 |
| Compensation & Benefits News |
[Jump to SHRM's Compensation & Benefits Focus Area]
News To Use
Retirement Savers Make Costly Errors
Despite efforts to educate workers about saving for retirement, many employees are not doing a good job of managing their company-sponsored 401(k) accounts, reports the Associated Press, citing a new study by Financial Engines Inc., a vendor of investment advice services for defined contribution plans.
Despite the not exactly disinterested source, the analysis of nearly 1 million retirement portfolios points to a real problem: 69 percent of participants have inappropriate risk or diversification of holdings and 36 percent have worrisome concentrations of company stock.
5/13/08
Elder-Care Benefit a Boon to Boomers
Caring for aging parents is beginning to eclipse child-care concerns as a pull on workers’ time and mental energy, reports the Kansas City Star.
An employee can spend hours on the phone trying to find appropriate resources, or take vacation or personal days off. But with Hallmark’s elder-care benefits, the employee can get company-paid consultations and personal family needs assessments from elder-care experts anywhere the need occurs. Hallmark contracts with Kansas City-based Creative Care Consultants for crisis and long-term-care management. Hallmark also contracts with Work Options Group, an agency based in Boulder, Colo., that helps with backup elder care.
• To sell the benefit to the Hallmark brass, HR did a cost-benefit analysis. Plugging in average consultation fees of $200, assessment costs of $300 to $500 (which cover a nurse and/or social worker visit and evaluation), and two days’ worth of backup care at $500 to $600, the benefit sold itself when compared with the costs of lost productivity from workers struggling to find answers and make elder-care arrangements on their own.
5/12/08
Corporate Execs Blast Pension Proposal
Corporate financial executives object to the Financial Accounting Standards Board's (FASB) proposal to require more detailed disclosure of the investment allocation and valuation of pension assets, reports Pensions & Investments.
“We have nearly 20 benefit plans worldwide that have literally thousands of investments in various private and public companies through over 100 investment managers,” wrote Arnold C. Hanish, executive director-finance and chief accounting officer at Eli Lilly, expressing concern about the complexity of accumulating the asset data in a tight reporting timeframe.
Greg W. Linder, vice president and controller of Abbott Laboratories, which has $6 billion in pension assets worldwide, wrote: “Accumulating, summarizing and auditing this information will take more time than for any other current disclosure requirement” and will be difficult to do.
• The proposal would amend Statement 132R, Employers' Disclosures about Pensions and Other Postretirement Benefits. If adopted, it would take effect for corporate fiscal years ending after Dec. 15, 2008, or in time for the 10-K statements most corporations will issue next spring.
5/12/08
IBM to Increase Pension Payments for Some Retirees
IBM Corp. plans to raise certain retiree pension payments. The increase will affect about 42,000 retirees who retired before 1997. About half of those who retired before 1997 will be eligible, reports the Poughkeepsie Journal.
5/9/08
Health Care Costs Pinch Employers
U.S. manufacturers who provide health insurance now spend an average of $2.38 per worker per hour on health care, reports the Los Angeles Times, citing an analysis by the New America Foundation.
The study provides support for the now-familiar lament of employers -- that rising health care costs are eating into the corporate bottom line.
5/7/08
Retirement Plans Shrink as Economy Falters
More older workers are opting to stay on the job rather than retire, reports NPR.org.
For some, it's a matter of choice. For others, the uncertain housing market and shrinking returns on retirement funds make retiring a difficult prospect. "People are growing more concerned about outliving their resources," says Craig Copeland of the Employee Benefit Research Institute. "They're concerned about being able to afford health care in retirement."
• "About 50 percent of workers have less than $50,000 in savings," Copeland says. "And that certainly won't get you far in retirement, when most people retire somewhere between 62 and 65, and they have 20 years of life expectancy."
5/7/08
New Jersey Gov. Signs Paid Family Leave Bill
New Jersey Gov. Jon Corzine on May 2 signed legislation that will entitle employees in the state with up to six weeks of paid leave per year after the birth or adoption of a child or to take care of a seriously ill relative, reports Business Insurance.
The new benefit will be fully funded through employee payroll deductions, the size of which would be based on salary, with a maximum annual contribution of $33 per employee per year.
• New Jersey is the third state to enact paid family leave legislation. California passed a similar measure in 2002 and Washington state last year approved a bill that gives employees up to five weeks of paid leave after the birth or adoption of a child, though that law has not yet gone into effect.
5/5/08
Upcoming DOL Webcast on Plan Filing Requirements
The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) will host a free webcast on May 8 to help employers and plan administrators understand and comply with the Form 5500 Series reporting requirements under the Employee Retirement Income Security Act (ERISA)."
5/5/08
Heading Off 401(k) Fee Trouble
Last summer, when a federal judge dismissed a suit brought by employees of John Deere & Co. alleging that they were charged unreasonable and poorly disclosed fees in their 401(k) plans, companies may have been tempted to breathe a sigh of relief. Turns out that relief was short-lived, reports CFO.com. In March, the Department of Labor lent its weight to the employees' side of the case, filing a brief in support of their claim as they pursue an appeal.
Rather than wait for the DOL to issue new regulations, some companies have called in retirement advisory firms to analyze and benchmark the hodgepodge of fees that they and their employees pay for the services rendered by 401(k) providers.
5/2/08
Small Companies, Big Insurance Costs
Small businesses are driving job growth, and yet they are hit harder by rising health-care costs than big companies. They don’t have the leverage to demand lower rates and health care is a bigger percentage of their budgets, reports the Boston Herald.
Employees in small companies pay an average of 18 percent more than workers in larger companies. Many small companies offer no insurance at all. Of the 47 million Americans without health insurance, 28 million are small business owners, their employees or their dependents.
• The National Federation of Independent Businesses (NFIB) is pushing for reforms such as tax credits or deductions that would make it easier for individuals to buy insurance, taking the pressure off employers. The group also wants the rules changed so businesses can band together across state lines to form pools of employees that would give them more bargaining leverage. Overall, steps should be taken to reduce health-care costs such as introducing more technology.
5/2/08
HSA Enrollment Nearly Doubles in Two Years
Enrollment in health savings accounts (HSAs) appears to be taking off, thanks in good part to large employers, reports Financial Week, citing research by America’s Health Insurance Plans’ (AHIP) center for policy and research
Through large employers, specifically, there are currently 2.8 million people using HSAs, or roughly 45% of the total number of enrolled individuals. The enrollment rate at large employers is up by 37% over last year, according to the research. “It certainly appears as though we’re at a tipping point right now,” said Karen Ignagni, president and CEO of AHIP. There were only about 1 million people enrolled in HSAs in March 2005. “Large employers are giving their work forces more choices, and a growing number of individuals are clearly deciding that HSAs suit many of their needs for health-care coverage,” Ignagni said.
• Individuals enrolled in HSAs are actively using them to pay for their health-care costs: the average HSA balance of enrolled individuals in 2007 was $1,380, while the average amount spent last year was $1,080.
5/1/08
Pension Pitfalls of Working Past Retirement Age
What workers with defined-benefit pensions and those who already have tapped Social Security benefits might not realize is that there are significant financial disincentives that make working into retirement age a tricky proposition, reports the Wall Street Journal.
A company's pension benefits typically are based on a worker's salary at the time of retirement, so for a retiring full-time employee earning $120,000, her pension payout is based on that salary. But if she continues working part time at a reduced salary of $60,000 a year, her pension benefit could be based on the lower salary -- and be permanently reduced.
• Another pitfall: Those who retire and draw Social Security before 65 years old (or later, depending on their birth year) and then return to work face benefit reductions when their taxable earnings top $13,560 a year. Benefits are docked $1 for every $2 of income earned if they are under your full retirement age.
5/1/08
Economy Slowing Down 401(k) Contributions
Due to the current economic climate, 8% of investors have halted or reduced their contributions in 401(k) plans in recent months, according a new study, reports Investment News.
5/1/08
The Latest Perk: Getting Paid to Volunteer
A growing number of companies are lending out skilled employees to nonprofits and struggling small businesses around the world to provide accounting, marketing and other professional services. And more employers have begun approving volunteer work on company time -- and the company dime -- even if it means employees miss weeks or months of work, reports the Wall Street Journal.
Employees often gain a broader perspective on business when they do their jobs in different settings -- knowledge they can bring back to the organization. And, say employers, first-rate corporate volunteer programs help attract and retain so-called millennials -- workers born after 1980 -- who are needed to help fill vacancies expected to be created by the impending retirement wave of the baby-boomer generation.
Companies are increasingly answering by creating volunteer programs and then touting them on their corporate Web sites and Facebook pages, as well as in meetings with job candidates.
4/30/08
Smoker Fees for Health Insurance a Hazy Issue
Whirlpool Corp. made headlines for suspending 39 workers who were seen smoking outside their Evansville, Ind., factory despite enrolling for insurance as non-smokers. Whirlpool's smokers pay $500 a year more for their employer-provided health insurance—a penalty big enough to increase the likelihood of cheating, reports the Chicago Tribune.
The pendulum may be swinging toward the notion that employees who smoke ought to pay more for employer-provided insurance because their health-care costs are higher. Still, a minority of companies have adopted the practice. A survey by consulting firm Mercer found that only 5 percent of employers with 500 or more workers varied health-care premiums based on smoker status in 2007. Among large employers, those with 20,000 or more employees, the number was 16 percent.
(To learn more about smoking cessation policies, see the SHRM Online article Tobacco-Cessation Programs: Healthier Lives—and Bottom Lines.)
4/30/08
Final HSA Comparability Guidance Clarifies Fair Worker Benefits
A long-awaited final guidance on employer comparable contributions to health savings accounts (HSAs) was released April 17 by the Treasury Dept. and IRS. The guidance clarifies the obligations to other employees when some are offered an HSA as part of their benefits, reports AISHealth.com./
While employers aren't required to contribute to HSAs, employers that choose to do so must make comparable contributions to all other eligible employees. Employers failing to comply with this comparability rule face a substantial penalty.
• However (and it's a big one): The comparability rule does not apply if contributions are made through a Section 125 "cafeteria plan," by which employees select from a "menu" of benefits. The final guidance clarifies that if an employer allows its qualified employees to contribute pretax salary dollars to an HSA through a cafeteria plan, then any HSA contributions are exempt from the comparability rules
4/30/08
Pay Gap Fuels Worker Woes
The gap between top executive and employee compensation has never been greater. That's triggering lower morale and productivity on some corporate staffs, and making it more difficult to attract and keep talent, even in a slowing economy, reports the Wall Street Journal.
"If you're a plant manager and you have a good year, you can take a vacation, but if you're a CEO with options, you can cash out in a good year and then you and your children are set for life," says Peter Cappelli, a management professor at the Wharton School. "What angers employees the most is knowing that the top boss has this plus a whole lot of other perks they won't ever have, like a plusher health-care plan and a company car and driver."
• For many employees, the higher cost of gasoline, health care, education, food and other daily expenses has left them with the feeling that they are treading water.
4/29/08
More Companies Offer Roth 401(k)s
Roughly 22% of corporations now offer a Roth 401(k) option to their workers, up from 12% last year, according to a survey from accounting firm Grant Thornton, reports Financial Week.
"It’s a considerable uptick, considering just how new these options are," said Gary Gross, executive director of Grant Thornton’s compensation and benefits consulting group. "And what may be even more impressive is just how many companies may begin offering Roth 401(k)s in the very near future."
• The Roth 401(k) may be more appropriate for workers who expect to be in a higher tax bracket when they retire than they are when they start contributing to the plan. This, Gross said, could be younger, lower-income workers, for example.
4/29/08
Simplicity Better Answer for 401(k) Participants?
Most 401(k) plan participants neither want to nor are trained to handle their own investments. And hiring advisors for them to consult, or putting in place programs to try to turn them into educated investors isn't the best solution, posits the BNA Pensions & Benefits Blog.
A better answer, according to the BNS Advisory Board, may be to go the other way—toward simplicity, with fewer consultants and advisors, and lower costs. For example, if a plan is big enough, hire a professional manager to invest all plan assets. If a plan is not big enough, limit investment options to low-cost index funds and target date (or similar) funds.
4/28/08
Employers Offer Overseas Medical Options to Employees
As more Americans choose to have medical procedures performed at lower cost outside the U.S., more employers have begun offering employees the option of, for example, getting hip and knee replacements at a hospital in Singapore, reports the AP/Boston Globe.
Even when air fare and hotel charges for the employee and a traveling companion are factored in, employers could save thousands of dollars per procedure.
(To learn more about medical tourism, see the SHRM Online article Medical Tourism Starting To Appear in Health Plans.)
4/28/08
Employees Advised to Forgo Lousy 401(k)s
Financial advice columns such as this one in Money Magazine are telling employees not to participate in their employers 401(k) plan if it has a poor selection of funds, and instead to concentrate on funding an individual Roth IRA.
• About one in five 401(k) plans offer no company match. And among smaller 401(k) plans in particular, investment fees of 1.5% or more are common -- that means that 20% of participants' investment gains will simply evaporate every year, assuming average returns.
4/28/08
Hotel Chain Offers 40,000 Employees 'Mini-Med' Coverage
Choice Hotels, which has over 4,400 domestic franchised hotel properties, is making available a limited benefit health insurance plan to an estimated 40,000 U.S. employees, the company reports in a statement. Over 260 of the chain's hotels have already signed up to make coverage available to their employees.
The plan starts at under $20 per week for the employee only and is available in three rate tiers allowing the employee to opt for coverage for themselves, their spouse and their children. The plans do not include catastrophic coverage, but provide basic coverage for services including maternity care, minor surgery, outpatient care and more. Employees can also choose to add dental, vision, short-term disability or life insurance options to their plan. The company also released this fact sheet on the plan.
(To learn more about limited benefit health insurance, see the SHRM Online article 'Mini-Med' Plans Fill a Gap, but Beware of Giving False Security.)
4/24/08
Renegotiate/Re-bid Your Contract with Health Insurance Provider
Health plan sponsors should consider making substantial changes to the plan every three or four years, up to and including a change in the insurance company vendor, advise two actuarial consultants at Milliman, writing in Benefits & Compensation Solutions.
It's best not to get locked into an agreement with any one provider for a term longer than three years, they recommend. There is a great deal of competition in the insurance industry and much incentive on the part of insurance companies and administrators to compete for your business. Even if you end up keeping your current vendors, the terms of your agreement likely will be much more favorable than your past contract due to increased competition.
• Shopping around can be particularly beneficial for self-funded plans; the savings can add up quickly. If renegotiation of the contract saves even $5 per employee in monthly fees, an employer with 10,000 participants would see savings of $600,000 a year.
4/24/08
Benefit Trends: Change Is Now Constant
So says Dallas Salisbury, head of the Employee Benefit Research Institute (EBRI), writing in the Wall Street Journal. In his overview, Salisbury finds that:
• For retirement benefits, the old final-average-pay, life-annuity, employer-paid pension is pretty much gone as a model for the private sector, forced out by global and domestic economic fundamentals; federal pension laws; new accounting standards from private and international accounting boards; worker distrust of institutional commitments; and other factors. However, the private-employer movement toward hybrid defined-benefit design is likely to continue in the decades ahead.
• For health care, the movement toward consumer-focused health plans is likely to continue, with ongoing refinements regarding payment for wellness and preventive care, chronic disease and prescription drugs. However, insurers—not insured individuals—are likely to continue to hold the risk of unexpected catastrophic costs.
• For other benefits, declining employer payment of supplemental benefits is being offset by multiple voluntary individual sign-up benefits negotiated by the employer but paid for by the employees who select them, a trend likely to continue as it is driven by inexpensive Internet administration.
4/23/08
Are Blackberrys the Next Battleground in Wage-and-Hour Litigation?
The next front in the ever burgeoning field of wage-and-hour litigation may be the use of Blackberrys, according to a report in the Wall Street Journal, citing research by the National Law Journal.
Litigation could be “just around the corner,” filed by employees who will claim overtime for all the hours they’ve spent typing away on their Blackberrys, cell phones, or other communication devices.
• So what should employers do? According to the story, some may want to require that employees get permission first before using their BlackBerrys after work hours, said Mitch Danzig, an attorney in the San Diego office of Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. Danzig advises his clients to give BlackBerrys only to employees who are exempt from overtime laws.
4/23/08
39 Whirlpool Workers Suspended Over Smoking Lies
A Whirlpool Corp. factory in Evansville, Indiana, has suspended 39 workers who signed insurance paperwork claiming they don't use tobacco and then were seen smoking or chewing tobacco on company property. Now, some could be fired for lying, reports CNN.com. Management suspended the 39 employees after they were spotted using either chewing tobacco on company property or taking a drag in one of the factory's dozen shelters for outdoor smoking.
As annual health care premiums rise more than 10 percent a year, many companies are trying to rein in costs by encouraging healthy living. Some employers have developed wellness programs to motivate employees, while others ask employees to state on benefits forms whether they use tobacco.
In Evansville, the 1,500-employee factory charges tobacco users an extra $500 in annual health insurance premiums. The refrigerator factory has levied the extra premium since 1996, and it depends on employees to honestly fill out forms. It doesn't mandate blood tests to detect nicotine or trail employees outside work.
To learn more about smoking cessation programs, see the SHRM Online article, Tobacco-Cessation Programs: Healthier Lives--and Bottom Lines.)
4/23/08
401(k) Plan Participants Want Help But Won't Pay, Study Finds
Among participants in defined contribution retirement plans, a majority (70%) are open to receiving free advice, but only 31% would be willing to pay for it, according to a study by Spectrem Group, reports Investment News.
"This is something that plan sponsors are split on," according to Gerald M. O'Connor, a director at Spectrem. "Some make the service available, and some absorb the cost while others don't."
• Advice may be particularly important since participants generally ignore educational materials. Although 56% of plan providers offer educational materials and meetings, only 12% of participants refer to them on a regular basis, the Spectrem survey found.
4/21/08
Maternity Leave: More Expectant Moms Wait 'Til the Last Minute
Eighty percent of U.S. pregnant women who work remained on the job until one month or less before their child's birth, according to Census data, reports the Christian Science Monitor. In 1965 that figure was 35 percent.
Most women work until close to their due date for two reasons: They need the income and they want to use their maternity leave after the baby arrives.
• Although some women face pressure from their bosses, others praise employers for being compassionate and flexible. "I've seen managers be concerned that a mom may be working too hard and suggest she work at home," says Cali Williams Yost, a workplace flexibility consultant in Madison, N.J.
4/21/08
Boeing Seeks Pension Plan Change for New Hires;
Incentive Pay Tied to Productivity
Boeing's top labor negotiator, Doug Kight, has an uphill battle ahead as the company undertakes difficult contract talks with unions representing machinists and engineers this year. To cut Boeing's enormous future pension liabilities, Kight said he'll propose replacing the employee pension for all new hires with a 401(k) plan supplemented by a company contribution, reports the Seattle Times.
Kight said Boeing also will propose a wage increase, particularly for entry-level workers, and an incentive pay plan tied to productivity gains and based on set targets close to the shop floor, so that workers know exactly what they have to do to earn the extra pay. But the proposed pension change for new hires will be a difficult issue.
4/18/08
Contentious 401(k) Fee Disclosure Bill Passes House Committee
The House Education and Labor Committee approved H.R. 3185, a 401(k) fee disclosure bill backed by panel chairman Rep. George Miller (D-Calif.) by a 25 to 19 party-line vote, planspsonor.com reports. The bill requires 401(k) service providers and plan administrators to provide complete disclosure of fees broken down into four categories: administrative fees, investment management fees, transaction expenses, and other charges.
Rep. Howard P. "Buck" McKeon (R-Calif.), the committee's ranking minority member, blasted the bill, declaring that it "demands sweeping new reporting of information regardless of whether it’s needed or how much it costs." One of McKeon’s suggested amendments would have eliminated the so-called "unbundling" requirement, which requires plan service providers to report the cost of individual services even when those services are not available on an individual basis. The amendment was defeated.
• U.S. Assistant Secretary of Labor Bradford P. Campbell issued a statement saying: "Unfortunately for America’s workers, retirees and their families, the Committee-passed bill would make 401(k) fee disclosure more complex and expensive than it needs to be. Meanwhile, the Labor Department is moving ahead with fee disclosure regulations that will empower workers, retirees and families by giving them the information they need to make informed retirement savings decisions.”
(To learn more about this issue, see the SHRM Online article, 401(k) Fee Disclosure Hearings Warn of New Burdens).
4/18/08
Average Drug Co-pay Fell in 2007 as Generic Use Rose
The average prescription drug copayment for patients in 2007 decreased by 25 cents to $13.20 -- the first such decrease in at least five years -- as the average total cost of such medications increased from $55.01 in 2002 to $55.93 in 2007, according to a report released on Wednesday by pharmacy benefit manager Express Scripts, the AP/Philadelphia Inquirer reports.
"When more generics are used, benefit plan sponsors can control plan costs without shifting these costs to consumers," said Emily Cox, the company's senior director of research. She said that, on average, consumers saved $15 per prescription when they chose a generic over a brand-name drug.
• The study showed that from 2002 through 2007, the average co-payment for brand drugs preferred by health insurance companies increased $4.52, to $19.18. For brand drugs not preferred by insurers, co-payments increased $11.28, to $28.44. But for generics, co-payments increased just 86 cents, to $7.57 from $6.71,
4/18/08
Small Biz: Picking Perks that Employees Value
Small companies employ nearly half of U.S. workers. But without the bargaining power of larger employers, they face big hurdles in combating soaring benefits costs, reports the Wall Street Journal.
A 150-employee architecture and design firm in Milwaukee surveyed its workers and discovered that the 401(k) match and stipend were especially important to employees. It now matches 25% of an employee's contribution up to 6% of salary, and in more profitable years pitches in more, as much as doubling the match.
• The survey also showed that paid time off ranked highly with employees. So the company shifted its policy so employees would earn time off faster. All new employees are given 15 days off each year for vacation, sick time and holidays. After five years, the number jumps to 20. An employee at the company for 10 years receives an extra two days. And each five years after that, another two days accrue.
4/17/08
Perks Needed To Keep Older Workers on the Job
Shorter work weeks, flexible hours and extended healthcare benefits are important for recruiting and keeping older workers, reports Reuters Life.
A poll of Canadians age 55 and older identified several factors that companies need to keep in mind to attract and stop older workers from leaving. The top factors in retaining older employees were:
• Extended health care benefits, cited by 60 percent of respondents.
• Flexible work hours, cited by almost 50 percent.
Older workers also want more than six weeks vacation a year, according to the study.
The poll showed that although four out of 10 plan to take retirement when they become eligible, 22 percent would like to phase it in gradually and 26 percent would like to keep working beyond retirement on a contractual basis.
4/16/08
Review of 401(k) Plan Fee Legislation and Regulation
New rules on provider-to-sponsor disclosure, requiring providers to provide a lot more, and more detailed, information to plan sponsors, are, for sponsors, a two-edged sword, according to an analysis by JPMorgan Chase.
On the one hand, more information could allow sponsors to negotiate more effectively. On the other hand, there will be a new burden of scrutiny. If a sponsor gets information, for example, about a service that may be overpriced or a conflict of interest, and doesn't act on it, that sponsor may be vulnerable to a participant lawsuit.
• New rules on sponsor-to-participant disclosure also are likely to prove a challenge for sponsors, particularly where pricing arrangements are not "explicit," e.g., in certain revenue sharing arrangements, and where assets-under-management fees are used to pay for services instead of charged on a per capita or flat fee basis.
4/16/08
Costs Soar for Massachusetts Health Care Law
Two years after Massachusetts' landmark health law was signed, the cracks are starting to show, reports the Associated Press.
In 2006, a legislative committee estimated the law would cost about $725 million in the fiscal year starting in July. In his budget, Gov. Deval Patrick set aside $869 million, but those overseeing the law have already acknowledged costs will rise even higher. Lawmakers are hoping to close the gap in part with a new cigarette tax expected to generate about $154 million a year
4/15/08
More Boards Limit CEOs' Pay-Setting Power
Corporate directors are increasingly cutting back the pay-setting authority of CEOs, and board compensation committees are retaining their own lawyers, holding frequent executive sessions and evaluating management more rigorously, according to a report by the Wall Street Journal.
Also, severance-pay packages for CEOs appear to be coming down, but slowly.
4/14/08
Co-Payments for Expensive Drugs Soar
Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases, reports the New York Times.
The system, often called Tier 4, began in earnest with Medicare drug plans and spread rapidly. It is now incorporated into 86 percent of those plans. Some have even higher co-payments for certain drugs, a Tier 5.
4/14/08
FMLA Cheats a Big Concern, Employers Say
Suspected employee abuse of leave taken under the Family and Medical Leave Act is the No. 1 FMLA-related concern for employers, according to a survey by WorldatWork, reports Financial Week.
Among HR professionals surveyed, 42% said the potential for or suspicion of abuse by employees causes “extreme difficulty” in administering intermittent FMLA leave. Among other top concerns cited, 38% reported inadequate notification prior to an absence and 28% reported difficulties tracking intermittent leave.
Among the regulatory changes garnering the most support were:
• 72% of respondents strongly agree with requiring workers to notify employers in advance of taking non-emergency, foreseeable leaves.
• 61% strongly agree with requiring annual medical certification from employees when conditions last more than one year.
• 60% strongly agree with requiring a fitness-for-duty certificate after return from intermittent leave to jobs that could endanger the employee or others, or that the worker may be unable to perform.
4/14/08
Higher Pay Puts Older Workers on Firing Line
Older workers are more vulnerable to losing their jobs than younger ones when companies cut costs, even though federal law forbids age-related discrimination, according to a Chicago Tribune column.
"When a company's looking to cut expenses, those who are most heavily compensated are most heavily at risk," said Chicago employment attorney Peter Steinmeyer.
• According to the author of an Ohio State University study, "Discrimination faced by the sixtysomething crowd seemed to be related to cost-reduction strategies surrounding health care and pensions, which can be big savings over time. In the one group the employers were looking at costs here and now, and the other, strategizing about future costs."
4/14/08
Bank of America Gives Its Employees Health Care Accounts
Bank of America Corp. is making major changes to its health care benefits, including giving employees up to $1,200 a year to spend on expenses not covered by insurance, reports CNNMoney.com. The bank itself issued this statement.
As part of the change, Bank of America will put $600 to $1,200 every year into health care accounts for employees who earn less than $100,000. More than 130,000 of the bank's employees will be eligible to participate.
The accounts are in addition to the bank's annual contributions to employees' health care coverage—which pay the majority of the cost of care—and on top of employee-funded flexible spending accounts, which allow workers to set aside pretax money on their own to cover medical expenses and dependent-care costs.
• The new employer-funded accounts can be used to pay for current health care expenses not covered by insurance, such as deductibles and co-pays, or rolled over year-to-year and saved, even into retirement. They sound similar to but more flexible than health savings accounts (HSAs), which must be tied to high-deductible health plans. However, it appears that they will lack the tax-advantages of HSAs.
4/11/08
The Best, New 401(k) Features
Money Magazine takes a look at the best five new features for 401(k) plans, which are:
• A Roth option. If employees will be in a higher tax bracket in retirement, a Roth 401(k) can be a better deal.
• Automatic rebalancing service. This service automatically rebalances the participant's investment holdings back to their desired allocation once a quarter
• Target-date funds. They maintain a mix of stocks, bonds and cash that gradually grows more conservative as employees draw close to the year they plan to retire.
• Investment-selection advice. Typical annual fee is 0.4% to 1% of the participant's account balance.
• Higher employer contributions. About 75% of those that have cut their defined-benefit pension plans in the past decade have increased their contributions to participants' 401(k) accounts.
"Many employers just don't think it's worth the effort to add something new if it hasn't yet been widely adopted," says Pamela Hess, director of retirement research at Hewitt Associates. "It's up to [their workers] to tell them it's worth it."
4/10/08
E-Prescribing Can Cut Costs and Improve Patient Safety
While physicians have been slow to embrace electronic prescribing, the experiences of several health plans in the forefront of e-prescribing point out that, when used, produces a significant return on investment, reports Health Plan Week (via AISHealth.com).
4/10/08
DOL Has Downloadable Retirement Plan Video for Small Employers
The U.S. Department of Labor has released a new online video and related pamphlets to help small employers understand the various options for providing a retirement program for their employees.
4/10/08
Court to Decide If Car Use Drives Public Pension Boost
Massachusetts' highest court will decide once and for all an issue that has popped up all over the state — whether public employees who get to take home a vehicle at night are entitled to claim that as a form of compensation in order to boost their pensions, reports the Eagle-Tribune.
The bottom line is if you provide a public safety official with a car so they can do their job, it seems not to be compensation but a tool to do their job," Justice Robert Cordy said. "But if a car is provided as compensation ... where does this fall?"
• Michael Sacco, a lawyer for the Beverly Retirement Board, argued it falls into the category of a fringe benefit — which under state law doesn't count toward a pension, just as overtime, bonuses or sick time buybacks don't count.
4/9/08
Monitoring Revenue-Sharing Is a Fiduciary Responsibility
Revenue-sharing arrangements mean that providers and advisers for a retirement plan receive money from the investments they select and manage. The Department of Labor refers to these as "indirect payments," while plaintiffs' attorneys often call them "secret and excessive payments," reports PlanSponsor Magazine.
Typically, the investments, or the investment managers, pay money to brokers, investment advisers, consultants, recordkeepers, and third-party administrators. The amount of the payments is usually, but not always, based on the amount of the investments. "That's just another way of saying that the participants are being charged for some or all of the cost of the plan, including the investments and the services to the plan," according to Fred Reish, managing director and partner of law firm Reish Luftman Reicher & Cohen.
• Reish says that plan fiduciaries must be aware of, and consider the impact of, conflicts of interest. "If your providers or advisers are receiving more compensation, including the indirect payments, when they promote one investment over another, there is a conflict of interest," he warns.
4/7/08
New Jersey To Mandate Paid Leave for Family Care
Despite the opposition of business groups, New Jersey will become the third state to require companies to offer six weeks of paid leave to workers wishing to care for a new child or sick relative, reports the Associated Press. The measure has now passed the Assembly and Senate, and Democratic Gov. Jon S. Corzine supports it.
Under the plan, which is backed heavily by organized labor, parents could take paid leave anytime in the first year after a child's birth or adoption. Workers also would be allowed to take paid leave to care for a sick relative receiving inpatient care in a medical care facility or under continuing supervision from a health care provider. A health provider could also certify a sick relative needs help at home.
• The program would be paid for through a payroll deduction that legislative officials estimate would cost each taxpayer $33 per year. Workers who take leave would get two-thirds of their salary, up to $524 per week, with an estimated average weekly benefit of $415. Opponents liken the payroll deduction to a tax, and they fear it will increase if the program doesn't earn enough money to meet its needs.
4/7/08
Citigroup Is Set To Pay Women To Settle Lawsuit
Citigroup Inc. agreed to pay $33 million to about 2,500 current and former female brokers at the company's Smith Barney subsidiary to settle a discrimination lawsuit. Citigroup also agreed to change the way it awards bonuses and partnerships and alter how accounts are assigned, reports the Wall Street Journal.
A federal judge in San Francisco still has to approve the proposed settlement of a lawsuit filed by four women in 2005 that accuses company managers of doling out clients disproportionately to male brokers.
4/4/08
Advice Efforts by Retirement Plan Providers Go Unused
Although retirement plan providers supply investment education materials to 56% of participants surveyed by Spectrem Group, only 12% said they refer to these materials on a regular basis and 22% never use them, reports plansponsor.com.
The education delivery methods most cited by participants surveyed by Spectrem Group were:
• Plan web site that allows users to read or download materials- 58%
• Hard copy written materials - 56%
• Group meetings – 31%
• One-on-one meetings – 27%
4/4/08
'Web Visits' with Doctors Likely to Rise
This year two of the country's biggest health insurers, Aetna and Cigna, have begun paying for patients' online consultations with physicians through RelayHealth, a secure web-based service, National Public Radio reports.
Critics charge that this practice could lead to errors and could compromise patients' private information.
4/3/08
Drug Costs Rise as Economy Slides
People with health insurance are having more trouble paying for prescription drugs as higher out-of-pocket costs for medications and a slowing economy strain family budgets, according to surveys and health care analysts, reports USA Today.
"Incomes aren't going up, but co-payments are," says Gary Claxton of the Kaiser Family Foundation, which studies health policy. In some cases, the patient's share of drug costs is no longer a flat dollar amount, but a proportion that can range from 20% to 70%.
4/3/08
Some PBMs and Health Plans Push Brand-Name Drugs
Some health plans and pharmacy benefit managers (PBMs) continue to favor brand drugs over generics based on the steep rebate agreements and other financial deals they forge with pharmaceutical manufacturers, reports Drug Benefit News (via AISHealth.com.
"These rebates create conflicting incentives, which are difficult to ignore, especially when consultants and employers emphasize rebates as a competitive price point," said Jake Cedergreen, senior director of market intelligence at Express Scripts Inc. "Even the net costs of brands with the highest rebates don't even compare to the low costs of most generic alternatives."
4/3/08
20 Percent of Companies Pick Up CEO Taxes on Perks
A new study from The Corporate Library finds that an increasingly common perk being granted to CEOs is a tax "gross-up." In plain English, it means that a company pays the taxes owed by the CEO on benefits, reports USA Today.
Almost any perk granted to a CEO generates a tax bill, from an executive life insurance policy paid by the company to country club dues. "We are sure that many U.S. workers would be grateful if their employers also paid their income tax obligations," writes Paul Hodgson of The Corporate Library in the report.
4/2/08
Smart 401(k) Moves for Rough Times
Financial columnist Tim Middleton provides advice to plan participants for weathering market volatility, via MSN's Money Central. Example:
Everything goes on sale. Stock sales are called corrections or bear markets, but what they are is sales. Markets always come back -- always. The price can be 20%, 30% or even 40% off, but it's still good merchandise.
4/1/08
Tuition-Reimbursement Programs: Measuring Retention Value
Tuition-reimbursement plans are often justified by their value in enhancing employee retention and recruitment, but few companies have put that hypothesis to the test. A recent survey of 180 companies conducted by the Corporate University Xchange found that nearly half neither measure the impact of such programs on retention and recruitment nor follow up with employees and managers to learn how the programs affect job performance, reports CFO.com.
Verizon Wireless is an exception. Beginning in 2006, it began surveying employees who participated in tuition-reimbursement plans, as well as their supervisors. The company found that those who earned degrees with the help of such programs were more likely to have been promoted or to have made lateral moves (35 percent compared with 26 percent of overall employees), and 96 percent said they planned to stay with Verizon for at least two years beyond the completion of their degree.
Nearly 40 percent of Verizon managers cited improved performance among employees who earned degrees with help from the company, including greater adaptability and a stronger appetite for more work and responsibility.
• "Any business has an obligation to make sure the investments it makes are sound," says Michael Flanagan, senior staff consultant for leadership development at Verizon Communications (the parent company of Verizon Wireless). "These measured outcomes prove to management that we have a strong program."
4/1/08
| 
