Category Archives: benefits

Five Important Steps for Retirement

retirement reviewMercer has just released its annual “10 Steps DC Plan Sponsors Should Take” for the coming year, or things employers should do to ensure their defined-contribution plans are meeting the needs of plan participants while staying in compliance and taking advantage of recent innovations. Some of these recommendations include the usual about financial-wellness education, monitoring participants’ progress against their retirement goals, reviewing plan fees and checking up on providers to make sure they’re staying compliant.

Rather than list all 10 steps, I’ve focused on the five that address relatively new developments.

First, you should make sure your plan is responsive to participants’ retirement-security needs by studying the latest available options, such as services promoting Social Security optimization. You should also be prepared to “respond to favorable regulatory changes,” such as the increased guidance on the use of in-plan annuities.

Second, you should conduct an in-depth analysis of your current, or future, managed-account provider. Heightened scrutiny of such providers, including the Government Accountability Office’s recommendation to the DOL to conduct an in-depth review of managed-account providers, means you should be taking a close look at your processes for selecting and monitoring these providers.

Third, make sure the capital preservation option in your plan is still the most appropriate for plan participants. Capital preservation options such as money market and stable value options have an important place within the DC framework. Given the new fixed-income products that have arrived on the market within the last few years, along with the increased SEC regulations that will be placed on money market funds in 2016, now is a good time to review your plan’s offerings to determine whether they’re still meeting participants’ needs.

Fourth, think about what a disabled employee can do to keep current with his or her plan while out on leave.  As Mercer notes, when employees go out on disability, their DC plan contributions can take a hit. This causes a gap in participants’ retirement preparedness that, depending on their leave’s duration, they may never be able to fully close. However, new regulations that allow continued contributions during periods of disability could mean that such a gap is not inevitable.

And finally, # 5: keep an eye on liquidity. Last year saw major growth in liquid alternatives, says Mercer, such as diversified inflation and hedge funds. Exposure to options such as these is not new: Many target-date funds have some exposure to these options. Plan sponsors need to review how these liquid alternatives are defined, reviewed, implemented and monitored within the plan. Make sure these exposures are appropriate for plan participants based on what’s available on the market today, and determine whether or not additional exposure should be considered.

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Americans: Overworked Yet Positive

The latest Heartland Monitor Poll from Allstate and the National Journal is out and it contains some very good news for the nation’s employers. The poll of 1,000 employed Americans finds that the overwhelming majority think very highly of their employers, with 82 percent saying they believe their employer has a positive impact on their community and 87 percent saying they’d recommend their place of employment to others. Americans are also highly satisfied with their jobs: 93 percent said they’re satisfied and 54 percent said they’re very satisfied.

So here’s the less-positive news: Only 31 percent say they’re very satisfied with their pay. Just 43 percent are very satisfied with their job benefits, 45 percent with the amount of paid vacation and sick time offered and 38 percent with opportunities for advancement.

Finally, many Americans will be putting in time on the job that they’d rather be spending with their families this holiday season: Just under half (45 percent) say there’s “at least some chance” they will be working on Thanksgiving Day, Christmas Day or New Year’s Day. More than half (55 percent) say it won’t be by their own choice. At least 25 percent of American workers will be required to work during at least one of these major holidays.

Working Americans’ personal time is increasingly impacting their personal time: 81 percent say they are required to be in contact outside of working hours, with 41 percent saying they’re required to be in contact frequently. More than half (56 percent) say they checked email or otherwise checked in with work during their last vacation.

Perhaps not surprisingly, Americans are looking for more flexibility and more personal time. If given the choice between jobs based on the balance between work and personal time, two in three (67 percent would choose “more flexibility and shorter hours … but less pay” while only one in four (26 percent) would choose “more pay … but less flexibility and longer hours.”

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Eliminating Silos in Health and Safety

Few of us need to be sold on the merits of greater collaboration. But if there were any doubts about what it’s able to bring to the areas of health and safety, Dr. Casey Chosewood put them to rest yesterday morning during his opening keynote speech at the National Workers’ Compensation and Disability Conference® in Las Vegas.

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Dr. Casey Chosewood, speaking at the National Workers’ Compensation and Disability Conference on Wednesday.

“Too many organizations today still have silos [that] are unconnected,” said Chosewood, chief medical officer and director of the Office for Total Worker Health Coordination and Research at the National Institute for Occupational Safety and Health (part of the Centers for Disease Control). “But that has to change. We have to put everything under one umbrella and take a more integrated approach.”

Remarkable things can happen when each of the components talk to one another, align their goals, understand the financial challenges of others and work on finding solutions, Chosewood told the packed room of attendees.

Of course, in the world of business, the elimination of silos, as a concept, comes up a lot. But it seems to be an especially powerful idea when it’s applied to safety and health.

Early in his talk, Chosewood took a few minutes to touch on the Ebola outbreak, which is also the subject of Carol Harnett’s Benefits Column posted earlier this week.

“I’m frequently asked if the CDC has a handle on the problem,” Chosewood said, “and that’s a fair question.”

As of today, he explained, there have been eight cases of Ebola in the United States, compared to 14,000 known cases in West Africa (a figure he believes is probably closer to between 20,000 and 28,000).

Chosewood said the CDC believes the risk of Ebola here in the United States remains very low, though he added that doesn’t negate the seriousness of the disease and the need to put “more resources on the ground in West Africa” to address it.

Returning to the focus of his talk, Chosewood said people would be mistaken were they to think they could separate work and home as far as health and well-being are concerned. “You can’t leave what happens at home on the kitchen table [just as] you can’t leave what happens at work on your desk. You shuttle them back and forth.”

Chosewood cited the example of a person who works in a factory who is exposed to lead and then brings it home to an unsuspecting child on the surface of his or her clothing. “Risks don’t just stay in one place,” he said.

During his talk, Chosewood also touched on the importance of changing the culture of the organization. Quoting Sir Michael Marmot (a professor at the University College London), he said it’s “unreasonable to expect people to change their behavior when the social, cultural and physical environments around them fully conspire against them.”

Chosewood shared a close-to-home illustration of the kinds of steps that can be taken.

When the CDC ran out of places to park and needed to build a new parking garage, Chosewood (then in charge of safety and health there) said he intentionally proposed picking a site that required workers to walk 15 minutes. While the move initially made him quite unpopular and existing employees complained about the distance, he said, new hires haven’t complained at all.

In addressing health and safety issues, he said, employers need to be willing to take “short-term heat” for “long-term gain.”

Chosewood said next on the Center’s to-do list will be to slow down the elevators so impatient workers will take the stairs. (I wasn’t sure if he was serious or kidding.)

According to Chosewood, there are three kinds of companies: bad, good and the best. Bad companies, he said, don’t do anything to keep their workers healthy and safe; good companies keep them protected from injury and illness; and the best do what’s needed to ensure their workers go home more healthy at the end of the day.

Employers that fall in this “best” category, he said, will enjoy more engagement, greater productivity and lower injury risk.

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The Pitfalls of Consumerism

Do you put as much thought into selecting your cellphone plan as you do for selecting which doctors and specialists to see for your medical plans?

This question was posed at the National Business Coalition on Health’s annual conference in Washington by Shawn Leavitt, senior vice president of global benefits at Comcast Corp., during his keynote address.

“More than half of all consumers say they’re dissatisfied with the cellphone plan they chose,” he said. “So, if people are having a hard time selecting a cellphone plan that’s right for them, then how do we expect them to make the right decisions with respect to their health plan and health providers?”

The subject of Leavitt’s presentation was that healthcare consumerism — high-deductible plans that put more of the onus for financing and managing healthcare on employees — will not work unless employees receive more expert direction and guidance to help them.

At Comcast, said Leavitt, HR has enlisted so-called “expert shoppers” to help employees with these crucial decisions. It’s coupled that with outreach to certain locations within its vast empire to focus on subsectors — such as call centers — where employees were making heavy use of emergency rooms (and driving up costs) to educate employees on alternatives such as urgent care centers.

“We understand that it’s hard to expect employees who are juggling multiple responsibilities to make the sort of far-sighted decisions we’d like them to make when they’re faced with something as immediate as a sick child,” said Leavitt.

Comcast is using its own marketing wizardry to help educate employees on making wiser healthcare choices, he said. “We have become very good at getting consumers to pay to watch bad movies and reality television shows,” said Leavitt. “We’re focused on bringing that same level of expertise to help our employees make good decisions on healthcare.”

The risks of consumerism were also highlighted by Dr. Mark Fendrick during a panel discussion on pharmacy drug benefits. One of the main questions the panel grappled with was whether it was right for plan sponsors to exclude certain medications from plan coverage.

“If you’re doing that just to save money, I don’t think it’s a good idea,” said Fendrick, director of the University of Michigan’s Center for Value-Based Insurance Design. “I think it’s OK if the drug has been proved to be ineffective or counterproductive or if cheaper generics of equivalent effectiveness are available. But do it for the right reasons.”

The trend of pushing more costs onto employees can end up doing more harm than good if it isn’t managed carefully, he said. “Raising deductibles and pushing more of the cost onto employees without giving them support necessary for needed treatment and medications will simply cause more of them to forgo what they need,” he said. “I’ve had patients tell me that until they exhaust their deductible, they’re not going to do many of the things I’ve told them they need to do to maintain their health. And that goes against what this whole idea of consumerism is supposed to be about.”

 

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So How Are the Financial Experts Doing?

When it comes to 401(k) performance, you’d think employees might do better with the help of the so-called experts, right? Well, maybe not.

Here’s a disturbing study I ran across today coming from researchers at Michigan State University and the University of Notre Dame: Financial experts do not make higher returns on their own investments than untrained investors.

153430966There’ve been more than a few surveys in recent years that suggest employees would like more help in managing their 401(k)s and preparing for retirement. So you’d think putting their nest eggs in the hands of “the experts”—or at least people they think are more expert than themselves—would give them some level of comfort.  But if there’s any truth to the new study mentioned above, which looks at the private portfolios of mutual-fund managers, they’d be mistaken. Among other things, the study—titled “Do Financial Experts Make Better Financial Decisions”—found the experts were “surprisingly unsuccessful” at outperforming nonprofessional investors. (The study is slated to be published in an upcoming edition of the Journal of Financial Intermediation.)

To reach their conclusion, the researchers—Andrei Simonov, associate professor of finance at Michigan State University, and Andriy Bodnaruk, assistant professor of finance at the University of Notre Dame—compared the portfolios of 84 mutual-fund managers in Sweden against the portfolios of untrained investors and found “no evidence that financial experts make better investment decisions than peers.”

Simonov says he’s not denying there aren’t talented fund managers out there, but does suggest that there are “very, very few of these superstars, and the average investor probably can’t afford to invest with them anyway.”

(Though the study took place in Sweden, Simonov and Bodnaruk believe the findings are just as applicable to the United States and other countries.)

Whether you’re an investor or a fiduciary, the notion that these experts aren’t performing any better than the average nonprofessional investor probably isn’t going to help you sleep any better at night. Most of us would like to think the opposite was the case, especially in an environment in which employees seem to be more stressed than ever about their financial well-being.

Employees certainly don’t need yet another thing to be frightened by. Oh BTW, Happy Halloween!

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EEOC’s Honeywell Suit Draws Protest

124666886 -- wellness biometricsThe National Business Group on Health says the Equal Employment Opportunity Commission’s recent lawsuit against Honeywell International over that company’s use of biometric screening in its wellness program “will have profound implications for any employer that offers employees wellness programs with incentives for biometric screenings.”

Employees at Honeywell could face as much $4,000 in lost incentives and surcharges in 2015 should they decline to participate in voluntary screenings of their cholesterol levels, body mass index and other measures, the Wall Street Journal reports. Other companies have similar programs in place; at Honeywell, it’s the potential size of the penalties that caught the EEOC’s attention, says the WSJ.

However, the EEOC is at least partly to blame for failing to provide the business community with clear guidelines regarding how to ensure their wellness programs comply with laws such as the Genetic Information Nondiscrimination Act and the Americans with Disabilities Act, said NBGH President Brian Marcotte.

In a statement, Marcotte said employers have been “seeking guidance from the EEOC for years” regarding this issue, yet the EEOC has failed to provide it. “Their lack of clear guidance, plus the recent legal action, conflicts with the message of HIPAA and the Affordable Care Act, which encourages the adoption and expansion of programs that benefit the health of employees and their families,” he said.

Honeywell’s troubles are just the latest example in what appears to be an ongoing battle between employers and the EEOC over what companies can and can’t do with regard to wellness programs. Last month we reported on the agency’s lawsuit against Orion Energy Systems — the EEOC contends the company’s policy of requiring medical exams and screenings violates the ADA.

What should HR leaders do? Well, in addition to working closely with legal counsel when designing and implementing wellness programs, they need to ensure they’re being applied uniformly, regardless of age, race or disability, attorney Anna Maria Tejada of Kaufman Dolowich & Voluck told reporter Kecia Bal.

“You can’t just say everyone can do it and then require a health screening or blood test. Then you exclude certain people. You can’t, in my view, make the wellness program a requirement that will affect the terms and conditions of a person’s employment. And, if someone refuses to do it, you can’t fire them.”

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Egg Freezing: Unique Benefit or Bad Idea?

pregnant womanThe Apples and Facebooks of the world are known for their original and generous employee perks and benefits. But these companies find themselves in the news this week for offering a new benefit that goes well beyond the usual on-site dry cleaning services and free haircuts.

Earlier this year, Facebook began covering up to $20,000 for female employees to freeze and store their reproductive eggs, so they can put off pregnancy as they establish themselves during their prime career-building years. Apple has announced it will start doing the same in January 2015.

Cryopreservation and egg storage could be seen as the latest advance from the tech firms that continue to blaze the trail for employee benefits that help attract and retain the best and brightest.

“Egg freezing is one in a long line of innovative HR practices intended to be attractive to educated people with many employment options, seeking a focus on flexibility in the difficult balance between work and life,” according to James Hayton, professor of human resource management at the Warwick Business School in Coventry, England.

“The cost appears to be moderate, although not trivial, at about 20 percent of average salary at these firms,” says Hayton. “The benefits, in terms of attracting and retaining employees, can be expected to significantly outweigh the costs. The positive PR will pay for itself by signaling these employers’ values with respect to women’s control over this important life choice to prospective female employees.”

All that said, the practice isn’t without its detractors.

Healthcare law and bioethics expert Seema Mohapatra, for example, wrote in August that egg freezing “seems to put a Band-Aid on the problem of how difficult it is for women to have a career and raise a family concurrently.”

This week, one woman, speaking on the condition of anonymity, told the New York Times that delaying fertility for female employees is “certainly in the employer’s interest … from a business perspective. But in my experience, it’s more personal: Are you married or not married, and if you’re not and you’re over 35, it’s a health thing.”

In the same Times article, Mohapatra expressed concern that women who “do not fit that profile” could feel pressure to use the benefit.

“What I worry about is it’s not going to be just used by that population, but [it’s] going to be used by the population in their 20s and early 30s saying, ‘If I want to be seen as a serious employee and make it to vice president, I can’t take maternity leave,’” said Mohapatra, a law professor at the Barry University School of Law in Orlando, Fla.

Critics may also note that, “while perks such as these are very impressive and innovative, broader pay equity might be an even stronger signal of the importance of women in the workplace,” says Hayton.

Additionally, companies offering this benefit could draw the ire of religious groups with serious reservations over “the tricky domain of bioethics and reproductive choices,” he continues, adding that other observers may be “squeamish about the degree of paternalism when employers show concern for their employees’ reproductive choices.”

While we’re certain to see these and other strong reactions in the days to come, Hayton, for one, is confident that employers providing egg freezing options for female employees will prove to be a good thing.

“Ultimately … these policies are innovative and forward-thinking, and likely to benefit the employers [that are] creative enough, and bold enough, to offer them.”

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Adapting to the Affordable Care Act

ACAHow are we going to respond to the Affordable Care Act?

That’s the question CHROs have been asking themselves since President Obama signed the ACA into law in March 2010.

The University of South Carolina Darla Moore School of Business recently asked that question of CHROs, in its annual HR@Moore Survey of Chief HR Officers.

Distributed to more than 560 chief HR officers at Fortune 500 firms as well as members of the HR Policy Association, this year’s poll asked these HR leaders to specify the actions they’ve already taken, or plan to take over the next 12 months, as a direct response to the Affordable Care Act.

The answers of the 200-plus respondents indicate that most companies are responding by pushing costs and responsibility on to employees. For example:

  • 73 percent of respondents said they have moved or will move employees to consumer-directed health plans.
  • 71 percent said they have raised or will raise employee contributions toward health insurance.
  • 30 percent of organizations have moved or will move their pre-65 retirees to ACA exchanges.
  • 27 percent have either cut back the coverage eligibility of employees’ spouses and dependents or plan to do so.
  • 23 percent have or will more rigorously ensure that part-time employees work fewer than 30 hours per week.

The study, which the University described as a “definitive look at how medium- and large-sized firms have been affected by the changes to the health insurance and healthcare system,” could serve as a “valuable benchmarking tool” for CHROs weighing their organizations’ options in terms of mitigating ACA-related costs, says Patrick Wright, a professor of strategic human resource management at the Darla Moore School of Business, and director of the school’s annual CHRO survey.

“Up to now there has been only speculation as to [the Affordable Care Act’s] impact on business and workers,” says Wright, in a statement. “This survey provides the facts about that impact and specifics on changes to employment practices as a result.”

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Survey Finds Skepticism on Private Exchanges

skepticsimThe National Business Group on Health’s latest health-benefits survey finds that large employers anticipate holding their healthcare benefit costs to about 5 percent next year, in part by continuing to shift more of the cost burden to employees, broadening their use of wellness programs and making high-deductible consumer-directed health plans their only benefit option (the number of employers that plan to do this for next year jumped by 50 percent).

Another option that’s attracting interest from large employers is private exchanges. Just 3 percent of large employers will offer their active employees health coverage through a private exchange next year, the survey finds; however, 35 percent said they’re considering doing so for 2016 or beyond. But employers are skeptical about the ability of these exchanges in two key areas: Only 17 percent said they’re confident that exchanges will do a better job of engaging employees to make better healthcare decisions and just 10 percent believe they’ll control costs better than their own plans.

Another report, this one from Accenture, finds that private exchanges are experiencing “hyper-growth” and that enrollment could exceed that of the public health exchanges (which have enrolled about 8 million Americans so far) by 2017. Approximately 3 million individuals could enroll in health plans via private exchanges this year alone, according to Accenture.

Whether or not these exchanges will be successful in engaging employees and lowering or stabilizing healthcare costs may depend on the features they offer: According to an Accenture survey of 2,000 U.S. consumers, 87 percent identified “tools to help project my expenses and select coverage levels” as an important feature, and 58 percent identified this as a “very important” or “critical” feature.

For readers wanting a bit more information on private exchanges, check out this comprehensive checklist by HREOnline’s benefits columnist, Carol Harnett.

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Adding to ACA Uncertainty

ACAA pair of appeals court rulings made just hours apart yesterday seem to have compounded employers’ confusion surrounding the Affordable Care Act.

First, the 4th Circuit U.S. Court of Appeals in Washington ruled in the case of Halbig v. Burwell that the ACA does not permit the Internal Revenue Service to distribute premium subsidies in the 36 states where exchanges are run by the federal government.

Later in the day, a federal appeals court panel 100 or so miles down the road in Richmond, Va., took the opposite view, determining the ACA’s “ambiguity” affords the IRS the authority to issue the subsidies.

Reaction to the contradictory rulings—which seem to pave the way for a likely Supreme Court case—was swift, strong and, politically speaking, true to party lines.

Noting his dissent in the later ruling, D.C. Circuit Judge Harry T. Edwards described the decision as a “not-so-veiled attempt to gut the Patient Protection and Affordable Care Act.”

Meanwhile, the conservative side of the aisle commended the Richmond panel’s decision.

Speaker John Boehner, for example, described the ruling as “further proof that President Obama’s healthcare law is completely unworkable,” saying in a statement that the Affordable Care Act “cannot be fixed.”

For employers in the majority of the U.S., what happened yesterday just seems to further cloud an already uncertain future with regard to the ACA.

“The D.C. Circuit’s decision is significant in that it calls into question whether employers [in the affected states] could be subject to a penalty under the ACA’s ‘pay or play’ penalty scheme,” according to Peter Marathas, a Boston-based partner in Proskauer’s employee benefits, executive compensation and ERISA litigation practice center.

Yesterday’s decisions are “not the final say on this issue,” he says, “but [they] certainly underscore the thin thread much of the employer penalty hangs on, particularly if other courts agree with this decision.”

The matter “seems destined for the U.S. Supreme Court,” said American Benefits Council President James A. Klein, in a statement.

Klein also offered his take on how things may ultimately shake out.

“Since the employer mandate penalty is triggered when employees receive a subsidy, some employers may be relieved of penalties, or may have different levels of penalties, depending on which states their workers reside.”

In addition, some companies have weighed whether employees may be better served through steady coverage in exchanges, especially those who frequently change jobs, said Klein.

“The lack of subsidies for workers in some states certainly would change the dynamics in that decision making,” he noted, adding that further uncertainty over the implementation of the healthcare law “chills” the decision-making process for employers.

“The courts need to quickly resolve this critical issue,” he said, “one way or the other.”

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