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SHRM Compensation & Benefits Newswire

By Stephen Miller, CEBS  8/25/2014


Compensation & Benefits Newswire

News To Use

For the latest SHRM-produced news and features, visit SHRM Online's
Benefits Page
and Compensation Page.

Also visit our Health Care Reform Resource Page, the Retirement Plans Resource Page, the Wellness Resource Page and the Workplace Flexibility Resource Page.

For links/summaries to some of the best external compensation /benefits stories on the web, see below.


New Accommodations for Employers on Contraceptive Coverage

In an analysis posted at Health Affairs Blog, Timothy Jost notes that on Aug. 22, the Departments of Health and Human Services, Labor, and Treasury released an interim final and a proposed rule providing for the accommodation of religious objections on the part of an employer or institution of higher learning to providing their employees or students coverage for contraceptive services.

A fact sheet on the rules was also released, as was a notice on the revision of the form used to collect information on religious objections to contraceptive coverage.

  • The proposed rule, issued in response to the Supreme Court’s decision in Burwell v. Hobby Lobby, would allow closely held for-profit organizations to qualify as “eligible organizations” that may claim the same accommodation as nonprofit religious organizations.

(To learn more, see the SHRM Online article Comments Sought on Proposed Accommodation for Contraceptive Coverage.)



Knock Down 401(k) Eligibility Barriers

A positive benefits trend is to scale back or reduce any barriers to retirement plan entry for employees, reports BenefitsPro.

Plans that have waiting periods play into the worst retirement planning tendencies that people have. New employees lose interest. They get used to spending every penny and don’t want to divert it after three months to a plan promising security in retirement years from now.

  • Shortening eligibility requirements to allow quicker if not immediate rollovers will discourage participants from cashing out and will allow balances to continue growing.



Beware: High Fees Can Erode HSA Dollars

The generous tax benefits that one receives by investing in a health savings account (HSA) can be eroded by the high fees that some HSA providers charge, reports Morningstar. While consumer groups have been shining the spotlight on 401(k) fees, many HSAs are larded with fees.

Although the savings account option in an HSA may carry a competitive yield, that advantage can be eroded with various types of account and transaction fees. HSA participants who invest in mutual funds are also likely to run the gamut of administrative charges, on top of the mutual funds' expense ratios.

  • Due diligence is essential in choosing both HSA providers and in weighing investment options within the HSA.



DOL Seeks Input on 401(k) Brokerage Windows

The U.S. Department of Labor (DOL) issued a request for information (RFI) about the use of brokerage windows for self-directing investments within 401(k) and other defined contribution retirement plans, reports

The DOL is considering whether to update its rules to expand plan sponsors’ fiduciary responsibilities regarding brokerage windows, which are available in 19.5 percent of defined contribution plans across plans of all sizes, and in 44.4 percent of plans with assets between $500 million and $1 billion.

  • The RFI, detailed here, contains instructions for how to submit public comments.



Uninsured Choosing Employer's Health Coverage

Uninsured workers who chose not to buy health coverage before there was a law requiring them to do so may now be opting for employer-provided insurance. This increase, if it is permanent, is going to cost employers money, reports the New York Times.

The law’s best-known and least-liked provision — the “individual mandate” — is probably causing the trend. For the first time, people must buy insurance this year or be subject to a tax penalty.

  • Dave Ostendorf, a managing director at Towers Watson, told the paper his customers were seeing small but real increases in the number of people they’re insuring through employer plans this year. Recent surveys support that finding.



Employees Falling for Roth 401(k)s

Employees saving for retirement in workplace 401(k) plans are increasingly choosing the Roth option, according to benefits consultant Aon Hewitt’s 2014 Universe Benchmarks report, reports Forbes.

When the Roth option is available, 11 percent of participants contributed to a Roth in 2013, up from 8.1 percent in 2011. But significantly, more than 17 percent of younger workers (in their 20s) elected to make Roth contributions to their 401(k)s compared to fewer than 9 percent of older workers (in their 50s).

  • The percentage of employers who offer the Roth option has also gone up—from 40 percent in 2011 to more than half of employers in 2013.



Only Top Earners See Real Wage Gains; No Improvement for Most Workers

Five years of economic expansion have done almost nothing to boost paychecks for typical American workers. Meager improvements since 2009 have barely kept up with a similarly tepid pace of inflation, raising the real value of compensation per hour by only 0.5 percent for most employees, reports Bloomberg.

Households in the top 20 percent of U.S. socioeconomic groups saw their incomes grow by an average of $8,358 a year from 2008 to 2012, compared with a $275 annual decline for the lowest 20 percent, according to data from the Bureau of Labor Statistics cited by Bloomberg.

  • Recoveries in the past generated broad-based compensation increases that outpaced the speed of inflation and encouraged consumers to spend. If the economy had followed the historical relationship between joblessness and earnings, real wages would have been 3.6 percentage points higher by mid-2014, given how much unemployment has declined.



Have Missing Participants? The DOL Says, “Google Them!”

Last week, the Department of Labor released Field Assistance Bulletin 2014-01, which updated its 10-year-old guidance on how to deal with the accounts of missing or unresponsive participants and beneficiaries in a terminating defined contribution plan, reports Bryan Cave.

Plan fiduciaries can start by using free Internet search tools, which may include search engines, public records, obituaries, and social media, the DOL advises.

  • But "If the free or cheap options don’t work, fiduciaries can’t stop there," Bryan Cave advises. Fiduciaries need to consider how prudent it would be to use other tools, such as commercial locator services, credit reporting agencies, information brokers, investigation databases, and analogous services that charge. 



7 Things Employees Wish They Could Tell Their Boss About Pay

“Pay scales are like a pacifier for a weak boss: falling back on pay scales is often the easiest way out of a difficult discussion about pay,” observes Jeff Haden at Linkedin.

“Pay scales—and pay practices—are important to a company, but they’re largely irrelevant to an employee who, often with good reason, views them as as arbitrary rule“Pay scales—and pay practices—are important to a company, but they’re largely irrelevant to an employee who, often with good reason, views them as as arbitrary rule.”

  • “Saying, ‘That’s just how our system is set up,’ is a cop-out. If the company can’t afford to pay an employee more, smart bosses say so. If they think a certain percentage raise is fair, they explain why. Smart bosses use pay scales to build their budgets, and use reason and logic—and empathy—to explain pay decisions to employees.”



‘Custom’ Target-Date Funds Criticized

A pension consultant makes the case that paying for “custom” target-date funds, which are tailored to meet the needs of specific workforce demographics, are a “trillion dollar fraud” compared with standard off-the-shelf TDFs -- posted on the website of financial information provider Paladin Registry.

“The fraud is that a glide path can actually be built to meet the unique needs of a diverse group of employees,” writes Ron Surz, president of PPCA Inc and its wholly owned subsidiary Target Date Solutions.

  • “There is a demographic that can be legitimately addressed by a target date fund. It’s the one demographic that all defaulted participants have in common: lack of financial sophistication. The sole focus of all target date fund glide paths should be on those who default their investment decisions,” making the asset allocation far less risky as the retirement year approaches, writes Surz.



Employers Adopt Narrow Networks but Ensure Quality

In a Q&A with Kaiser Health News, Dr. Robert Galvin, chief executive officer of Equity Healthcare, said the move to offer workers plans with narrow networks that limit numbers of doctors, hospitals and other providers is increasing, but most companies are eager to make sure those networks offer adequate quality assurances and that employees are given the option of using other providers if they want to pay more for their care.

“Those employers who are going to stay in the game – which is the majority of them – in many cases have to [improve] what they’re covering,” Galvin said. “So the answer is narrow networks – we now call them ‘performance networks’ – they are definitely increasing in popularity. And I think what we’re trying to do differently this time is to make them performance [based] and not just narrow.”

  • Another change is offering more expensive provider options outside of the narrow network. “I think what we learned in the ‘90s was that Americans want choice, even if it’s the wrong choice,” Galvin said.

(To learn more, see the SHRM Online article High Performance Networks Entice Health Plan Sponsors)



Phased Retirement Program for Fed Employees

The federal government’s Office of Personnel Management has released final rules for a much-anticipated phased retirement program for federal workers, reports The program could encourage similar efforts in the private sector.

Under the new OPM rule, a federal employee with the approval of an authorized agency official will be able to enter into a 50 percent working schedule and receive approximately 50 percent of his retirement annuity.

  • Phased retirement will potentially benefit both employees who are eligible for retirement and the federal government. Employees with experience and knowledge may remain at work for a longer time and employees in phased retirement will earn more money than they would by fully retiring.

Also, via Reuters: Phased Retirement: How Washington is Leading the Way on Phased Retirement.



Can Family Leave Policies Be Too Generous?

Some economists say paid leave around the birth of a child is essential to making it possible for women to work. But long paid leaves can also hold back women by having negative effects on their career growth, reports the New York Times.

A big policy question is how long family leave should be, several economists said — and neither the United States or Europe seems to have figured out the ideal.

  • "I suspect women in the U.S. would benefit from longer leaves than the 12 weeks that are currently mandated,” said Cornell economist Francine Blau. “In Europe the leaves may be so long as to have negative effects on women’s labor market outcomes.”



401(k) Tools Help Retirees Delay Social Security

Mercer and the Stanford Center on Longevity recently published the article How to Improve Your Employees’ Retirement Security at Minimal Cost, which demonstrates the significant income advantage retirees can secure by delaying their Social Security claim.

More than half of all Social Security beneficiaries commence income at the earliest possible age of 62. The authors make a compelling case that tapping into savings or other retirement income streams, (or in effect “buying” a social security annuity), so as to delay the onset of social security, can significantly improve the odds of a successful retirement.

  • Employers can play a key role in empowering their near retirees to better plan for when to collect social security by providing third party life expectancy calculators and by enabling 401(k) plans to provide installment payment features to help “offset” Social Security deferral.



Same-Sex Couples and Employee Benefits: Where are We Now?

The IRS provided additional guidance on how qualified retirement plans should treat the marriages of same-sex couples. Guidance for health and welfare plans, however, is yet to come, according to an alert from law firm Warner Norcross & Judd LLP.

Under recent IRS guidance, qualified retirement plans must recognize and treat same-sex spouses on an equal basis with opposite-sex couples. And while the IRS has yet to issue much guidance for health and welfare plans, employers need to look at state laws to determine whether the plan must provide the same benefits to same-sex spouses as it provides to opposite-sex spouses.

  • Federal law does not currently require that self-insured plans provide benefits to same-sex spouses, or even to spouses in general. Yet government officials in the State of Washington recently stated their position that, under the state’s civil rights laws, all plans, including self-insured plans, must provide equal benefits to spouses, regardless of sex, to the extent they choose to provide spousal benefits.

(For a related SHRM Online article, see IRS Guidance: Employee Income Tax Correction for Same-Sex Spousal Health Coverage)



Employers Look to Wellness to Drive Performance

A new survey of employers worldwide illustrates their investments in wellness: 43 percent say they created a brand identity for their employee wellness programs, 52 percent offer health insurance premium reductions, and 65 percent believe wellness programs are extremely or very important to attract and retain workers, reports Buck Consultants at Xerox, citing research it conducted with Cigna and the Global Healthy Workplace Awards.

  • Survey findings show that 52 percent of employers worldwide are measuring the outcomes from their wellness programs – up from 36 percent in 2012. Yet, in the U.S., 59 percent of employers say they don’t know if their wellness programs are having an impact on health care cost trend (their top-stated objective).



IRS Increases Affordability Percentage Under Employer Mandate for 2015

On July 24, the IRS released Revenue Procedure 2014-37 to index the Affordable Care Act’s (ACA) affordability percentages for 2015. For plan years beginning in 2015, an applicable large employer’s health coverage will be considered affordable under the pay or play rules if the employee’s required contribution to the plan does not exceed 9.56 percent of the employee’s household income for the year, up from 9.50 percent, reports BB&T Insurance Services Inc.

Because an employer generally will not know an employee’s household income, the IRS created three affordability safe harbors that employers may use to determine affordability based on information that is available to them.

• The Form W-2 safe harbor (affordability determined based on Form W-2 wages from that employer).

• The rate of pay safe harbor (affordability determined based on an employee’s rate of pay).

• The federal poverty line (FPL) safe harbor (affordability determined based on FPL for a single individual).

Applicable large employers (ALEs) that do not offer affordable health coverage to their full-time employees may be subject to penalties, beginning in 2015. ALEs should review whether their health plans comply with the increased percentage.

(To learn more, see the SHRM Online article IRS Increases Affordability Percentages for 2015.”)



Pension Smoothing Extended without Premium Hike

On July 31, the Senate joined the House in passing legislation extending MAP-21 pension interest rate smoothing, reports Buck Consultants. The bill does not include premium increases requested by the Pension Benefit Guaranty Corporation (PBGC). President Obama is expected to sign the measure shortly.

“Plan sponsors will need to assess the cost of redoing 2013 valuation work against the temporary contribution relief and possible reduction in PBGC premiums for 2013 plan years through reassignment of contributions to 2012,” Buck Consultants advised.

  • The advisory notes: “The extension of MAP-21 pension smoothing is good news for employers interested in reducing their minimum required pension contributions. ... Employers should keep in mind, however, that the ultimate cost of a plan is the amount of benefit that it pays. If future investment returns are not sufficient to make up for lower contributions today, contributions in the future will be larger.”



Employment Costs on the Rise

Growing anecdotal evidence of companies raising wages in the U.S. has left economists expecting the employment cost index to start rising significantly sometime in the second half of 2014. Fed officials on Wednesday acknowledged the improvement in labor market conditions, but said "significant underutilization of labor resources" remained, reports Reuters.

  • Wages and salaries were up 1.8 percent in the 12 months through June after rising 1.6 percent in the 12 months through March. Benefit costs jumped 1.0 percent in the April-June period, the largest increase since the second quarter of 2011, likely reflecting expanded health insurance coverage.

(See the SHRM Online articles LINE: Hiring Pace Pressures Flat New-Hire Salary Structures and Base Salary Rise of 3% Forecast for 2015.)



Wage Growth Picking Up in Some Sectors

Wage growth is accelerating in several key industries, foreshadowing stronger gains across the economy, reports USA Today.

Pay hikes have picked up in sectors such as leisure and hospitality, business services, construction and retail, Labor Department figures show.

Wages in leisure and hospitality were up 2.7 percent in June from a year ago, vs. a 0.6 percent annual increase in June 2013. Salaries for professional and business services — a category that includes architects, engineers and accountants — were up 2.4 percent year-over-year in June vs. a 1.6 percent annual rise in June 2013. In retail, annual raises averaged 2.2 percent last month, up from 1.8 percent a year ago.

  • Annual raises for the top 20% of sectors with the highest pay averaged 3% in May, nearly double the year-ago rate, says Wells Fargo economist Jay Bryson. "We believe it's going to spread," he says.

(For another look at salary forecasts, see the SHRM Online article “Base Salary Rise of 3% Forecast for 2015.”)



Employers Have Cut Many Paid Benefits

Even though the economy has improved significantly since the recession, over the past five years employers have reduced a variety of benefits, educational assistance and perks, reports U.S. News & World Report, citing SHRM research.

  • Defined benefit pensions, retiree health care, and long-term care insurance have declined as employee benefits, along with undergraduate educational assistance, dependent care flexible savings accounts and elder care assistance.



Rankings Reveal Most Generous 401(k)s

A ranking of 401(k) plans at the 250 biggest companies in the U.S. found that ConocoPhillips, Philip Morris International and Abbott Laboratories were among those that provide the most lucrative retirement benefits, reports Bloomberg News, which compiled the rankings.

ConocoPhillips topped the Bloomberg News rankings of the largest public companies’ 401(k) plans, largely due to a matching formula that contributes 9 percent of annual salaries for employees who save as little as 1 percent of their pay. It was among about 90 companies that gave additional retirement funds to employees, regardless of whether or how much the workers themselves contributed. Philip Morris International, runner-up in the rankings, paid not only a 5 percent match but also an extra 15 percent of employees’ compensation.

  • At Abbott Laboratories, also in the top 10, employees who save just 2 percent of their annual salaries get a 5 percent match from the company. “We want to give incentives to young employees without a lot of discretionary income,” said Stephen Fussell, executive vice president of HR at the pharmaceutical company. “We don’t think you need to work at 10 companies over your career to keep advancing and growing.”



Split Subsidy Decisions No Excuse to Delay Preparation for ACA

“Large employers should continue to prepare for the Jan. 1, 2015 effective date for the employer penalties,” advises an alert from law firm Ice Miller Strategies LLC:

Employers who wish to avoid ACA employer penalties should continue to develop systems for tracking hours to determine the full-time employees to whom health coverage should be offered. They should continue to review their plan design to ensure that it meets the ACA's minimum value standards and they should review their health insurance premium structures to determine whether the employees' share of the premium is “affordable” under ACA standards.

  • Finally, employers with calendar year plans who wish to avoid penalties should make an offer of affordable, minimum value health coverage to full-time employees and their dependent children by Jan. 1, 2015.

(To learn more, see the SHRM Online article “Rulings on Subsidies Bring More ACA Confusion.”)



Most Employers Don’t Measure Cost of Worker Absences

The majority of employers don’t measure the impact of absence on their bottom line, despite the fact that it costs about 8 percent of payroll on average, according to an Aon Hewitt survey, reports Business Insurance.

  • Only 22 percent of employers will coordinate health and absence management with workers compensation in 2014, but more than half are considering doing so in three to five years, according a recent survey.



Why More Companies Want Pensions Off Their Books

More companies are moving their pension obligations off their books and into annuities run by insurance companies, reports the Washington Post.

Companies in recent years have poured billions into their pension funds to keep pace with accounting rules. Now that the stock market is up and interest rates are expected to increase, buying annuities to get rid of pension obligations is becoming less expensive—and interest in de-risking is rising.

  • A recent survey of 182 companies by Prudential found that 53 percent of them have either transferred defined benefit pension liabilities to a third-party insurer or “are likely to” in the next two years.

(To learn more, see the SHRM Online article "Pension Plan 'De-Risking' Strategies on the Rise.")



Reminder: Health Plans Must Pay PCORI Fees by July 31

Under the Affordable Care Act (ACA), self-insured health plans and insurance issuers must pay a fee each year for seven years to fund the Patient-Centered Outcomes Research Institute (PCORI). The fee is based on the number of individuals covered under the plan, and it is due by July 31 each year, reminds an alert from PricewaterhouseCoopers.

This is the second year for which PCORI fees have been collected. The fee is paid by filing IRS Form 720 (attached Form 720 and Form 720 Instructions).  Calendar year plans, as well as plans with plan years ending in October or November, were required to file for the first time in July of last year and to pay a fee of $1 per covered individual. Those plans will make their second PCORI fee payment this year, at the $2 per person rate that applies for the second year's filing.

  • Plans with plan years ending in January through September will file for the first time this year, and owe $1 per person.



Pay Raises for Recent College Grads Far Below Average

Salaries for recent college graduates have risen at less than half the pace for all U.S. workers since the recession, an analysis by the Federal Reserve Bank of San Francisco found, reports the Los Angeles Times. The study reveals that median earnings for recent college graduates rose only 6 percent between 2006 and 2013, compared with 15 percent for the workforce at large.

  • In the two most popular categories for recent graduates — professional occupations and management, business and finance—median earnings grew just 2.6 percent since 2007. A similar trend applied across nearly all occupations.



Employee Tax Refunds for Same-Sex Spousal Health Coverage

In June, the IRS published a letter outlining the steps taxpayers should take in order to obtain a refund for taxes paid on the value of employer-sponsored health coverage provided to an employee’s same-sex spouse, reports Proskauer’s ERISA Practice Center Blog.

The IRS instructed a taxpayer to contact her employer and request a corrected Form W-2, which she could then use to complete her tax return. If the employer does not issue a corrected Form W-2, the taxpayer should file her tax return using the original Form W-2 and file a Form 4852 (Substitute for Form W-2 or Form 1099-R) reporting the correct amount of her taxable wages (subtracting the value of excludable spousal health coverage).

  • Advises Proskauer, “Employers are not obligated to automatically furnish corrected Forms W-2 to employees who had imputed income in years pre-Windsor for the value of employer-sponsored health coverage provided to same-same spouses. However, it serves as a good reminder that employers should be prepared to respond to such requests as employees continue to seek refunds.”



Videos Can Promote Benefits Engagement

Interactive “video postcards” sent internally by employers to inform participants of benefit changes results in higher response levels than print mailings, reports

A video communications campaign generated an average 79 percent employee engagement rate (the percentage of employees who opened and watched the video postcard content). How long people spent engaging with the content was also surprisingly high—the average time was just over 3.5 minutes per viewing session.

  • Delivery is through the employer's e-mail system and responses can be integrated for campaign tracking to provide data about employee engagement and response.



Reference-Based Pricing for Health Services Explored

As insurers and large employers grapple with how to reign in health care costs, a growing number are turning to reference pricing, a benefit design in which an insurer defines the maximum amount that it will cover for a particular health care service, reports Health Care Financing & Organization, an initiative of the Robert Wood Johnson Foundation.

The Obama administration recently indicated that the use of reference pricing by large group and self-funded group plans does not violate the Affordable Care Act’s cap on patients’ annual out-of-pocket costs. Some experts say this guidance is likely to encourage additional employers to adopt reference pricing strategies.

  • Early evidence suggests that reference pricing may be a promising cost-control strategy when applied to frequently performed, non-emergency tests and procedures where the prices charged vary widely across providers but the quality of results remains largely similar. But some are concerned about the impact on consumers who unknowingly choose high-cost providers and incur thousands of dollars in medical bills as a result.



Employers Dropping Long-Term Disability Insurance

Employers are dropping their standard disability insurance plans in favor of employee-paid, voluntary plans. The result is a higher percentage of employees opting not to participate in the optional plans, leaving more workers vulnerable to financial ruin if they suffer long-term illnesses or injuries, reports the Portland Press Herald.

Insurers said employers’ uncertainty about the future costs of employees’ health benefits under the Affordable Care Act is likely to push even more companies to discontinue standard disability coverage for all employees.

  • The industry has responded to the drop-off in business by setting up private exchanges for employers to purchase either employer- or employee-paid group plans.

(To learn more, see the SHRM Online article "Disability Payments Up, But Fewer Workers Covered.")


San Francisco Law to Restrict Stand-Alone HRAs

A new San Francisco law will eliminate the appeal for employers in that city to use stand-alone health reimbursement arrangements (HRAs), one of the ways employers have used to satisfy the city's health care spending law, reports Business Insurance.

Under the city's 2006 health coverage law, employers with 100 or more employees are required to spend $2.44 per hour per covered employee on health care this year, while employers with between 20 and 99 employees must spend $1.63 per hour. The law allows employers to contribute to stand-alone HRAs that reimburse employees for health care-related expenses.

  • Under a newly passed city measure, HRA contributions can no longer be counted to satisfy San Francisco's spending law unless the contributions are irrevocable and cannot be recovered by the employer if unspent, lesseing the appeal of stand-alone HRAs for employers.



When One Pay Raise a Year Isn’t Enough

“As companies try to retain top employees and hit growth targets, some are ditching the annual salary review and doling out raises and bonuses several times a year,” reports the Wall Street Journal.

Executives say it doesn't cost that much to speed up the raise cycle—many companies simply break annual raise amounts into smaller bites—and the frequent pay raises keep workers motivated and less likely to jump to competitors since the next payoff is just around the corner.

  • But the practice isn't widespread: 5 percent of 1,147 companies increase salaries more than once a year, according to a 2013 survey by consulting firm Aon Hewitt. And some pay experts say the practice can be risky, since workers who respond well at first could grow unhappy if the rewards slow down.



A Wellness Program Compliance Checklist

Law firm Nixon Peabody explains that “While the plan design of a wellness program is generally simple, employer wellness programs are subject to myriad federal laws, and, in some cases, state laws as well, which can make compliance rather difficult. To add to the confusion, the laws that apply to an employer wellness program vary depending on whether or not the wellness program is a group health plan.”

  • A positive note: “Although the myriad laws impacting wellness programs may seem overwhelming, it is quite possible to design a compliant and cost-effective wellness program that has the potential for significant benefits to the employee and the employer.”



Lower Job Churn Depresses Wage Growth

Young workers always have earned less than those with more experience, but the gap has widened. In 2004, the median wage for workers 25-34 years old was 5 percent lower than the overall median wage. Today, it is 8 percent lower, reports the Wall Street Journal.

While the nation's jobless rate dropped to 6.1 percent in June, the lowest in nearly six years, the improvement masks the fact that many workers who held jobs throughout the downturn and recovery struggled to advance.

  • Their plight is best captured by the collapse in the monthly hiring rate, from 5.5 million in 2006 to as low as 3.6 million in 2009, according to the Labor Department. It was 4.7 million in May, the latest figure available.

(For more on this topic, see the SHRM Online article “Base Salary Rise of 3% Forecast for 2015.”)



Few Small Businesses Using SHOP Exchanges

There is apparently no way to know how many small business owners and employees have signed up for health care coverage through the Affordable Care Act law’s new Small Business Health Options Program (SHOP) exchanges, reports the Washington Post. By all indications, though, it’s not very many.

Health and Human Services (HHS) officials allowed states not to implement this first year a key cost-cutting feature that would have allowed business owners to give their employees a choice of multiple plans through the SHOP. Without that option, experts say small business owners are less likely to consider the small-business exchanges.

  • With HHS last month approving 18 states’ requests to delay that feature for yet another year, it for yet another year, it appears less likely that those small-business enrollment numbers will turn around in 2015.



Factors Shaping Upcoming Overtime Regs

The Department of Labor (DOL) expects to have proposed rules on the “white collar” overtime exemption by November of this year. Tammy D. McCutchen, a former administrator of the DOL’s Wage and Hour Division, said she expects the DOL to move faster than usual with this rule change. In her estimation, the final rules are likely to be published by September 2015 – and likely to go into effect by January 1, 2016, reports CFO Daily News. Currently, the DOL is looking at:

Raising the minimum salary level – after adjusting for inflation – to 1975’s level. That would bump the minimum salary level all the way up to $50,000 per year and force many firms to change the status of many employees they had previously classified as exempt.

Adopting the California salary level. This method relies on auto-corrections for inflation. Based on today’s standards, that level would be $570 per week.

Increasing the availability of overtime pay by amending the current duties test. The DOL is likely to narrow the duties test and to specifically spell out more jobs which are definitely overtime exempt.

Revising the “concurrent duties” regs under the executive exemption test. The DOL is seriously considering adopting California’s duties test, which requires an exempt manager to spend more than 50 percent of his or her time supervising employees.



How One Employer Tackled Pay Equity

Should female secretaries be paid at the same rate as male landscapers? That was one of the questions facing McGill University in Montreal as it launched a sweeping program to ensure gender pay equity among its 12,000 full-time employees, reports the Wall Street Journal.

As many U.S. companies gird for a new federal requirement to report pay data by gender, McGill's gender-equity program could be a model.

  • In February, McGill sent out checks covering back pay and raises for 2,100 current and former employees deemed to have been underpaid. For some workers with long tenures, that meant sizable sums—as much as C$80,000 in some cases.



Trade Group Creates Its Own Health Exchange

Industree, a hospitality trade group, launched a health care exchange aimed at making it easy for large restaurants and bars to comply with the Affordable Care Act, reports Associations Now.

Workers at participating restaurants will be able to choose from a variety of plans, with costs ranging from $61 to $92 per month for a basic plan to $175 to $425 per month for plans from larger insurers, such as Aetna.

  • “Every single option has been designed, negotiated, and built specifically for the demographics of the restaurant industry,” the group’s founder and CEO, Alisia Kleinmann, told The Washington Post.



Try Convincing an Employer to Pay for an Online Degree

Starbucks made headlines recently by creating a tuition reimbursement program for employers who pursue online degrees, but not all employers share the company's enthusiasm for online learning, reports U.S. News & World Report.

Employees should research their preferred online program and be able to convince their employer of its merits, making sure the employer knows that the institution is regionally accredited.

Online degrees can sometimes be better bargains than their on-campus counterparts, Lance says, and employees should also mention any relative cost savings to their manager.

(To learn more about the Starbucks program, see the SHRM Online article “Starbucks Helps Employees Earn Online Degrees.”)



IRS Releases Final Rule on ACA Small-Business Tax Credit

The Internal Revenue Service released final regulations on the tax credit available under the Affordable Care Act to small employers that offer health insurance coverage to their employees, reports Bloomberg BNA. The final rule was published in the June 30 Federal Register. The IRS also posted a new set of Q&As

  • The final rule extends the tax credit to employers with no more than 25 full-time equivalent employees (FTEs) whose annual average wages are a maximum of $50,000, adjusted for inflation after 2013, the IRS said.



Cost-Effective Obesity Strategies

There are several strategies for dealing with the expected cost increase associated with obesity’s designation by the American Medical Association as a disease, according to Segal Consulting’s Public Sector Letter.

These approaches include:

Institute “step-therapy” that might start with nutrition and exercise counseling.

Require prior authorization for covering obesity treatments.

Choose narrow networks or Centers of Excellence for bariatric surgery.

Introduce reference-based pricing that sets maximum payment on reimbursable amounts.



Presumption of Prudence Voided for Employer Stock

In Fifth Third Bancorp v. Dudenhoeffer, decided June 25, the Supreme Court unanimously rejected a presumption of prudence for employer stock held in ERISA individual account individual account plans.  As a result, law firm Kilpatrick Townsend & Stockton LLP advises the following steps:

Plan and trust documents should be updated; summary plan descriptions, investment policies and charters for investment fiduciaries should also be reviewed.

Apply an equally robust fiduciary process to employer stock as applies to other investments.

Addressing participant investment concentration in employer stock.

(To learn more, see the SHRM Online article Retirement Plans that Hold Employer
Stock: What Now?



Targeting Overweight Workers Can Backfire

Employers say obesity is a top health concern for their workers. But health is a sensitive and personal issue. Some employees say these wellness initiatives can go too far, reports

Obesity can lead to medical complications like diabetes and heart disease, and can increase absenteeism and the risk of injury on the job. Helping overweight employees nudge the scale in the other direction might be good for their health and for the company's bottom line. But firms have to walk a fine line in what they say to workers.

  • It's difficult to address obesity because wellness programs must be voluntary. Employers can offer incentives, but they can't directly talk to an employee about a weight problem. Preserving medical privacy is also a concern.



ACA Compliance Becomes Big Expense

Private businesses without large in-house legal departments are spending thousands of dollars hiring consultants to walk them through the ins and outs of complying with the new rules under the Affordable Care Act, reports USA Today.

Starting in 2015, businesses with 100 or more employees will need to document that they are providing health benefits that meet the ACA's coverage criteria to at least 70 percent of their full-time workers. The number rises to 95 percent by 2016. Firms that fail to meet the targets face penalties that start at $2,000 per employee. Businesses with 50 to 99 full-time employees will need to start insuring workers by 2016.

The ACA’s definition of full-time employee is 30 hours a week or more versus the historic 40 hour week recognized by other federal and state laws. The law also requires employers to collect signed waivers from employees who opt not to sign on to a company insurance plan.

  • The paperwork substantiating the number of full-time and part-time workers in itself is challenging, requiring most businesses to invest in ways to document that they are complying with the new rules.

(To learn more, visit SHRM Online's Health Care Reform Resource Page.)



Contraceptive Mandate Curtailed

The Supreme Court ruled that closely held for-profit companies may refuse to offer insurance coverage of specific birth control methods if they conflict with the owner’s religious beliefs, reports the Washington Post. The ruling pertains to the contraceptive mandate under the Affordable Care Act.

  • The ruling is limited to closely held companies whose owners hold sincere religious beliefs, such as the companies that brought the challenges: Hobby Lobby, an arts and crafts chain that says it is run on Biblical principles, and Conestoga Wood Specialties, a Pennsylvania cabinet-making company owned by a Mennonite family.

(To learn more, see the SHRM Online article "Contraception Ruling’s Impact Seen as Limited.")



IRS Ruling Gives Approval to Adjustable Pension Plans

The IRS approved the Newspaper Guild of New York and New York Times Co.'s  application to begin an adjustable pension plan (APP) that will allow the newspaper company to keep a defined benefit plan structure, reports Pensions & Investments.

The new plan structure, which shares the investment risk between employees and employers while providing more retirement income security than a typical defined contribution plan, required approval from the IRS.

  • The new defined benefit plan at the Times covers about 1,100 workers and guarantees a monthly payment for life for its employees.

(To learn more, see the SHRM Online article "IRS Ruling Favors Adjustable Pension Plans.")



CMS Guidance on Transitional Reinsurance Fee
Payment Process

The Centers for Medicare and Medicaid Services (CMS) disclosed the mechanics of collecting and remitting the Affordable Care Act’s transitional reinsurance fee, which will be imposed on insurers and self-insured health plans later this year, reports Lockton.

The tax is generally $63 per covered life ($5.25 per month), payable by insurers and by employers on behalf of self-funded major medical plans. A third-party administrator (TPA) may, but is not required to, pay the fee on behalf of the self-insured plans it administers.

  • An on-line process will be available at to offer a “one-stop” resource for registration, submission of headcount and payment to CMS. Either the self-insured plan sponsor or the plan’s TPA can complete the reinsurance contribution process, including payment, on behalf of the self-funded plan.



Final Regs on ACA and Orientation Periods Released

Federal regulatory agencies in charge of health care reform released final regulations clarifying the relationship between a group health plan’s eligibility criteria and the Affordable Care Act’s (ACA) 90-day limit on waiting periods, reports Proskauer Rose LLP.

  • The final rule (published in the June 25 Federal Register) address an employer’s ability to require new employees to satisfy a “reasonable and bona fide employment-based orientation period” before starting a group health plan’s waiting period.

(For background on this issue, see the SHRM Online article “Final Rule Limits Health Care Enrollment Wait to 90 Days.”)



Which Workplace Benefits Are In, or Out?

Employers are increasingly spending money to try to keep workers healthy, even if it comes at the cost of other benefits, reports the Washington Post, in its analysis of SHRM’s 2014 Employee Benefits trends report.

The report finds that employers are redirecting more of their spending toward wellness expenses such as health coaches, smoking cessation programs, and insurance premium discounts for employees willing to submit to health-risk assessments.

  • Investments are decreasing elsewhere, however, with companies removing benefits that are under-used or that don't apply to large swaths of employees.

(To learn more, see the SHRM Online article “Employers Adjust Benefits, Emphasizing Health Care”)



Federal Workers’ Right to Request Flextime Expanded

Federal employees now have the right to request a more flexible work schedule and managers must "carefully" consider those requests, President Obama told agency heads in a June 23 memo on expanding workplace flexibility in the federal government, reports

“The employee is encouraged to have a conversation with the employer about their flexibility needs,” Mike Aitken, SHRM’s vice president of government affairs, said. And the fact that the President is calling on agencies to expand flexible options "sets the tone from the top,” he added.

  • Aitken also pointed to the importance of expanding access to flexible work arrangements as a potential remedy for employee morale that's been eroded by tight budgets and constraints on federal pay.



HHS Webinar on Transition Reinsurance Program Fees

The Department of Health and Human Services (HHS) is offering a webinar regarding the Affordable Care Act’s transitional reinsurance program, with a particular focus on reinsurance contribution policy and operations.

The webinar, “The Transitional Reinsurance Program: An Overview of Policy and Operations for Reinsurance Contributions” will be held on June 20, 2014 and June 25, 2014 from 2:00 pm – 3:00pm EST. It will provide an overview of the transitional reinsurance program with a focus on reinsurance contributions, including general information regarding who is involved in submitting reinsurance contributions, how reinsurance contribution amounts are calculated, and the reinsurance contribution submission process. Registration is available through this portal.

  • HHS also published a new FAQ on May 22 regarding the reinsurance contribution submission process.



Emergence of Single-Carrier Model Expected in Private Exchanges

Private health insurance exchanges increasingly will feature single-carrier rather than multicarrier networks as well as more expansive product lines, according to survey findings reported by HIX.

“What we hear from health insurers is that they are interested in a single-carrier approach because it enables them to build direct and ongoing relationships with consumers while giving them control over product selection and presentation,” explained Array Health CEO Jonathan Rickert, whose firm conducted the survey.

  • While the findings suggest most private [exchanges] may be wed to one carrier rather than play the field, greater choice is seen in terms of the product suite. For example, 80 percent of health insurer respondents believe most of the exchanges will offer core medical, dental and vision plans alongside ancillary products by 2015,” HIX reported.

(To learn more about about this topic, see the SHRM Online article "On Private Exchanges, Choice Drives Satisfaction.")



PCORI Fee Due by July 31

The IRS has released the 2014 Form 720 that plan sponsors of self-insured group health plans will use to report and pay the Patient Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of this year, reminds an alert from Buck Consultants.

The Affordable Care Act imposes a fee on health insurers and plan sponsors of self-insured group health plans to help fund the Patient Centered Outcomes Research Institute.

  • Plan sponsors must pay the PCORI fee by July 31. All plan sponsors of self-insured group health plans will pay the fee in 2014, but the amount of the fee varies depending on the plan year.



Starbucks to Subsidize Online Degrees

The coffee chain plans to launch a new program on Monday that will pay for its employees to attend online college classes at Arizona State University, reports the New York Times (and also the Wall Street Journal, firewalled).

The program is open to any of the company’s 135,000 United States employees, provided they work at least 20 hours a week and have the grades and test scores to gain admission to Arizona State.

  • “Starbucks is going where no other major corporation has gone,” said Jamie P. Merisotis, head of the Lumina Foundation. “For many of these Starbucks employees, an online university education is the only reasonable way they’re going to get a bachelor’s degree.”

(For more on this topic, see the SHRM Online article “Starbucks Subsidizes Online Degree Tuition” and the HR Magazine article “Rejuvenate Tuition Reimbursement Programs.”)


Private Health Care Exchanges Enroll More Than Predicted

​Employers are moving more quickly than forecasted to offer health insurance to their workers through private exchanges, reports the New York Times.

Three million people signed up for workplace health coverage for this year through private exchanges, according to data from Accenture, roughly three times the number of people the firm had estimated would enroll for coverage through the private exchanges. The growth was driven largely by smaller and midsize companies — those with no more than 1,000 employees.

  • Accenture estimates that total enrollment in private exchanges by active employees will reach about 40 million by 2018, surpassing the number of people enrolling through state and federally funded exchanges.

(To learn more about this topic, see the SHRM Online article "On Private Health Exchanges, Choice Drives Satsifaction.")



It’s OK to Discuss Salary Early in Hiring Process

Contrary to conventional wisdom, employers are open to discussing salary early in the hiring process, according to a survey by staffing firm Robert Half, reports Canadian HR Reporter. Thirty-eight percent of senior managers in Canada said it's OK to ask about compensation and benefits in the first job interview, while 25 percent suggested waiting for the second interview.

But only one in 10 respondents said they decided against hiring someone because she brought up pay and benefits prematurely.

  • "It's important the candidate and potential new boss are within the same range of expectations before getting too far along in the hiring process," said Greg Scileppi, president of Robert Half, international staffing operations.




Employer Plans Adopting Reference-Based Pricing

While employee cost shifting remains the most prevalent strategy for U.S. employers to reduce health care costs, there is growing interest in adopting new tactics, reports

A new Aon Hewitt survey finds 68 percent of employers plan to adopt reference-based pricing—where employers set a pricing cap on benefits for certain medical services for which wide cost variation exists with no discernible differentiation in quality. Just 10 percent of employers have adopted reference-based pricing as a tactic today.

  • An analysis of health claims data by the Employee Benefit Research Institute found that adopting reference-based pricing for all workers with employment-based health benefits, for the six health care services EBRI analyzed, would have reduced the employers' overall spending on health benefits by 1.6 percent.

(Related SHRM Online article: "In-Network Costs Vary Widely for Common Procedures.")



SHOP Limited to One Plan in Many States

The piece of the Affordable Care Act meant to help small businesses provide better health insurance options for their workers—the Small Business Health Options Program (SHOP)—failed to launch through the federally facilitated ACA marketplace this year, and the Obama administration has now given the go ahead for 18 states to put part of it on hold once again, reports Politico.

Also, the Centers for Medicare and Medicaid Services released the list of federal exchange states where employee choice will not be available for the SHOP exchange for 2015. 

The delay leaves the exchange for small employers hobbled in large parts of the country until at least 2016 and creates another element of the law that’s inconsistent from state to state.

  • The choice feature was already delayed this year for most of the 32 states that relied on the federal exchange for small businesses, although 17 states and the District of Columbia are operating their own SHOPs, many of which do offer the choice option and online enrollment.



Employers Fail to Address Financial Stress

Most employers don’t offer a loan program to help employees deal with emergency situations, even though financial stress affects their employees’ ability to work, reports ThinkAdvisor magazine.

Over 45 percent of employees could not get access to $2,000 given a 30-day period to meet a financial challenge.

  • “I think that speaks volumes to why for those that have retirement accounts, why these 401(k) loans and what have you are being impacted at such a heavier rate to borrow against their financial futures,” said David Kilby, president of FinFit, a provider of financial wellness solutions.

(For more on this topic, see the SHRM Online article “SHRM Study Highlights Employees’ Financial Challenges.”)



Got Paternity Leave? Men Value It, but Are Conflicted by It

“Researchers say Americans’ conflicted views over paternity leave are a potent symbol of how tough it is to figure out what it means to be a good man, and a good dad, these days,” reports

  • A recent survey found that 68 percent of dads who took paternity leave took two weeks or less, and most dads surveyed thought that amount of time was appropriate.



Wellness Programs, Smoking Cessation and e-Cigarettes

The Affordable Care Act changed the maximum reward that can be provided under a “health-contingent” wellness program from 20 percent to 30 percent, and in the case of smoking cessation programs, the maximum reward is increased to 50 percent. But nowhere do final regulations issued last year address whether an individual who uses e-cigarettes is a “smoker” for purposes of qualifying, or not qualifying, for a wellness program reward, according to a blog post by law firm Mintz Levin.

A related question is whether a wellness program can offer e-cigarettes as an alternative standard, i.e., one that if satisfied would qualify an individual as a non-smoker.

  • An employer that wanted to treat the use of e-cigarettes as smoking in order to deny access to a wellness reward could confront arguments that e-cigarettes are part of a smoking cessation program. However, “The larger question, which may take some time to settle, is whether e-cigarettes advance or retard the cause of wellness,” according to the posting.



Narrow Networks Are Disliked but Reduce Costs

They annoy patients. They scare docs. But narrow networks might be a good thing,” according to a commentary in the Standard Examiner.

With narrow networks, insurers use quality and cost metrics to limit the number of health care providers participating in a given plan. Patients and providers have raised concerns that by limiting plan participants, narrow networks are creating unexpected access challenges. But narrow networks are credited with tamping down health insurance costs.

  • “If you don’t like narrow networks,” accordng to David Blumenthal of the Commonwealth Fund, “you’re saying ... that you don’t like competitive solutions -- at least under current market conditions -- to our health system’s problems.”



More Jobs but No Cheer on Pay Gains

“A big pool of unemployed people means that you're unlikely to get a big raise any time soon, and that means that you're also unlikely to go on a spending spree,” reports USA Today. “Consumer spending drives the bulk of the U.S. economy. And you can't have an inflationary wage-price spiral without higher wages.”

Discouraged workers—those who have given up looking for jobs—remained at 3.4 million, a rate the Federal Reserve views as too high to threaten inflation or push wages higher.



The 95% Coverage Rule under ACA: Know the Details

For employers subject to the Affordable Care Act’s shared-responsibility mandate (50 or more full-time employees or equivalents), not properly applying the 95 percent rule could subject them to penalties, notes an alert from Moulder Law. As always with the ACA, the details can get complicated.

An employer will be treated as offering qualifying coverage to all of its full-time employees (and their dependents) for a calendar month, if the employer offers coverage to all but 5 percent (or, if greater, five full-time employees) of its full-time employees. A full-time employee is an employee who accumulates 30 or more hours of service per week in a calendar month. Full-time employees receiving Medicare, Medicaid, or insurance from a spouse’s or parent’s employer are included when calculating the 95 percent rule.

  • The next step is to determine if any of the full-time employees fall into a non-assessment period. There are six different ways an employee can be considered an employee in a non-assessment period. These employees are not included when calculating the 95 percent rule.



DOL Sets November to Propose Changes in Overtime Rules

The Department of Labor (DOL) set a target date of November 2014 to propose new rules that would govern who is entitled to overtime pay, according to an alert from Buck Consultants.

It is widely anticipated that the DOL will tighten eligibility for the white-collar exemptions—and extend overtime pay to a sizeable number of currently exempt workers—by raising the minimum salary threshold of $455 per week and changing the current job duties tests. However, it is unclear what the new threshold or qualifying duties might be.

  • Given the steps the DOL will need to complete before any changes to the current overtime rules become final, it is unlikely that new rules would be finalized before spring 2015.



College Allowed to Cap Medical Leave at 6 Months, Court Rules

Employers can't reasonably be expected to grant more than six months of leave in order to accommodate sick or disabled employees, the U.S. Court of Appeals for the Tenth Circuit ruled, reports Bloomber BNA.

An "employee who isn't capable of working for so long isn't an employee capable of performing a job's essential functions," Judge Neil Gorsuch wrote.

  • The ruling pertains to the federal Rehabilitation Act, which prohibits recipients of federal funding from discriminating on the basis of disability, but also has implications for the Americans with Disability Act (ADA). It applied to a case in which a university faculty member requested to extend her leave beyond six months while undergoing cancer treatment.



Small Businesses May Have to Wait to Offer Employees ‘SHOP’ Plan Choices

For small businesses that want to offer employees health insurance coverage on the new Small Business Health Options, or SHOP, exchanges created by the Affordable Care Act, challenges remain, reports the New York Times

Insurers are skeptical that the federal SHOP exchanges, already running a year late, will be up to the technological challenge of facilitating choice. This includes collecting a single payment from the employer, calculating how much of that payment goes to each insurer, and then distributing it accordingly.

  • In Colorado, which is running its own SHOP exchange that offers three varieties of employee choice, only a very small number of businesses have chosen to enroll — about 256 businesses out of about 20,000 small groups in the state.



Pre-Existing Condition Bans for Health Insurance Linger

"Welcome to Cigna," said the letter, dated May 16, on behalf of a new employer. The letter also said the insurer was placing the employee on a one-year waiting period for any pre-existing conditions, reports

HIPPA says that if you've had continuous coverage, meaning coverage without a break of more than 63 days, your new insurer may not impose a pre-existing condition waiting period. Plus, for group plans, the Affordable Care Act prohibits all pre-existing condition exclusions for new plan years beginning on or after Jan. 1, 2014.

  • By the end of 2014, the requirement to eliminate pre-existing condition exclusions will have become effective for all group.



Employers Missing Opportunity with ACA Wellness Incentives

Employers continue to embrace wellness programs, and employees keep saying they appreciate them and will use them. A new study suggests, though, that many employers that could be realizing even more value from their wellness plans are not, reports

A new Virgin Pulse survey  found that when employers were asked whether they were going to beef up their incentives as permitted under the Affordable Care Act, more than four in 10 said they had no plans to.

  • About half of employers who offer wellness plans don’t track productivity results or test to see if employee engagement has increased as a result of wellness program participation, the survey revealed.



​Surge Expected in Costly Specialty Drugs

Even spending on prescription drugs has continued to slow over the past several years, an exception has been spending on new innovative specialty drugs to treat multiple sclerosis, rheumatoid arthritis, leukemia, osteoporosis and other conditions, reports the Fiscal Times.

“It’s not only unaffordable for the individual, but the system can’t absorb that much,” John Rother, chief executive of the National Coalition on Health Care, told the paper. Rother and his group of business leaders, health care providers and some drug manufacturers launched a campaign last week to highlight the mounting cost of specialty drugs.

  • Rother has urged pharmaceutical officials to find ways to reduce the cost of breakthrough therapies while continuing to cover companies’ research costs and compensate them for innovations that can save lives and reduce medical complications.



DOL Delays Fiduciary Redefinition Proposal Again

The Department of Labor (DOL) announced it would re-introduce in January 2015 a proposed rule to make retirement plan advisors subject to the fiduciary standard, reports

The DOL first proposed the rule in October 2010, but decided in 2011 to re-propose the rule, in part due to criticisms the proposal was too broad and may disrupt established business practices of financial institutions interacting with employee benefit plans.

  • Also in January 2015, the DOL expects to issue notices of proposed rulemaking about the safe harbor for the selection of annuity providers for individual account plans, as well as including lifetime income estimates on participants’ defined contribution account statements.



Workers Rely on Employers Regarding How Much to Save

Most financial planners advise setting aside 10 to 15 percent of pay for retirement. A worker who believes their employer has set the right savings default rate for them, and then does nothing more, will be sorely disappointed. Unfortunately, such workers are legion, reports

  • Many retirement experts recommend auto enrollment with a 6 percent employee deferral rate, and raising the deferral one percentage point each year until it reaches 10 percent of income. They further recommend that companies sweep all existing employees into the automatic plan—not just new hires. “They could opt out, but most wouldn’t. That’s inertia working for them, not against them,” according to the report.



Helping Employees Cope with Cost Shifting

High-deductible health insurance plans are a fact of life, but cost shifting doesn’t have to hurt morale or loyalty among workers, reports

  • Arming employees with all the information about the plan, ensuring they know which doctors are in network and out of network, and all the benefits associated with the plan (including preventive care), can go a long way in keeping out of pocket costs down.

  • Some employers who contribute to health savings accounts (HSAs) can increase their contribution to offset any bad feelings from offering a high deductible plan.

  • Brokers work with employers to create a health plan that limits the cost sharing for hospitalization, surgeries and outpatient procedures; a medical bridge policy can be taken out to insure employees from high deductibles associated with those expensive but less frequent medical needs. (But be aware of that HSAs may not be allowed if employees are offered supplemental health insurance that pays expenses under the deductible.)

(To learn more, see the SHRM Online article "Health Cost-Shifting Puts Burden on the Unprepared.")



Don't Ignore the Cultural Perks Millennials Crave on the Job

More than any other generation, Gen Y is made up of job hoppers. offers four company-culture perks and attributes "to help an organization recruit and retain great millennial talent before the competition lures them away":

  • Encourage entrepreneurial passion and creativity. Take a page from Google’s book and invest in a program like 20 percent time, whereby Googlers can dedicate 20 percent of their time to dreaming up new projects and finding creative solutions to problems.
  • Offer technological innovation. Millennials tend to love tech and smart companies will use this to reach out to them. Once millennials are hired, internal social-media apps, real-time tracking and mobile technology can help these employees stay organized and allow them to work on the go.
  • Grant flexible-time options. A two-year study by PwC determined that if milllennials were able to introduce more flexibility into their current posts, 64 percent would favor sometimes working from home and 66 percent would appreciate an adjustment in their hours.
  • Promote giving back. The Creative Jobs Report found 35 percent of millennials surveyed found it important to have a job with a positive social impact, compared with just 19 percent of employed Americans overall. Millennials will be more likely to stick around if they feel a company's culture is socially responsible and contributing to the community.



Study Reveals Health Costs Shifting to Employees

More employees are facing higher insurance premiums and co-payments, and many don't have the money to cover unexpected medical expenses, reports USA Today, citing the annual Aflac WorkForces Report.

In 2013, 19 percent of companies implemented a major medical plan with a high deductible (more than $1,000) and health savings accounts as an alternative to a traditional medical plan, the study finds.

  • Employees are worried about covering their medical costs: 49 percent have less than $1,000 to pay for unexpected out-of-pocket  medical expenses, and 53 percent would borrow from their 401(k)s or credit cards to cover unexpected medical costs.

(For a report on another recent cost-shifting study, see the SHRM Online article “Health Plan Cost-Shifting Trends Highlighted.”)



New Costs from Health Law Snarl Union Contract Talks

Disputes between unions and employers over paying for new costs associated with the Affordable Care Act are roiling labor talks nationwide, reports the Wall Street Journal.

Unions and employers are tussling over who will pick up the tab for new mandates, such as coverage for dependent children to age 26, as well as future costs, such as a tax on premium health plans starting in 2018.

  • Among the earliest supporters of the health-care law, unions have unsuccessfully tried to win concessions from the Obama administration on some issues now involved in the labor talks.



Agency Scraps Employee Ratings to Avoid Discrimination

The federal Consumer Financial Protection Bureau (CFPB) released an internal report that showed "statistically significant disparities" in employee evaluations based on race, age, location, tenure, and other factors. As a result, the CFPB said it was scrapping its current system and would pay most agency employees as if they received the highest rating available at the time of their evaluation. Ultimately, the remediation to its staff is expected to cost the government between $5 million to $5.5 million, according to the agency, reports American Banker.

  • The CFPB said it would remediate payment to any CFPB employee—except senior leadership—who received a 3 or 4 summary performance rating in fiscal years 2012 or 2013. Such staffers will be paid as if they received a 5 at the time of their evaluation, including merit and lump sum payments.

(For a different view on ratings systems, see the SHRM Online article "Improve Performance Evaluations Using Calibration.")


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IRS Bars Employers from Paying Pre-Tax Subsidies for Health Exchange Coverage

“Many employers had thought they could shift health costs to the government by sending their employees to a public health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual marketplace,” reports the New York Times

  • Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”

(To learn more, see the SHRM Online article “IRS Prohibits Payment Plans for Premiums.”)



Regs Allow Disability Regs Allow Disability Regs Allow Disability Insurance Premiums
to Be Paid from Retirement Plan Accounts

On May 9, the Treasury Department and the IRS released final regulations regarding amounts used by a qualified plan to pay for accident or health insurance premiums. The final regulations allow employers to adopt insured "plan contribution replacement" benefit programs for disabled employees, according to an analysis by law firm Holland and Knight.

  • Employers will be able to offer employees disability insurance to continue retirement plan savings during an extended disability.


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Free’ Preventative Care Can Still Cost Consumers

“The Affordable Care Act requires insurers to pay the full cost of services like cholesterol checks, women’s birth control, immunizations, colonoscopy screenings and a host of other items. … But does a free colonoscopy cover just the screening or the immediate removal of polyps, too? Does the smoking-cessation benefit include counseling, medication or both? And exactly when does a routine checkup become an ailment-specific appointment and leave patients on the financial hook?” asks Politco.

An increasing number of workplace plans carry substantial deductibles that consumers must meet before the insurer begins covering any bills. That raises the stakes on what applies as a preventive service with no out-of-pocket cost vs. a treatment for which the patient may end up paying full freight, the article notes.

  • “There are a number of preventive services where the insurers are not quite sure what they’re supposed to cover,” said Tim Jost, a law professor at Washington and Lee University and an expert on the Affordable Care Act.


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District Court Rejects Challenge to Self-Insured ERISA Health Plan's
Denial of Coverage for Same-Sex Spouses

A federal district court in the Southern District of New York found that a self-insured health plan that specifically excludes same sex couples does not run afoul of ERISA, reports Proskauer’s ERISA Practice Center Blog.

The case involved an employee of St. Joseph’s Medical Center in New York, who married a person of the same sex in 2011. Later that year, the employee sought to add her spouse as a dependent under St. Joseph’s self-insured health plan. The court rejected plaintiffs’ argument that the Supreme Court’s Windsor decision changed the legal landscape concerning the requirement to provide benefits to same sex spouse.

  • Praskauer attorneys commented that this decision and others “will pave the way for future courts to provide clarity on this issue for self-insured health plans. New federal anti-discrimination legislation may also have an impact on this issue. Employers and other sponsors of self-insured health plans will want to keep their eyes on developments in this area.”


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Good News About Elder Care Benefits at Work

More employers are offering several forms of elder care supports than in the past, but smaller employers lag behind their larger counterparts, according to an article in Forbes, citing research by SHRM and the Families & Work Institute.

Far more employers now offer Dependent Care Assistance Plans for elder care (the ability to set aside money from each paycheck before taxes to pay for elder care expenses) than in 2008. Currently, 41 percent do; in 2008, 23 percent did.

  • Large employers with 1,000 or more employees were more likely to offer Dependent Care Assistance Plans (53 percent do) than smaller ones (38 percent do).


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COBRA & ACA: When Two 60-Day Election Periods Are Not Equal

For former employees contemplating electing COBRA continuation coverage or medical coverage from the Affordable Care Act’s (ACA) insurance Marketplace, there are two distinct 60-day periods during which they may elect health insurance coverage, but these periods are not equal or equivalent. “Employers may want to consider how the impact of these two different 60-day periods may impact their plans in setting parameters for the vendors assisting them with COBRA notices and in planning separation packages,” according to an alert by law firm Winstead PC.

“Employers may want to review their COBRA notice procedures to maximize the period their former employees have to compare the terms and conditions and prices of COBRA coverage with the coverage available on [the ACA’s] Marketplace so that employees have time to review all of the information and make an informed decision,” the firm advises.

  • For example, if instead the employer/plan administrator issues the notice within 30-days of the termination of employment and loss of coverage, then the former employee would have 30 days in which to consider the values of COBRA as opposed to Marketplace coverage and elect between the choices.

(To learn more, see the SHRM Online article “Updated COBRA Notices and Proposed Guidance Issued.”)


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Employer Health Costs to Rise Nearly 9% This Year, Survey Finds

Employer health care costs are expected to rise nearly 9 percent in 2014, a slight improvement over recent years, reports the Los Angeles Times, citing a Buck Consultants survey.

Despite the slowdown, the rise in health premiums continues to outpace inflation and wage growth.

  • "Even though the decline is good news, most [health] plan sponsors still find 8% to 9% cost increases unsustainable," said Harvey Sobel, a principal at Buck Consultants, a benefits consulting firm that surveyed 126 insurers and health plan administrators nationwide.

(To learn more about these findings, see the SHRM Online article "Slower Increases in Health Benefit Costs for 2014.")





New ‘Pay or Play’ Tools Help Businesses Evaluate Next Steps

A new collection of tools from health insurer Unum can help navigate through crucial decision regarding health care reform. They include:

  • Pay or play interactive tool: Employers can enter their employee information to find out whether they may be subject to the employer mandate—and what penalties they may face.
  • Pay or play decision tree: Employers can follow the arrows on this graphic to see the elements that make up the pay or play decision.
  • Employer responsibility timeline: This web-friendly roadmap walks employers through their health care reform decisions from now through 2018.

(For more tools and calculators, visit SHRM’s Health Care Reform Resources Page.)



Insurers to Unveil More Health Care Price Information

The goal of providing employees with competitive pricing information for available health care services may improve in 2015 via a collaborative effort of health insurance giants Humana, Aetna and United Health, and possibly other insurers, reports Forbes.

Through a nonprofit organization, the Health Care Cost Institute, the insurance companies will develop and provide consumers “free access to an online tool that will offer consumers the most comprehensive information about the price and quality of health care services.” Additional health plans could soon join Aetna, Humana and UnitedHealth in the effort.


  • The health insurers, who will continue to provide their own information via their own web sites, will provide information to the Institute as a supplement to what the companies provide. The Institute will maintain and manage access to the information in a secure portal.



San Francisco Bay Area Employers Required to Provide Commuter Benefits

Employers with 50 or more full-time employees in the San Francisco Bay area must offer commuter benefits to their employees by Sept. 30, 2014, reports Buck Consultants.

Employees who work an average of 20 hours per week (excluding seasonal and temporary employees) must be offered one of four commuter benefit options:

  • Pre-tax benefit. Allow employees to pay for their transit or vanpool expenses with pre-tax dollars, as permitted by federal law (for 2014, $130/month).
  • Employer-provided subsidy. Offer a transit or vanpool subsidy to reduce, or cover, employees’ monthly transit or vanpool costs (up to a maximum of $75/month).
  • Employer-provided transit. Provide a low-cost or free shuttle, vanpool, or bus service operated by or for the employer.
  • Alternative commuter benefit. Propose and seek approval of an alternative method (e.g., carpooling, bicycling, walking, compressed work week) that would be as effective as the other options in reducing single-occupant vehicle trips (and/or vehicle emissions).

Although employers must offer this benefit, the ordinance does not require employees to make use of the benefit.



IRS Provides Penalty Relief for Some Late Filers of Form 5500

The IRS has issued guidance providing relief from certain penalties for the late filing of a Form 5500 return, reports Practical Law/Thomson Reuters.

Specifically, Notice 2014-35 provides relief from late filing penalties for plans subject to Title I of ERISA that file a late Form 5500 series return, while Revenue Procedure 2014-32 establishes a one-year pilot program providing relief from late filing penalties for plans not subject to the reporting requirements of Title I.

  • Retirement plans that are subject toRetirement plans that are subject toRetirement plans that are subject to Title I of ERISA for the plan year in which the filing is delinquent are not eligible for penalty relief under Revenue Procedure 2014-32. They can seek relief for delinquent Form 5500 filing under Notice 2014-35




More Insured, but the Choices Are Narrowing

Insurers are promoting smaller health care provider networks for employers as a way to reduce overall health care costs, reports the New York Times.

“The larger the network is, the higher the cost,” said Larry Boress, chief executive of the Midwest Business Group on Health. Employers remain concerned about the quality of the networks, and many are doing an analysis to see how disruptive changing the network would be for their workers. Nonetheless, the bottom line is that more employers are considering smaller networks.

  • Some companies are experimenting with different tiers of networks, charging workers more if they go to the broadest network, said Joseph Kra, a Mercer consultant



Economists See Wages Climbing in 2014

After stagnating for years, wage gains will accelerate in 2014, a wide majority of leading economists predict in USA Today’s survey. Forty economists, surveyed May 2-6, also say economic and job growth will ratchet higher the rest of this year despite an economy that stalled in the first quarter.

Average wages have risen about 2 percent a year since the recovery began in mid-2009, and have been virtually flat after adjusting for inflation. But the jobless rate has been falling rapidly, to 6.3 percent from 8.1 percent in August 2012.

  • Economists say that as unemployment approaches 6 percent by year's end, a more limited supply of available workers will force employers to step up pay hikes.



IBM Ends Severance-Related Disclosures

“For at least a decade, International Business Machines Corp. gave fired employees information detailing a severance package that asked them to waive age-discrimination claims and also included a page listing the job titles and ages of workers being let go. This disclosure [is] required by U.S. federal law for workers over 40 if a company wants the person to agree not to file such a lawsuit. Now IBM is...avoiding the disclosure requirement by offering workers the option of bringing claims in arbitration,” reports Bloomberg News.

  • “Although employees are now able to accept a severance agreement and maintain their ability to bring an age-discrimination claim in arbitration, the strategy could make it harder and riskier for dismissed older employees to decide whether it’s worth taking on the cost of a legal battle, lawyers and labor law experts say,” Bloomberg reports.



Supreme Court to Rule on Retiree Health Obligations
under Union Agreements

The U.S. Supreme Court agreed to decide the question of what language is necessary in a collective bargaining agreement in order to require an employer to continue retiree medical benefits beyond the agreement’s expiration, reports Bloomberg News.

The Supreme Court granted review of the 6th circuit's decision in Tackett v. M&G Polymers USA. The lawsuit stemmed from M&G's announcement in December 2006 that it would begin requiring its retirees to contribute to the cost of their health benefits.

  • The case asks the high court to consider what has become known as the “Yard-Man inference,” a judicial presumption that union retiree benefits are intended to be vested in the absence of specific plan or bargaining agreement language to the contrary (United Auto Workers v. Yard-Man Inc., 6th Circuit, 1983). While Yard-Man has been applied in the retiree-friendly 6th Circuit, other circuits have required stronger plan language to support a finding of vested retiree health benefits.



Employers Eye Moving Sickest Workers to Insurance Exchanges

Can corporations shift workers with high medical costs from the company health plan into online insurance exchanges created by the Affordable Care Act? Some employers are considering it, reports Kaiser Health News.

It's unclear how many companies, if any, have moved sicker workers to exchange coverage, which became available only in January. But an employer that provides ACA-compliant health coverage to its employees might still be able to buy a targeted employee with high medical expenses a "platinum" plan in the ACA’s exchange/Marketplace. The plan “could cost $6,000 or more a year for an individual, but that's still far less than the $300,000 a year that, say, a hemophilia patient might cost the company,” according to the article.

  • Such practices could raise concerns about discrimination, and could also cause resentment among employees who didn't get a similar deal, benefit experts said.



Make Better Use of 401(k) Statements

In a blog post, Putnam Investments recommends beefing up 401(k) statements with the following “actionable information” to raise participation.

  • Many savers are leaving money on the table by not taking full advantage of their employer’s matching contribution. Segment and target these individuals, and demonstrate how maximizing the match can lead to greater savings at retirement age.

  • Savers over the age of 50 are eligible for catch-up contributions to their plan. Monitor participants’ birthdays and provide the necessary information to help them take advantage of this feature.

  • Give savers a before-and-after snapshot of their paycheck as they raise their deferral rates. Help them visualize the tax advantages of increasing their contribution.

Higher participation and savings rates are connected with employees assigning more value to their benefits, while an increase in the size of plan assets can lead to lower per capita recordkeeping fees.



Proposed Guidance on ACA and COBRA Notices

On May 2, the Department of Labor's Employee Benefits Services Administration (EBSA) issued a notice of proposed rulemaking regarding revisions to COBRA continuation notices that employers must provide to employees. EBSA also released a model general notice form and a model electronic notice form for providing COBRA notices, and a series of frequently asked questions (FAQs) addressing the relationship between COBRA and the Affordable Care Act (ACA).

Timonthy Jost, a professor at the Washington and Lee University School of Law, writes on the Health Affairs Blog:

The proposed rule would…provide model notices through guidance to make it easier to update the model notices. On May 2, the DOL published such model general and election notices on the EBSA website. The election model notice specifically states that COBRA coverage does not limit eligibility for marketplace coverage, which may be more affordable. Group health plans are not required to use the model notices, which must in any event be modified if the plan is not a single employer plan, but plans that do use the model notice are presumed to meet COBRA notice requirements.



Wage Pressure Begins to Build

U.S. Labor Department figures on Friday showed private-sector nonfarm hourly wages grew just 1.9 percent in April from a year earlier—and economists aren't finding much evidence of a strong uptick in wages five years after the recession ended.

Still, executives at more than two dozen large companies—including manufacturers as well as financial and services companies—reported rising wages in significant portions of their businesses, much of it in the U.S., reports the Wall Street Journal.

  • Some companies said the impact of wage increases was damped by productivity gains and cost-cutting efforts.



Are 401(k) Fees Too High? High Court May Rule

If the Supreme Court takes on a new case involving high 401(k) fees, it would be the first time it has considered a the topic. A ruling against California-based utility Edison International could force plan sponsors to take greater fiduciary responsibility for their plans, reports Reuters.

While several 401(k) fee cases are winding through the appellate courts, these class actions often end with large settlements that profit the attorneys who specialize in pursuing them.

  • One prominent litigator already has many trophies on his wall: settlements with Bechtel, Caterpillar, Cigna, General Dynamics, International Paper and Kraft Foods. The core allegations in those cases involved imprudent investment options, excessive fees and misleading information about fees.



Envisioning the End of Employer-Provided Health Plans

"The days of Americans getting health insurance through their employers may be numbered — and the change could be just as profound as the shift of employers forcing employees to manage their own retirement savings," reports the New York Times.

By 2020, about 90 percent of American workers who now receive health insurance through their employers will be shifted to government exchanges created by the Affordable Care Act, according to a projection by S&P Capital IQ, a research firm serving the financial industry.

  • "Companies’ experience with substituting 401(k)s for pensions may have taught them that employees had little choice in the transition, and just accepted it," the article states.



U.S. Employment Costs Rise Slightly

U.S. employers' costs for pay and benefits rose slightly in the first quarter, a sign of persistently weak inflation across the economy, reports the Wall Street Journal.

The employment-cost index, a broad measure of pay and benefits, rose a seasonally adjusted 0.3 percent from January through March, the Labor Department said Wednesday. That was slower than the 0.5 percent gain in the fourth quarter of 2013.

Wages and salaries, which make up about 70 percent of compensation costs, rose 0.3 percent in the first quarter. Benefits were up 0.4 percent. Total labor costs were up 1.8 percent in the first quarter from a year earlier.

In 2013, wages rose 1.6 percent for the year, while benefit costs climbed 2.1 percent.

  • Federal Reserve Chairwoman Janet Yellen has described recent wage gains for U.S. workers as "very low by historical standards," calling them evidence of "considerable slack" in the labor market, despite a falling unemployment rate that stood at 6.7 percent in March.



Five Surprising Work/Life Trends 

New findings by The Family & Work Institute and SHRM highlight five somewhat unexpected workplace flex trends: 

  • The FMLA leveled the playing field—12 weeks has become the norm for leaves; at the same time, longer leaves are less available.    

  • Businesses have become much more responsive in helping employees provide for their parents' elder-care needs.

  • Smaller employers are big leaders in providing flexibility.

  • Telecommuting is on the rise, but conversely, employers have reduced the options that involve employees spending significant time away from full-time work, include job-sharing and sabbaticals.

  • Employee retention needs are driving flex programs. 



Medicare Part D Amounts Will Increase in 2015

For 2015, retiree health plan sponsors that are eligible for the federal Retiree Drug Subsidy (RDS) will receive 28 percent of Part D prescription drug expenses between $320 and $6,660, reports Sibson Consulting, citing an April 7 announcement by the Centers for Medicare and Medicaid Services.

Plan sponsors should note the new benefit amounts for planning purposes for 2015 — both with respect to expected RDS income and to the design of any Medicare Part D prescription drug plan that is offered to retirees.

  • Prior to making benefits designs for 2015 final, plan sponsors may wish to analyze the benefits of contracting with a Medicare prescription drug plan as opposed to retaining the RDS.

(For a related SHRM Online story, see "For 2015, Higher Limits for HSA Contributions and Deductibles.")



Proposed Enrollment Process for Federal SHOP Coverage in 2015

The administration has clarified its proposed procedures for small group market employers seeking to purchase 2015 plan year health coverage for their workers through a federally facilitated Small Business Health Options Program (SHOP) exchange, Timothy Jost reports on the Health Affairs Blog.

Among the procedural steps outlined by the Centers for Medicare and Medicaid Services (CMS): 

  • The employer decides whether to offer employee choice, and at which single level (bronze, silver, gold, or platinum), and determines the level of employer contribution for medical, dental, and dependent coverage.
  • The employer offers coverage to employees and others eligible for coverage (such as business owner and spouse) and specifies the deadline to enroll.
  • The SHOP exchange notifies persons offered coverage of their eligibility (and offers an appeal to those determined ineligible).
  • Employees select a plan or waive coverage.
  • If an employer voluntarily terminates, a notice must be sent to all employees. Employees may also voluntarily terminate coverage. Notice must then be sent to the employer. Insurers may terminate coverage if an enrollee ceases to be eligible or coverage is rescinded because of fraud or misrepresentation.



    Talking Up Paternity Leave

    In an interview with the Chicago Tribune, the editorial director of Working Mother magazine, Jennifer Owens, offered perspective on paternity leave.

    Asked about the best practices in terms of paternity leave, Owens said, "Just making it available to men is one. But in the best companies, there’s a lot of communication to let men know that not only is paternity leave available and accepted, but that they are encouraged to take it, with a top executive stepping up and saying ‘I took it’ and talking about its value in his life."

    • On Working Women's annual 100 Best Companies list, 83 percent offer paid paternity leave of, on average, three weeks. These companies included Johnson & Johnson, IBM, S.C. Johnson, Ernst & Young and Marriott.



    The ACA and COBRA at Odds

    Laid off workers who opt for temporary coverage under COBRA while they evaluate options under the Affordable Care Act can’t switch to an exchange-based ACA plan until the next open enrollment period in November, reports Forbes. If workers choose COBRA coverage, even for a month, they are trapped within its much more expensive coverage until the next open enrollment period.

    In a limited number of situations involving a qualifying life event, such as loss of a job, workers can sign up for an exchange-based plan outside one of the enrollment periods. But most people wait a month or more to get the COBRA notice and then make the decision. COBRA covers medical expenses incurred during the gap retroactively, while exchanged-based ACA plans do not.

    • Often severance agreements provide that the company will pay a month or two of its share of the health insurance premiums and apply them to the COBRA payment for which the employee would otherwise be responsible. In the past this would be considered a favorable term. “But now if you accept that payment, you elect COBRA,” said employment attorney Donna M. Ballman.



    U.S. Trails on Bereavement Leave

    The United States continues to lag behind other developed countries in one key area: mandatory bereavement leave for employees, reports

    The U.S. Department of Labor states that the Fair Labor Standards Act "does not require payment for time not worked, including attending a funeral. This type of benefit is generally a matter of agreement between an employer and an employee (or the employee's representative)."

    • Even though U.S. federal law does not require it, 87 percent of (surveyed) companies still offer paid bereavement leave to employees, according to a 2013 study of employee benefits published by SHRM. Employers generally limit paid bereavement leave, however, to an "immediate family member."



    SEC Readies to Require More Disclosures
    on Target-Date Funds

    The Security and Exchange Commission (SEC) is preparing to require further participant disclosures regarding the design of target-date funds (TDFs) in  401(k) or similar plans, reports MarketWatch.

    The SEC earlier this month reopened the public comment period for its TDF regulations, which were first proposed in 2010 but haven’t yet been completed. That proposed rule would generally require TDFs to more prominently disclose the fund’s asset allocation at the target date, and require fund materials to include a table, chart, or graph depicting the fund’s asset allocation over time (the "glide path.")

    • A group of regulators, consumer advocates, academics and others earlier this month recommended a number of changes to the proposed TDF regulations, requiring additional, detailed information be provided for plan participants, in the belief that further disclosure materials are actually read.



    5 Red Flags for 401(k) Plans

    Most of the nation's more than 600,000 401(k) plans are fine. That doesn't mean employees should let their guard down when they get statements for their employer-sponsored retirement plan, advises USA Today.

    Employees are warned about frequent service provider turnover, along with either frequent changes or no changes to the plan's investment options, which would be equally worrisome.

    • If their plan isn't providing much in the way of investment education — such as, meetings and online or printed material — employees should consider that a red flag.



    Give Employees a Stipend to Buy Health Insurance?

    Robb Mandelbaum's New York Times' "You're the Boss" column looks at whether giving employees a flat stipend to purchase health insurance would violate age discrimination law (since premiums are higher for older individuals).

    The answer: it depends on how the benefit is designed and communicated.

    • Moreover, Bruce Elliott, SHRM's compensation and benefits manager, tell the columnist that whether a lump sum payment is distributed equally or as an equivalent share of the premium expense, the employer "is bound to alienate some segment of his work force."



    Why More Companies Should Pay Employees to Quit

    Following up on the recent announcement that Amazon will pay employees up to $5,000 to quit (unrelated to any reduction in force layoff or negotiated severance), Washington Post workplace columnist Jena McGregor contends more companies should do the same. She writes:

    "Five thousand dollars here and there, after all, isn't that much when compared with what disengaged people can cost a company's bottom line. Gallup has shown that companies that have 9.3 "engaged" employees (those who are emotionally connected with their jobs and willing to go above and beyond) for every one "disengaged" employee saw 147 percent higher earnings per share on average in 2011-2012 when compared with their competitors. Meanwhile, employers with just 2.6 happy workers for every unhappy one saw earnings per share that was 2 percent lower than their competitors. Gallup estimates that "active disengagement" costs the United States $450 billion to $550 billion each year."

    (To learn more, see the SHRM Online article "Amazon Offers 'Pay to Quit' Bonuses to Disgruntled Workers.")



    CEO Pay Study Looks at Largest U.S. Companies

    Although compensation awarded to CEOs at the largest U.S. corporations is increasing, the link between pay and performance continues to be strengthened by shareholder "say on pay" voting, according to pay consultancy Equilar's latest CEO Pay Study.

    The study examines CEO pay at the 100 largest U.S. public companies, based on proxy filings from thousands of U.S. firms. Findings from this year’s study include:

    • The median pay for the 100 CEOs on the list was $13.9 million, an increase of 9 percent over the previous year.

    • The cash component of CEO pay increased 10.8 percent while the equity component rose 7.1 percent.

    • Oracle’s Larry Ellison remains at the top of the list with $78.4 million, marking the seventh consecutive year he has been in the top three in this study. Bob Iger of Disney and Rupert Murdoch of Twenty-First Century Fox round out the top three.



    In Wellness Programs, 'Wearables' Step Forward

    Wearable technology is seen as one way for companies to ensure that employees are keeping active and sleeping well, reports Fortune.

    More than 13 million wearable fitness tracking devices are expected to be incorporated into employee wellness programs within the next five years, according to estimates from ABI Research. In firms where the tech is used, the benefits have included clearer goals, proactive approaches to health, and employees who are thinking about improving their lifestyle on a regular basis.

    • The gas and oil giant BP offers employees the use of a Fitbit tracker, which measures the number of steps taken every day, among other things. Employees are encouraged to improve their health and earn "wellness points" along the way.



    Patients Often Win If They Appeal a Denied Health Claim

    To help make sure a patient's claims aren't improperly denied, the Affordable Care Act creates national standards allowing appeals to the insurer and, if necessary, to a third-party reviewer, reports Kaiser Health News. Previously, the rules regarding such appeals varied by state and employer.

    Capital Public Radio in Sacramento analyzed multiyear data from California and found that about half the time a patient appeals a denied health claim to the state's regulators, the patient wins. A 2011 GAO report sampling data from a handful of states before the health law took effect found that patients were successful 39 to 59 percent of the time when they appealed directly to the insurer.

    • When appealing to a third party (such as the state insurance commissioner), patients also were often successful in getting the service in question – winning as many as 54 percent of such decisions in Maryland, for example.



    Discord Over What's 'Preventive' Care During Physicals

    Access to preventive care at no charge to the patient is a key tenet of the Affordable Care Act. But questions about what qualifies as "preventive" are causing discord between doctors and patients, particularly when it comes to the traditional annual checkup, reports the Wall Street Journal (subscription required).

    A long list of services do qualify as preventive care under the Affordable Care Act, including vaccinations and screenings for diabetes, depression, high blood pressure, high cholesterol and several cancers. Most nongrandfathered plans cover one such preventive visit per year with no charge to the patient. But care related to existing health problems, or new issues, is considered "evaluation and monitoring," not preventive.

    • Some doctor offices now ask patients to schedule separate annual visits—one for preventive care (with no out-of-pocket cost) and one to discuss problems (with the usual deductible and co-pay). Some insurers let doctors bill for preventive and nonpreventive services in the same visit using a special code ("modifier 25"). But that does trigger patient co-pays—and sometimes patient ire.



    Amazon Offers 'Pay to Quit' Bonuses
    to Disgruntled Employees

    Amazon has a deal: The company will pay unhappy employees a bonus—up to $5,000—to leave, reports USA Today.

    In a program that Amazon calls "Pay to Quit," those who aren't committed to their jobs are urged to leave on their own and can get $2,000 in severance pay in the first year of employment with the bonus topping out at $5,000 in the fourth year. "The goal is to encourage folks to take a moment and think about what they really want," Amazon CEO Jeff Bezos said in an April 10 letter to shareholders. "In the long run, an employee staying somewhere they don't want to be isn't healthy for the employee or the company."



    Large Employers' Health Premium Trends

    The newly released 2014 ADP Annual Health Benefits Report highlights significant trends in employer-provided health benefits between 2010 and 2014 among U.S. companies with 1,000 or more employees. Among the findings:

    • Premium increases leveling. In 2014, the average monthly health plan premium was $870 (including employer and employee contributions), an increase of 15 percent since 2010. However, after a spike of 6.9 percent between 2010 and 2011, the rate of increase moderated, and premiums rose 1.7 percent between 2013 and 2014. The cause of moderating premium costs may have been due, in part, to an increasing number of employers using high-deductible health plans with higher co-pays, or implementing spending accounts and consumer-directed health plans.

    • Premium per covered life fairly constant. Employees with higher incomes tended to incur higher premiums, but they also covered more dependents. When premiums were adjusted for total covered lives—considering each insured person, rather than each employee—premium costs were fairly constant among income levels, averaging $411 per month in 2014.

    • Dependents on parent’s plan until age 26. Several trends identified may be linked to the ability of dependents up to age 26 to stay on a parent’s health policy, if the plan offers dependent coverage. Higher premium costs in older age groups may have been linked to the growing likelihood that a covered employee could have covered dependents who may be up to age 26. Among those 30 and under, the take rate declined -7.6 percent between 2010 and 2014.

    • Employers contributing slightly less. In 2014, employers contributed 74 percent of the premium cost for those with dependents, whereas those with no dependents experienced a 77 percent employer contribution share. Employer contributions to health premiums declined slightly for all groups from 2010 to 2014, within a tight range of -1.0 percent with no dependents to -1.5 percent with dependents.



    White House Advisor Reaffirms Prediction
    Employers Will Drop Health Coverage

    Dr. Ezekiel Emanual, who advises the White House on health care reform, provoked controversy when he recently predicted most employers will abandon health coverage by 2025. In a follow-up Q&A with the New York Times, Emanual contends employers will raise wages to make up for ending health benefits.

    • Says Emanual: "After the [initial] interview appeared a colleague of mine wrote me and said, ‘You know, my sister would love to be able to go into the exchange, because she can get a better deal for herself, but her employer’s not going that direction, at least not now.’ ”



    Obama Readies Executive Actions on Equal Pay for Women

    President Obama on Tuesday will sign an executive order to prevent federal contractors from "retaliating" against workers who discuss their compensation, reports Reuters (via

    The president also will direct the U.S. secretary of labor to create regulations that require federal contractors to submit to the government summary data on employee compensation including details on sex and race.

    • The move comes ahead of consideration in the U.S. Senate for the Paycheck Fairness Act, which would update equal pay laws by barring all employers—not just federal contractor—from punishing workers who share information about their pay.



    Justices Hear Arguments in 'Stock Drop' Case

    The issue of inside information dominated the back-and-forth between U.S. Supreme Court justices and attorneys debating the pro-fiduciary presumption of prudence during oral argument April 2 in the first Employee Retirement Income Security Act stock-drop case to reach the high court, reports Bloomberg BNA.

    While the case involves an employee stock ownership plan (ESOP), the ruling could affect fiduciary responsibility with respect to employer stock offered in 401(k) and other defined contribution plans.

    • The justices' questions to counsel suggest that they see the central issue as how a prudent fiduciary of an employer stock plan should respond to inside information affecting the value of the stock price.



    Study Estimates ACA Costs for Large Employers

    The Washington Post reports on a new study by the American Health Policy Institute, The Cost of the ACA to Large Employers, that looks at direct costs to companies from the Affordable Care Act's requirements, over and above projected employer health care cost trends without the ACA.

    The study found that:

    • The cost of the ACA to large U.S. employers (10,000 or more employees) is estimated to be between$4,800 to $5,900 per employee.

    • These large employers will see overall ACA-related cost hikes of 4.3 percent in 2016 and 8.4 percent in 2023 over and above what they would otherwise be spending.

    • The total cost of the ACA to all large U.S. employers over the next ten years is estimated to be from $151 billion to $186 billion. 


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