporary?
Millions of Americans have been forced to rely on unemployment payments for extended periods as the nation struggles through its longest period of high joblessness in a generation, and critics are taking aim, saying that the Depression-era program created as a temporary bridge for laid-off workers is turning into an expensive entitlement, reports the Washington Post.
About 11.4 million out-of-work people now collect unemployment compensation, and half of them have been receiving payments for more than six months, the usual insurance limit. But under multiple extensions enacted by the federal government in response to the downturn, workers can collect the payments for as long as 99 weeks in states with the highest unemployment rates -- the longest period since the program's inception.
- Continuing to pay people unemployment compensation is a disincentive for them to seek new work, especially if it's at lower wages than they previously earned, say critics of the extensions. Proponents argue that no jobs are to be had and more government relief and job creation is necessary.
(To learn more, see the SHRM Online story Decision-Making Leave: A Process to Cut Turnover and Unemployment Insurance Costs.)
3/12/10
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Senate Votes to Extend COBRA Subsidy to December;
House Yet to Act
The Senate passed a jobs bill that would extend the COBRA subsidy program until Dec. 31, 2010, extend unemployment benefits in many states, increase Medicaid funding for states and prevent a Medicare reimbursement cut for doctors, reports Kaiser Health News.
The bill would add $132 billion to the budget deficit over the next year and a half. In states with the highest jobless rates people would be eligible to receive benefits for up to 99 weeks.
- The House must now take up the bill.
3/11/2010
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Senate Passes Pension Funding Relief, with Strings
The U.S. Senate passed an amendment to a tax extension bill that would allow defined benefit pension plan sponsors to spread out funding their shortfalls. The House has yet to act on a similar bill, reports plansponsor.com.
Under the amendment, employers would be allowed to choose from repaying their pension shortfall over nine years, with only interest on the shortfall owed in the first two years, or repaying over 15 years.
- The measure would add major restrictions to executive compensation at firms taking advantage of the relief. For example, if any employee's indexed, taxable compensation for a year exceeds $1 million, the employer would be required to make a matching contribution to the pension for that year in an amount equivalent to the excess.
3/11/10
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Some Execs Got ‘Pity’ Bonus
Corporate executives who missed their earnings target last year might not have missed out on generous bonus. Following an unprecedented period of economic turmoil, a number of corporate boards appear to have taken pity on executives last year, reports CNNMoney.com.
Executive bonuses are judged based on a variety of factors, such as the company's stock performance, year-end earnings or other fundamentals. But after the economy unraveled much faster than anyone ever anticipated, targets that once seemed attainable for many executives quickly moved out of reach. As a result, some boards looked elsewhere for indications that 2009 was indeed a good year.
- Paying bonuses during tough economic times could potentially become palatable, said Paul Hodgson, senior research associate at the corporate governance research firm The Corporate Library. To do that though, he said boards would have to be just as willing to cut bonuses when executives miss lofty targets during a robust economic environment.
3/10/10
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DOL Publishes Spanish Version of CHIP Model Notice
The Department of Labor's Employee Benefits Security Administration has posted a Spanish version of the Model Notice for employers to use to regarding eligibility for premium assistance under Medicaid or the Children's Health Insurance Program (CHIP), reports plansponsor.com. In addition, the Model Notice in English was reposted with updated contact information.
The CHIP Reauthorization Act of 2009 (CHIPRA) requires employers that maintain group health plans in any state that provides premium assistance to notify employees of their potential opportunities to receive the premium assistance for themselves or their beneficiaries. Employers may combine this notice with other information (e.g., open enrollment materials).
- The Model Notice in Spanish is here. The Model Notice in English is here.
(To learn more, see the SHRM Online article DOL Issues Model Notice on Premium Aid Under CHIP or Medicaid
3/8/10
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Employees Raise Cry over High 401(k) Fees
A growing number of workers, upset over 401(k) plans that include only high-fee funds, are lobbying their employers to add low-fee index funds to their plans, reports the Wall Street Journal.
The tricky part: The same sensitive one to raise with employers. Still, many workers can no longer keep quiet, and some are taking their economic downturn prompting scrutiny of high fees also is responsible for an outbreak of job insecurity, making the issue a grievances all the way to the courts.
- "At companies our size, you don't have someone devoted 24 hours a day to these human resource things," said one small business owner who was successfully lobbied by employees over their 401(k)'s high-fee funds.
3/8/10
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Federal Pay Ahead of Private Industry
Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, USA Today reports, based on an analysis of federal data.
Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector.
- Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.
2/5/10
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DOL Plans to Issue Alert on Target-Date Funds
The U.S. Department of Labor (DOL is planning to issue target-date fund guidance for retirement plan fiduciaries. In the long term, the agency is still discussing issuing regulations about what kind of disclosure target-date fund managers need to provide to retirement plan participants, reports InvestmentNews.com. The DOL is also said to be discussing amending its regulations governing qualified-default-investment alternatives and how much needs to be disclosed to plan participants.
According to Bradford P. Campbell, an attorney at Schiff Hardin LLP, who used to work at the DOL, “It seems they spent the first year replacing policies that they didn't agree with from the Bush administration and now they are moving forward with their own agenda.”
- The Senate Special Committee on Aging is planning to unveil legislation soon that would require target-date funds — and perhaps all managers of qualified-default-investment alternatives in defined-contribution plans — to act as fiduciaries under ERISA.
2/5/10
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Obama Calls for Passing Overhaul Using Simple Majority
President Obama called on Congress to "schedule a vote in the next few weeks" to pass the health care overhaul bill, using the budget reconciliation process that requires only a majority vote and cannot be subject to a GOP filibuster in the Senate, reports USA Today.
Reconciliation will require House Democrats to essentially adopt the Senate health care bill passed late last year, and then for both chambers to amend the bill by majority votes to meet House objections to some of the provisions in the Senate bill.
- Republicans argue that reconciliation has never been used to pass major social legislation, and has never been used without bipartisan support.
3/4/10
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Will Annuities Be Mandatory in Qualified Plans?
The Obama administration is considering some form of a requirement that participants in a qualified pension or profit-sharing plan would have to have some of their assets in an annuity or some other investment that will provide income for life, reports the Morningstar Advisor.
Much of the motivation for the government to require the inclusion of longevity guarantees for at least some assets held under tax-qualified retirement plans is the recent instability in the financial markets.
- At issue is whether retirement plans should be more like insurance policies promising guaranteed income, rather than investment portfolios subject to market fluctuations.
(To learn more, see the SHRM Online article DOL Seeks Comments on Lifetime Income for Retirement Plans.)
3/4/10
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Obama Signs Bill Extending COBRA, Unemployment Funds
After days of intense infighting, Congress passes and President Obama signed legislation extending the COBRA health care premium subsidy and unemployment benefits through March 2010, reports CNNMoney.com. Some legislators hope to pass a measure continuing those programs through December.
- Sen. Jim Bunning, R-Ky., ended his filibuster of the extension. Bunning had wanted the $10 million measure to be funded through the use of unspent stimulus money or budget cuts, rather than added to the federal debt. He agreed to end his filibuster after coming under intense pressure from both parties
3/3/10
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‘Invasive’ Questions Help Companies Cut Health Costs
Regardless of what happens in Washington, experts say people insured through an employer should be braced to bear more costs and more intrusion into their personal choices, reports the Tampa Tribune.
Some companies are requiring workers to complete health surveys as a condition of employment or continuing coverage. And more companies are choosing to add a surcharge on plans for people who use tobacco.
- An employer can't ask particular personal questions about its workers, but health insurance is a business contract between an individual and a third-party insurer, and those companies have a legal right to know about the people they cover.
3/2/10
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Workers Gain Comfort, Knowledge from Retirement Advice
Individuals face a daunting range of financial issues as they approach retirement. Among them: how to save enough, how to invest, how to convert savings into retirement income and how to cover health care expenses once they stop working, reports Forbes.com.
According to a recent survey by the TIAA-CREF Institute, the area where the most near-retirees seek advice is regarding how to invest their retirement savings, at 89%.
- The two issues about which near-retirees say they believe it is most important to receive advice, however, are how to manage assets and draw income from their savings in retirement and how to pay for health care--challenges sometimes overlooked in advisor consultations.
3/1/10
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Firms Move Gingerly to Rescind Salary Cuts
Slowly and tentatively, some companies are rescinding pay cuts made during the recession, reports the Wall Street Journal.
"It's very unlikely [companies] are going all the way back to help people make up for lost ground," said Ravin Jesuthasan, a managing principal at pay consultant Towers Watson in Chicago.
- Some companies are restoring pay for part of their work forces. In January, Seagate Technology Inc. rescinded its 10% pay cut for nonexecutive staff, but it didn't end its 25% cut for executives.
3/1/10
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COBRA, UI Extensions in Limbo
The U.S. Senate adjourned without approving an extension of the COBRA health care premium subsidy or unemployment insurance (UI) benefits, which were set to expire over the weekend, reports the New York Times. The House passed an extension measure earlier in the week.
''Everybody in this chamber wants to extend unemployment benefits, COBRA health care benefits,'' Republican Sen. Jim Bunning of Kentucky said. But, he added, ''If we can't find $10 billion somewhere for a bill that everybody in this body supports, we will never pay for anything.'' Rather than add to the deficit, he called on paying for the extensions with economic stimulus funds.
- Efforts to pass legislation in the Senate are set to resume on March 1.
2/26/10
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Health Care Summit Ends, 'Reconciliation' Attempt Looms
At the long-awaited health care summit Republicans and Democrats aired their views, but deep philosophical differences on approach mean slim prospects for bipartisan accord, reports the Christian Science Monitor. And the Washington Post reports that Obama sent "a clear message that Democrats will move forward to pass major legislation with or without Republican support."
The president suggested that with no compromise agreement built on his proposals, Democrats would attempt to pass the nearly $1 trillion health care overhaul using reconciliation, which requires only 51 Senate votes for passage, as opposed to the 60 votes needed in the Senate to break a filibuster.
- Republicans depicted the Democratic proposal as a vast expansion of government authority that would levy new taxes on businesses and result in higher insurance premiums and fewer choices. Democrats countered that health care problems have grown so egregious that the government has no choice but to intervene.
2/26/10
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Biden Announces Investment Advice Proposal for
Retirement Savings
Vice President Joe Biden unveiled proposed new regulations aimed at helping protect workers' retirement savings, reports the Wall Street Journal.
A White House official said the proposed new rules were intended to shield workers from potential conflicts of interest related to financial advisers. Under the plan, retirement investment advisers and money managers may give investment advice only if they don't get a commission for steering workers into funds with which they are affiliated or if their advice is based on an objective computer model certified to be unbiased by independent experts.
- In November 2009, the Department of Labor withdrew a Bush-administration rule intended to implement sections of the Pension Protection Act allowing 401(k) and other defined contribution plan participants to receive advice from financial firms that act as plan service providers, under certain conditions.
2/26/10
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Wages Likely to Stay Sluggish for Years to Come
Even after the unemployment rate starts to come down – which may not be anytime soon – wages are likely to remain flat for the foreseeable future, reports NPR.org.
"Even before the recession started, you had almost a complete [business] cycle where you had very high productivity growth and virtually none of it showed up in the wages of the median worker, adjusted for inflation," says Harry Holzer, a former chief economist with the Labor Department now affiliated with the Urban Institute and Georgetown University.
- The jobs that are going to be created," says Marisa Di Natale, of the research firm Moody's Economy.com, "are likely to be skewed toward lower-paying levels."
2/24/10
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Insurers: Obama's Plan Would Increase Costs
The Obama administration’s new health proposal could lead to a dramatic increase in the cost of health care and health coverage, argue the Blue Cross and Blue Shield Association (BCBSA), statement here, and America’s Health Insurance Plans (AHIP), statement here.
“Several provisions in the president's proposal would make coverage even more expensive,” BCBSA contends.
2/23/10
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Flextime May Hold Surprising Benefits for Employee Health
Workers who had more control over their schedules and work days saw improvements in both physical and mental health, according to a review published in The Cochrane Library, reports ABCNews.com.
"Control at work is good for health," summarized Clare Bambra of Durham University in the U.K. Situations that gave employees more control over their schedules had positive effects with regard to blood pressure, sleep, and mental health.
- The researchers said it is "fair to suggest that ... certain types of worker-oriented flexible arrangements ... represent a plausible means through which policymakers and employers can promote healthier workplaces and improve work practices."
2/22/10
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Obama Proposes Authority to Curb Health Insurance Rate Hikes
The Obama administration will propose legislation that would allow the government to curb health insurance rate hike increases it deems to be excessive, reports the Wall Street Journal. It's a move that some cheer as a means to block excessive profit-taking by insurers (e.g., The Huffington Post), but that others fear could lead to price controls and cause providers to limit their services (e.g., the Cato Institute).
The proposal would create a Health Insurance Rate Authority that would issue an annual report on what it considers to be reasonable premium increases, and recommend to states whether certain rate increases should be approved.
- The Health and Human Services secretary would be allowed to overrule state insurance regulators.
2/22/10
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Health Care Excise Tax Would Mostly Hit Non-Union Plans
The proposed excise tax on high-value health care plans, still strongly supported by President Obama, would mainly affect non-union workers, reports the Washington Post, citing a new report by the University of California at Berkeley Labor Center.
Opponents of the tax, including many House Democrats, point to research suggesting that the tax would hit plans that are costly because they are in expensive regions or in businesses that have many older workers. And they warn about the political risk of taxing middle-class voters' health benefits.
- Separately, the Employee Benefits Research Institute released an analysis finding a wide consensus that the proposed tax is likely to cause major cuts in employer-provided health benefits.
2/19/10
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Some 401(k) Plans Serve Workers Better than Others
There are many reasons why a neighbor might have a much brighter retirement outlook than your employees, or vice versa. To what degree does your company's 401(k) plan make a difference? A lot, reports MarketWatch.
There are wide differences in the types of plans companies offer their employees, and how much those plans cost. In additoin to mutual-fund expense ratio, separate administrative fees or asset charges can be assessed by the plan administrator and covered by employers.
- Particularly in smaller plans, participants may be charged extra administrative costs, and they are taking note. Online services such as BrightScope.com may allow them to compare their own 401(k) plan with a competitor's.
2/19/10
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Lowe's Does National Comparison Shopping for
Employees' Heart Surgery
With medical costs climbing and health care reform stalled, Lowe's Companies Inc. decided to shop nationally for the best deal in heart surgery for its employees, reports the Cleveland Plain Dealer.
The nation's second-largest home improvement retailer reached a three-year agreement with the Cleveland Clinic. The deal was praised widely as a groundbreaking business effort to purchase health care based on documented quality and value. The move could spur others to shop far and wide for medical treatment. "This is the first I've seen a multistate, national company choose a center of excellence and make it available to their employees," said Dr. Jack Lewin, chief executive of the American College of Cardiology.
- Lowe's is offering employees incentives in the form of reduced out-of-pocket costs to come to the Clinic for heart procedures. Lowe's said it chose the Clinic among five hospitals nationwide in an effort to improve the quality of medical care for its workers and to lower costs.
2/18/10
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Stimulus Funds Paying Some Salaries
In some states, part of the $5 billion in welfare money in last year’s stimulus act is going to subsidize employee salaries, reports the New York Times.
Florida recently announced it would use up to $200 million to create thousands of jobs in the public and private sectors. Los Angeles County set itself a goal of putting 10,000 people to work with its money.
- In Mississippi, the STEPS program focuses on private-sector jobs. The program is set up to reduce the subsidy for each new worker over time: employers will be reimbursed for each new worker’s full salary for the first two months of work, and then the monthly reimbursement will be scaled back gradually until it drops to just a quarter of the salary in the sixth month. After that, the employer must pay the full salary.
2/18/10
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Former Employee Benefits Fund Administrator Accused of Embezzling over $40 million
The former administrator of the Sandhogs’ Union Local 147 in New York City has been indicted on charges that she embezzled over $40 million from the union’s employee benefit fund over a six year period, reports the Mid-Hudson News Network.
- Melissa King, 58, of Westchester County, has been charged with one count of theft and embezzlement in connection with employee benefit plans, and 11 counts of money laundering. If convicted, she faces a total of 115 years in federal prison.
2/18/10
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Health Account Plans Gaining Share
Enrollment in health plans that incorporate health savings accounts or other personal health accounts could increase to 45 million by the end of 2012, from 29 million at the end of 2008. The account-based plan industry has experienced a compound annual growth rate of about 71% over the past 4 years, according to Aite Group LLC, a business research and advisory firm, reports National Underwriter.
- Premiums have been increasing just 3% per year for account-based plans, compared with an average of 8% for traditional plans, Aite found.
(To learn more, see the SHRM Online article Studies Quantify Savings with Consumer-Driven Health Plans.)
2/18/10
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Congress May Extend COBRA Subsidy Using Emergency Spending
With current extensions of the COBRA subsidy and unemployment benefits set to expire at the end of February and the jobless rate still near 10 percent, Democratic lawmakers want to pass further extensions quickly, without having to find offsets for the costs, reports The Hill.
Democratic leaders said extensions of these benefits should be emergency spending that isn’t subject to the pay-as-you-go statute, which requires new non-discretionary spending to be offset with spending cuts or tax increases. Facing record deficits and a debt that has exceeded $12 trillion, Democrats had touted the new pay-go requirements as a necessary step to get spending under wraps. President Barack Obama signed the pay-go bill into law on Feb. 12, amid much skepticism that the spending limits would be enforced.
- “Assistance to unemployed workers during periods of high unemployment are always classified as emergencies,” a House Democratic leadership aide said.
2/17/10
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Shell Unveils Plans to Curb Executive Pay, Bonuses
Royal Dutch Shell PLC is freezing executive pay and revamping bonus policy in the wake of a shareholder rebellion at its annual meeting last year, reports the Associated Press.
In a letter to investors, the company outlined changes including barring the payment of bonuses when executives fail to meet their performance targets.
- Shell's new bonus policy is tied to both share performance and other criteria such as production and cash-flow increases. The new system does not necessarily reduce executive bonuses, but shifts some incentives toward a five-year horizon.
2/16/10
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Six Ways Employers Will Change 401(k)s in 2010
Employers plan to get more involved in their 401(k) plans in 2010. The trend of employers automatically signing their workers up for retirement accounts is expected to continue this year, and so will automatic escalation of employee contributions, and automatic rebalancing of investments. Many companies will also provide more advice regarding appropriate investments, according to U.S. News & World Report., citing a report from Hewitt Associates.
- Other trends include adding a Roth 401(k), offering annuities and resuming the 401(k) match.
2/16/10
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DOL Posts Six EFAST2 User Guides
The U.S. Department of Labor has posted on its web site six EFAST2 user guides to assist with electronically filing Form 5500 for 2009 and later plan years.
The guides, which can be found at can be found at http://www.efast.dol.gov/fip/forms_pubs.html, include:
• EFAST2 Guide for Filers and Service Providers
• EFAST2 Tutorial
• EFAST2 IFile User Guide
• EFAST2 Filing Search Guide
• Most Common EFAST2 Filing Errors
• EFAST2 2009 & 2010 Third Party Software Test Plan & Certification Procedures
2/15/10
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Minorities Less Likely to Receive Diabetes Test
Ethnic and racial minorities bear a disproportionate share of America’s diabetes epidemic but are significantly less likely than whites to receive a commonly used test to monitor control of blood glucose, according to Washington State University (WSU) researchers, reports newswise.com.
black and Hispanic patients diagnosed with diabetes are two to three times less likely than white patients to receive the A1C test during physician office visits. The A1C test is a “monitoring cornerstone,” providing a retrospective snapshot of a patient’s blood-glucose level.
- Diabetes is projected to affect 48 million Americans by 2050. Hispanics and blacks are more than twice as likely to develop diabetes and suffer the consequences of insufficient monitoring, say the WSU researchers.
2/15/10
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Tax Court: Sex Reassignment Expenses Were Covered Medical Care, Not 'Cosmetic'
The U.S. Tax Court held that hormone therapy and sex reassignment surgery treated a disease within the meaning of the tax code, and therefore these procedures were for medical care and were not cosmetic surgery, reports EBIA Weekly from the Employee Benefits Institute of America (EBIA).
- Comments EBIA, health flexible spending account (FSA) administrators will appreciate having this new guidance. The case also serves as a reminder not to deny a claim just because the bill comes from a plastic surgeon—administrators should check to see if the expense is for medical care, obtaining additional substantiation if appropriate. In addition, EBIA notes that at least one employer that denied coverage for similar expenses was sued under ERISA and Title VII.
2/15/10
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AIG Overhauls Incentive Pay to Reward Top 10% of Employees
American International Group Inc., the insurer criticized by lawmakers for giving bonuses to executives after a U.S. bailout, started an incentive plan that will give the top 10 percent of employees the largest awards, reports BusinessWeek.
AIG’s system will rank employees on a scale of 1 to 4 based on performance compared with colleagues. About 10 percent of its workers will be placed in the top rank, getting the biggest bonuses, while 70 percent will fall in the middle tiers. The bottom 20 percent of performers will get the lowest payouts.
- “These ratings will help ensure that our people are accountable, recognized and rewarded for their achievements,” a statement from the company said.
2/12/10
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Many U.S. Adults Skip Routine Vaccinations
Tens of thousands of American adults die each year from pneumonia, influenza and other infectious diseases that could be prevented by routine vaccinations, according to a recent report released by the Trust For America's Health, the Infectious Diseases Society of America and the Robert Wood Johnson Foundation, reports Reuters (via MSNBC.com).
Millions of American adults go without routine vaccinations every year, leading to as many as 50,000 preventable deaths and thousands of preventable diseases, the report said.
- Diseases that can be prevented by vaccines add an estimated $10 billion a year to U.S. health care costs, according to the U.S. Centers for Disease Control and Prevention.
2/12/10
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Insurers Measuring Doctors Against Quality Metrics
UnitedHealthcare has started sending doctors individualized reports drawing doctors' attention to how their treatments might vary from medical protocol, in hopes of reducing unnecessary care that doesn't improve health and raises health care costs, reports the Wall Street Journal.
For caner treatment, the insurer has been collecting clinical information directly from oncologists. It then compares the choices that a doctor made for a particular patient's treatment with claims data and guidelines developed by the National Comprehensive Cancer Network, a consortium of 21 leading treatment centers. The American Society of Clinical Oncology also has been running its own quality-assessment program, in which doctors' performances are measured against national guidelines.
- WellPoint Inc has a pay-for-performance program in primary care that rewards physicians based on technology adoption and generic-drug use.
(To learn more, see the SHRM Online article Employers Take Further Steps to Rein in Health Costs.)
2/11/10
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401(k)s Opening Door to Annuities
Mutual fund companies and insurers are working toward building annuities into 401(k) retirement plans, in response to concerns Americans will outlive their savings, reports BusinessWeek.
President Barack Obama on Feb. 1 called for a change in government rules to make it easier to add annuities to 401(k) retirement plans. While the annuities offer a steady stream of income in exchange for upfront payments, the price for peace of mind may be higher fees and less access to cash.
“We believe guaranteed income is important because it locks in a level of retirement income,” said Jamie Kalamarides, senior vice president of retirement solutions for Prudential. But countered Glenn Daily, a fee-only insurance consultant, “These things [annuities] are so complicated I doubt many people will understand what they’re buying.”
(To learn more, see the SHRM Online article, DOL Seeks Comments on Lifetime Income for Retirement Plans.)
2/11/10
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Depression Costs for Employers
Workers with depression stay home sick more often than healthy colleagues, even when their disease is treated, reports the New York Times, citing research by Thomson Reuters.
- The research suggests that employers would benefit from better treatments of their workers for depression. Depression is the leading cause of disability among Americans aged 15 to 44, according to the National Institute of Mental Health.
2/9/10
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Disability Odds Are Hard to Pin Down
About one-third of U.S. workers have at least some disability coverage, according to the Bureau of Labor Statistics, reports the New York Times.
- The odds of an injury or illness that would keep you out of work for more than three months range wildly, depending on where you look for guidance.
2/9/10
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Geithner Backs Pension Funding Relief
Treasury Secretary Timothy Geithner today endorsed giving “targeted” funding relief to defined benefit pension plans as a way to create and preserve jobs, reports Pensions & Investments.
- Geithner made the commitment during a hearing before the House Ways and Means Committee, according to a news release issued by Rep. Earl Pomeroy, D-N.D. Pomeroy is co-sponsor of a House bill that would give employers additional relief from funding obligations under the Pension Protection Act of 2006.
2/4/10
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Public Health Tab to Hit Milestone
For the first time, government programs next year will account for more than half of all U.S. health-care spending, reports the Wall Street Journal.
Government health programs are a growing burden on the federal budget, which is running annual deficits of more than $1 trillion, Growth of Medicaid accounts for much of the shift toward publicly funded health care. Researchers predict enrollment in Medicaid will rise 5.6% this year and spending will rise 8.9%.
- In a separate Wall Street Journal story, Helen Darling, head of the National Business Group on Health, says she was disappointed that few efforts to slow health care costs survived into the congressional health care overhaul bills, and thus, in this regards, the legislation wouldn't have accomplished much.
2/4/10
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Why Employers Suspend Their 401(k) Matches
Liquidity constraints rather than profitability concerns appear to be the main reason for employers suspending their matching contributions to employee 401(k) accounts during the financial crisis and recession, according to a February 2010 research report from the Center for Retirement Research at Boston College.
About 5 percent of active participants in 401(k) plans saw their employer’s match suspended.
- As the crisis abates, companies appear to be restoring the match. "If this trend continues, the suspensions may have done little harm and may have been better than the alternative of cutting payroll or laying off workers," the report concludes.
2/3/10
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Obama Proposes Second COBRA Premium Subsidy Extension
Federal COBRA health insurance premium subsidies provided to involuntarily terminated employees would be extended again, the Obama administration proposed on Feb. 1, reports Business Insurance.
Under the latest proposed extension—embedded in the administration's proposed federal budget for fiscal 2011—employees who are laid off from March 1, 2010, through Dec. 31, 2010, would be eligible for the 65% premium subsidy for up to 12 months. An extension of the COBRA premium subsidy law also is expected as part of a jobs bill Senate Democrats are expected to unveil.
- Benefit experts say Congress is likely to be very receptive to the proposal.
2/2/10
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New Rules for Employer-Provided Mental Health Coverage
The newly issued rules implementing the Mental Health Parity and Addiction Equity Act of 2008 prohibit group health plans from setting higher co-payments and deductibles or stricter limits on treatment for mental illness and addiction disorders. Nor can they establish separate deductibles for mental health care and for the treatment of physical illnesses, reports the New York Times.
- The administration said the new requirements could increase premiums by four-tenths of 1 percent, or $25.6 billion over 10 years. Businesses with 50 or fewer employees are exempt.
(To learn more, see the SHRM Online article Agencies Issue Final Rules for Mental Health Parity Act.)
2/2/10
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Interim Final Rules Issued for Mental Health Parity Act
Federal agencies have issued long-awaited regulations on providing parity for employees enrolled in group health plans who need treatment for mental health or substance use disorders. The interim final rules were jointly issued by the U.S. Departments of Labor, Health and Human Services (HHS), and the Treasury, and are to be published in the Feb. 2, 2010 issue of the Federal Register (available here). The rules apply to plan years starting on or after July 1, 2010.
The new rules implement the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Enacted in October 2008, MHPAEA prohibits group health insurance plans — typically offered by employers — from restricting access to care by limiting benefits and requiring higher patient costs than those that apply to general medical or surgical benefits.
- Officials are still weighing how to explain some part of MPHAEA, reports National Underwriter. For example, they are seeking comments on how the ban on differences in nonquantitative treatment limitations will work.
2/1/10
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Focus on Health Reform May Be Changing
The immediate focus may be shifting toward health insurance reform instead of quickly trying to pass a comprehensive bill, White House officials signaled, reports CNN.com.
"The American people aren't saying let's walk away from health insurance reform," David Axelrod, the senior adviser to President Obama, said on Jan. 31, citing problems such as people denied health coverage for pre-existing conditions and losing coverage when they become seriously ill.
- However, Robert Gibbs, the White House press secretary, was noncommittal when asked if President Obama was considering breaking the health care bill into smaller measures that might be able to gain bipartisan support. "I don't think we know yet the answer on the process of this," Gibbs told CNN.
2/1/10
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Democrats Seek to Resurrect Health Care Bill
Asked on Jan. 27 if Congress might abandon a health care initiative beset with political and policy problems, House Speaker Nancy Pelosi responded: "I don't see that as a possibility. We will have something," reports the Washington Examiner.
President Obama, in his State of the Union address, vowed not to "walk away" from the comprehensive health care overhaul he's championed, reports the San Francisco Chronicle.
- AP reports (via the Washington Examiner) that Democratic congressional leaders hope the House will eventually pass the Senate bill with some changes to accommodate House Democrats, and then to use a special budget procedure — known as reconciliation — to pass the revised bill in the Senate with a simple majority vote, according to senior Democratic aides.
(To learn more, visit SHRM's Health Care Reform web page.)
1/28/10
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President to Make Retirement Income a Priority
The administration’s plans include a proposal to encourage the use of annuities and similar products to transform savings into guaranteed future income, thereby reducing the chance of retirees’ outliving their savings or seeing nest eggs worn down by inflation or investment losses, reports National Underwriter.
The proposals were outlined in a fact sheet released by the White House in advance of President Obama’s State of the Union address. Initiatives outlined by the White House document include:
• Increase the clarity of 401(k) plan fees.
• Encourage retirement plan sponsors to give workers access to impartial retirement advice.
• Require clearer disclosures of the risks of funds offered as retirement plan investment choices.
• Promote use of annuities to generate retirement income.
1/27/10
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Raises Make Bad Motivators, Expert Says
Most managers get it all wrong, according to Daniel H. Pink, author of Drive: The Surprising Truth About What Motivates Us. They're still focused on the old-fashioned carrot-and-stick approach to drive their employees, rewarding good work with pay, benefits or promotions, according to a review in USA Today.
Pink, a former speechwriter for Al Gore, says using carrots and sticks can diminish performance, foster short-term thinking and encourage unethical behavior.
- Better motivators, in Pink's view, would be giving employees more freedom at work, including the opportunity to take on new challenges and greater autonomy to follow through on them.
1/26/10
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Fortune 100 Best Companies to Work for: Best Benefits
Fortune magazine's annual list of best companies to work for includes, via Fortune's online "perkfinder," a breakdown of which "best perks" are offered by which best companies.
- "Best perks" include 100% payment of health care, onsite childcare, and allowing employees to telecommute or work at home at least 20% of the time, among others.
1/25/10
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Obama Goes After 'Obscene' Bank Bonuses
The White House, reeling from setbacks in Congress, may be spoiling for a showdown with an unpopular industry that has returned to high profits and big bonuses, reports USA Today.
"My resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform," President Obama said in a press briefing at the White House, "and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can't lend more to small business (and that) they can't keep credit card rates low."
- "If these folks want a fight, it's a fight I'm ready to have," the president said, announcing plans to impose limits on how much financial institutions can grow and take risks. Bank stocks plummeted in the wake of Obama's announcement.
1/22/10
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Health Care Reform in Flux
President Barack Obama suggested he's open to Congress passing a scaled-back health-care bill, reports the Wall Street Journal, but some top Democrats said they would press ahead despite growing doubts among rank-and-file members that they can pass the bill they've been laboring over for nearly a year.
Sen. Max Baucus appeared to throw cold water on a bill that would focus only on stiffer insurance regulations. And White House Communications Director Dan Pfeiffer said the president would prefer Congress to pass the comprehensive package, and hasn't given up on that option. A senior White House official said House Speaker Nancy Pelosi was counting votes to see if she could move the more comprehensive package through the House.
- Republicans said the election results from Massachusetts were a clear order to stop the health bill and start over.
1/21/10
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Democrats Ponder Health Care Reform After Massachusetts
In the wake of Republican Scott Brown's upset victory in the Massachusetts Senate race, Democratic congressional leaders sought to sound optimistic that they could remain on course to pass a their massive health care reform bill, reports the Washington Post. But other Democrats saw a bleaker landscape ahead for passing a final act that reconciles measures passed by the House and Senate, given numerous polls showing the increasingly unpopularity of the sweeping provisions, and costs, in these bills.
"The biggest worry in the party is that moderates will now begin to back away from the legislation, fearing its political effects," the Post reports. Similarly, Investors Business Daily's Capitol Hill column predicts, "Expect a number of House Democrats also to look for a way out."
Adds CNN.com: "Several rank-and-file Democratic lawmakers on the right and the left suggested it may be best now to scrap their big overhaul bill and pass a smaller measure with provisions they can all agree on, such as barring rejection by insurers for those Americans who have pre-existing conditions and closing the doughnut hole to bring down prescription drug costs."
- Still, a comprehensive health care overhaul along the lines of the House and Senate bills remains President Barack Obama's signature issue, and the administration is unlikely to retreat, others say. The coming days, and the president's upcoming State of the Union address, will shed more light on how the Democrats will proceed.
1/20/10
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Keeping Watch on 401(k) Investments, Fees
Roger Ferguson, CEO of TIAA-CREF, which provides retirement services to 3.6 million active and retired educators and non-profit workers, urges 401(k) plans to diversify investment options, in an interview with USA Today.
Ferguson notes the declining number of employers are offering defined benefit plans, commenting that "the probability of being able to undo 30 years of trend is not very high. We really have to focus on getting to a place where we have defined contribution plans that have some of the attractive defined benefit components."
- Separately, the Washington Post reports that the for-profit service Brightscope is now making available on its web site free 401(k) fee reports for participants regarding specific 401(k) plans. (Note that use of the site requires registration and contains ads for additional services.)
1/19/10
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Accord Would Exempt Unions, Government Workers
from Excise Tax
The White House, Congressional leaders and labor unions reached agreement on a proposal to tax health insurance policies above a minimum value threshold—carving out partial exemptions for union-negotiated and government-employee plans until 2018, reports the New York Times, FoxNews.com, and other sources.
- Business columnist Allan Sloan, writing in the Washington Post, explains why he views the excise tax as a bad idea. According to Sloan, "employers, who pay little for FSAs [flexible spending accounts] except for administrative costs, would be forced to pay a 40 percent, non-tax-deductible excise tax on part of employees' FSA accounts if a plan's premiums plus FSAs plus other stuff exceed certain thresholds. Employers won't offer FSAs if there's a chance they'd have to pay an excise tax as a result. This would increase workers' taxable incomes."
1/15/10
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Do Wellness Programs Make Cents?
Employers are investing in ways to contain health care costs, but few know what they're getting back, reports CFO.com.
That's not to say there's no effort to measure savings. At Data-storage giant EMC, a pilot dietary program showed the company avoided nearly $1,000 in medical and drug costs per participant, and EMC is hoping to eventually get a measure of the productivity gains that go along with that.
- Some programs can raise costs in the short term. Health-screening fairs at a Pennsylvania-based pretzel-maker's manufacturing facilities turned up employees with serious illnesses, saving at least one employee's life. Those proactive steps drove up 2009 health-care costs, "but once they have those illnesses under control, those levels will start to come down," predicts the firm's benefits manager.
A new study in the journal Health Affairs, "Workplace Wellness Can Generate Savings," provides more evidence of positive returns on employers' investments in prevention.
1/14/10
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ETFs Make Inroads with 401(k) Investors
Exchange-traded funds have been the hot thing in the investment world these days, but not among retirement plans. That may be changing, as ETFs finally are gaining a foothold in the 401(k) retirement-plan market, reports the Wall Street Journal.
For ETFs, which resemble traditional open-end mutual funds but trade on exchanges like a stock, growth has been much faster than for the mutual-fund industry at large. Another appeal of ETFs, which mostly track indexes, is that they offer investors low costs and extra flexibility.
- Unlike other 401(k) options, ETFs don't accommodate "revenue-sharing," or using a portion of the fees investors pay to funds to support administrative costs of retirement plans. To keep brokerage commissions low, 401(k) plans typically pool many individual investors' trades.
1/14/10
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CBO Analyzes Cost of “Bronze Plans”
Individuals might have to pay $4,500 to $5,000 per year to buy enough insurance to meet minimum Senate health bill coverage requirements (for the so-called "bronze plans"), according to the Congressional Budget Office (CBO), reports National Underwriter. The cost of family bronze plan coverage might be $12,000 to $12,500.
- Insurers likely would charge small employers about as much for new policies as they would for policies sold through a proposed health insurance exchange system, the CBO says. But, in most cases, small employers would provide plans with a greater amount of coverage than under bronze plans, as they do under current law.
1/13/10
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Over Half of DC Plans to Reinstate Match in 2010
More than half of companies that dropped or cut their defined contribution matches in 2009 expect to reinstate the matches in 2010, reports Pensions & Investments, citing a Callan Associates survey.
Real return/TIPS funds were the most common investment option additions last year, followed by target-date funds, while small-cap and midcap equity funds were the options most dropped the most in 2009, “likely the result of the extraordinarily poor performance of active small/midcap managers in the third quarter of 2008,” the report said.
- 61% re-evaluated their investment structure last year with 28.1% increasing the number of fund options and 14% reducing them.
1/13/10
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House, Senate View Health Care Exchanges Differently
In the House bill, health insurance would be purchased on a national exchange set up and run by the federal government. In the Senate bill, each state will have to set up its own exchange, complete with its own state law on the subject, reports NPR Online.
- In both bills, at least at first, only individuals who don't have access to insurance at work and small businesses could buy coverage through the exchanges. But while the House bill might open up the exchanges to more people and larger firms later on, the Senate bill would not.
1/12/10
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Unions Oppose Health Care Excise Tax
Unions – a key source of support for President Obama – argue that a tax on insurance plans costing more than $23,000 a year for family coverage and $8,500 for individuals could affect a significant number of their workers, reports the Christian Science Monitor.
Unions argue that the health policies of too many of their workers would be hit by the levy. Older workers in particular, whose health premiums are more expensive, could be affected, they say.
- The Congressional Budget Office estimates that about 19 percent of workers would be subject to the tax in 2016.
1/12/10
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DOL Updates COBRA Subsidy Posters and Flyers
To reflect the additional 6-month extension for COBRA premium subsidies recently signed into law, the U.S. Department of Labor's (DOL) Employee Benefits Security Administration has posted on its web site updated versions of several materials, including its:
- Flyer for employees.
- Flyer for employers.
- Job loss poster.
1/11/10
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Health Reform Could Threaten Autonomy of Self-Insured Plans
Self-insured health plans could lose much of their autonomy as federal health care reform reshapes requirements for their coverage, reports Insurance & Financial Advisor.
Employers might face a surcharge for offering so-called Cadillac plans, where the annual value of benefits exceeds $8,500 for individuals and $23,000 for families. Benefits equaling $705 a month could draw the surcharge, a 40% tax.
- Other new—and potentially costly—requirements could include a prohibition on non-coverage for pre-existing conditions, expansion of COBRA coverage to dependents up to 27 years old, and the termination of lifetime coverage limits. Employers would face fines for failing to meet the new requirements.
(To learn more, see Employers Watch and Wait as Health Reform Advances.)
1/8/10
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With Clawback Rules, Spending Bonuses Becomes Risky
Many U.S. executives opening their 2009 bonus envelopes will find something extra this year: more conditions on whether they can keep their money or stock. That’s because a growing number of companies are inserting clawback provisions in employment agreements, which puts incentive cash or stock at risk of being rescinded in the future, reports Bloomberg.com.
Seventy-three percent of Fortune 100 companies, or the largest U.S. firms based on revenue, said they had clawback policies in 2009 compared with 18 percent in 2006.
- Appealing a clawback usually means arbitration or mediation.
1/8/10
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Matches Lower in Automatic Enrollment 401(k)s
Employers who automatically enroll their workers in 401(k) plans match their employees' savings at a lower level than do other employers, reports Forbes.com, citing a study by the Center for Retirement Research at Boston College.
Automatic enrollment increases the share of workers, particularly younger and low-wage ones, contributing to retirement savings plans. However, some companies are offsetting the increase in their retirement expense that comes from having more workers participate by lowering their matching contributions.
- Even after controlling for the differences in match rates by company size and industry, the matches at firms with automatic enrollment were still about 7 percentage points lower. Despite the increase in employee participation, lower matches work against the goal of increasing retirement savings.
1/7/10
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Pensions More Generous, and Expensive, in Public Sector
Public sector (government) workers generally retire earlier than private sector workers and enjoy generous pension benefits for life indexed for inflation, according to a new report by the not-for-profit Cato Institute.
Public sector workers can typically retire at age 55 after 30 years of work, as in California’s CalPERs system. In CalPERs, workers receive an annual pension equal to 60 percent of final salary after 30 years.
- Virtually all public sector plans calculate benefits based on pay in the last one to three years of work. Private plans are more likely to use a lower-cost approach such as the last five years of pay or career-average pay. Also, public plans typically have a more generous factor to adjust pension benefits for number of years worked.
1/6/10
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CFOs Consider Dropping Health Coverage Post-Reform
A number of midsize employers are thinking about dropping their employee health coverage if the proposed health care reform measures become law, reports CFO.com.
Larger employers that could be at a competitive disadvantage by not offering health care insurance may also make substantial changes in how they deliver it to employees.
- Among the proposed items that could raise the cost of sponsoring a health care plan are $500 billion in cuts to the Medicare budget and taxes on prescription-drug manufacturers, both of which are likely to create more cost-shifting to plan sponsors. Under one version of the bill, plan sponsors could also be subject to state-by-state inspections of their benefits administration.
1/5/10
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Employers Brace for Burden of COBRA Extension
Unemployed workers got a holiday gift of extended subsidies for health care benefits — but employers have to front the money and spread the news, reports the Sacramento Business Journal. That means tracking them down and getting them signed up again if they choose.
- “Employers will need to allow (former) employees who had rolled off the subsidy an opportunity to roll back on for a total of 15 months,” said Vinny Catalano, area vice president at Gallagher Benefit Services. That means money out of pocket because employers get reimbursed via tax credits rather than cash for the insurance premiums they pay.
1/5/10
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Report Shows U.S. Health Care Spending Growth Slows
U.S. health care spending rose at the lowest rate on record in 2008, reports Reuters, citing a study published in Health Affairs.
The report, issued by the government's Centers for Medicare and Medicaid Services (CMS), showed that U.S. healthcare spending rose 4.4 percent in 2008. That was the slowest growth rate in nearly 50 years of federal tracking of such spending and was lower than the 6 percent growth increase recorded a year earlier, CMS analysts reported.
- Overall spending slowed for nearly all health care goods and services, particularly for hospital care, CMS said.
1/5/10
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In Health Bill, Provisions Favor or Penalize Industries, States, based on Clout
The Senate Health Care bill contains special provisions favoring certain states and penalizing certain industries, reports the New York Times.
One example: the bill singles out the construction industry for special treatment, in a way that benefits union members and contractors who use union labor. Generally, employers with fewer than 50 workers are exempt from the requirement to provide acceptable health care coverage or pay a penalty of $750 per worker. But for the construction industry, the exemption from the penalty would be much more limited, available only to employers with fewer than five employees, in order to favor unionized firms.
- Republicans complained of “sweetheart deals,” payoffs and kickbacks. But the Senate majority leader, Harry Reid, Democrat of Nevada, brushed aside the criticism.
1/4/10
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Target-Date Retirement Funds Bounce Back
Target-date funds, a popular default investment in 401(k)-type plans but subject to a maelstrom of investor ire and governmental scrutiny after plunging in 2009, rebounded sharply in 2010, reports Morningstar.com.
- Plan sponsors and fiduciaries, meanwhile, need to make sure that target-date funds match the demographics of their participant base while improving education efforts. "If target-date funds can successfully execute on this front, there will be a lot less second-guessing the next time the markets crash," Morningstar notes.
1/4/10
