10 tips to boost retirement savings
Do you need help boosting your savings for your retirement? Check out these great tips from Benefits Pro on how to increasing your retirement savings by Marlene Y. Satter
Americans are struggling to save enough money for retirement.
Now that pensions are going the way of the dodo and workers are relying primarily on Social Security and 401(k) plans—the latter if they’re lucky—it’s a struggle to find extra money to set aside against the day they leave the workplace.
In fact, many workers never plan to retire.
Considering how many workers don’t even have access to a retirement plan at work, trying to stretch dollars even a little bit further to set aside money for retirement can be a real challenge.
That’s pretty clear from the zero-to-minimum savings held by many Americans.
In fact, with 40 million working-age households lacking any retirement savings at all, and the average balance of retirement accounts a pitiful $2,500 across all households, it’s obvious that something needs to be done. But how much can people do on low incomes, fighting against the gender wage gap and shrinking benefits packages?
Perhaps it’s only baby steps they can take, but even those baby steps can pay off over the span of a career. So here are some suggestions that workers could definitely benefit from on how they might be able to squeeze just a little more out of that paycheck.
Depending on a worker’s age, some of these strategies will be more helpful for some than for others—but all can make a difference in the end result: stashing away enough money to pay for retirement.
Courtesy of a range of sources, including Schwab Retirement Plan Services, Forbes, Fidelity and others, here are 10 strategies to help workers boost their retirement savings.
10. Take advantage of the employer match.
If you’re lucky enough to work at a company that provides a 401(k) plan, Schwab suggests that you make sure your contribution level is high enough to take full advantage of the employer matching contribution.
Not saving enough to get the full employer match is leaving free money on the table. Look for economies elsewhere (fewer trips to the barista, brown-bag lunches) to increase your contribution till you get the full benefit of whatever your employer is willing to give.
9. No matter what you’re saving, keep increasing it.
Some people up their retirement contributions every time they get a raise; others do it when they hit some other significant milestone, such as an anniversary with the company.
Schwab, again, suggests that whether it’s a performance review, a birthday or some other occasion, you keep raising your retirement contribution even if it’s only by one percent at a time. It will all add up by the time you’re ready to retire.
8. Automate retirement plan increases.
While you’re busy increasing those contributions, automate them.
Set up an automatic increase that will add to your savings at regular intervals, even if you forget.
That way, whether you’re the type that actually remembers those special occasions on which you plan to boost contributions or you forget them, you can set it and forget it—and your retirement plan will do the rest.
7. Don’t forget the catch-up contribution.
If you’re 50 years old or older, remember that you’re allowed to put an extra $6,000 into your retirement account to catch up to where you ought to be.
That can help a lot as you approach retirement, particularly if you haven’t saved the maximum allowable in years past.
6. Check the fees on your investments.
This one doesn’t actually require you to find additional money to save. What it does require is that you review the investments in your retirement accounts and see how much the fees add up to.
If there are cheaper investments available in your plan—exchange-traded funds, for example, or target-date funds that offer lower fees—make sure they’re suitable for your particular needs and risk tolerance and then, if they’re appropriate, make the switch. Cutting down on the fees you pay will keep your balance growing.
5. Put yourself on a budget.
Particularly if you haven’t saved all that much for retirement and the Big Day is drawing near, see if you can adjust to a budget that reflects lower spending levels—something you might have to do in retirement anyway, if money is tight.
Whether or not you can sustain living on that budget, while you’re experimenting, take any money that you save from your usual outlay and put it into your retirement account. Better yet, open a Roth if you’re eligible. You’ll have already paid taxes on the money, if it’s coming out of your regular pay, and when you take it out of a Roth however much it’s grown to will be tax free. That will save you money both now and then.
4. Look into your health savings account.
If your benefits plan at work includes an HSA, check it out as a potential investment vehicle. While most people just put money in it to pay approved medical expenses, many don’t know that they can actually invest the money in an HSA and just let it grow; it’s not a use-it-or-lose-it account.
If it grows into retirement, you can then use the money to pay approved medical expenses tax free, which will stretch your other retirement savings further. (You can also use it for nonapproved expenses, but you’ll have to pay tax on the money upon withdrawal if you do that.)
3. Make sure you’re using the right kind of account.
Don’t just stick your money into a savings account and wait for retirement. Check out the potential of and differences among different types of accounts—savings, HSAs, Roths, traditional IRAs, 401(k)s—and put your money where you’ll get the most bang for the buck.
Contribute the maximum to your 401(k) to get full matching funds at work, and then look into opening a traditional or a Roth IRA. As previously mentioned, if you’ve already paid taxes on money contributed to a Roth, when you withdraw it in retirement it will be tax free (so it will go further).
2. Don’t forget about the Saver’s Credit.
Your income and income tax filing status determine whether you’re eligible for this one, aimed at low- to moderate-income households, but it’s a goodie—and if you’re married and filing jointly, both of you might be able to claim it.
The program, the official name of which is the Retirement Savings Contributions Credit, can give you $1,000 for contributing to a qualifying retirement account. Whether your retirement plan is an IRA, a 401(k), 403(b), 457(b) or even a SEP or SIMPLE IRA, you contribute the allowable amount, assuming your income level makes you eligible, and the government credits you 10 percent, 20 percent, or 50 percent of the first $2,000 you contribute to retirement savings for the year.
1. Remember that payroll contributions to a retirement plan can lower your taxes.
Yes, by following the instructions in earlier steps and boosting your retirement contribution at work, you could lower your tax bracket—and that could have you losing less of your take-home pay to increase that contribution than you thought.
Depending on your withholding rate, an increased retirement contribution might hurt less than you think—and that can encourage you to do even more. You can check with human resources or the payroll department to find out just how much the hit will save you. And who knows? It might lower your adjusted gross income enough to let you qualify for the Saver’s Credit—a real win-win situation.
See the original article Here.
Source:
Satter M. (2017 March 07). 10 tips to boost retirement savings [Web blog post]. Retrieved from address https://www.benefitspro.com/2017/03/07/10-tips-to-boost-retirement-savings?ref=mostpopular&page_all=1
Get The Best of Both Worlds
OSMA's Health Benefits Plan: Frequently Asked Questions & Answers
In response to the changes brought about by the Affordable Care Act (ACA), the Ohio State Medical Association (OSMA) plans to offer a Health Benefits Plan (HBP). The OSMA HBP will be a self-funded multiple employer welfare arrangement developed for Ohio physician practices. The HBP is currently pending approval by the Ohio Department of Insurance. If approved, it would be an innovative alternative to the ACA.
Q. How is the OSMA's HPB different from the ACA?
A. Unlike the current ACAstructure, the OSMA HBP
• Will be a self funded plan for small physician practices.
• Will offer a variety of plan designs that meet the minimum essential coverage requirement, including:
• Eight different options with deductibles ranging from $ 500 to $6,350 for single coverage (2x for family
coverage)
• Several plans with copays and prescription drug cards
• Will allow for the continued use of Health Reimbursement Accounts (HRA) and Health Saving Accounts (HSA).
• May be less expensive than many comparable options under the ACA.
• Will allow for changes in benefits and contribution roles al renewal without being "locked in" by the grandfathered status, and no monthly administrative billing fee.
Q. Will my current plan rates go up under the ACA?
A. The ACA premium will be dependent on a variety of factors and specific to each group. Our in-house insurance agent will help you understand your options and will be in a position to help you get the most affordable benefit option available.
Q. Do I have to switch doctors?
A. The OSMA HBP utilizes the SuperMed Plus network from Medical Mutual of Ohio, one of the largest networks of providers and facilities in the state. You should, however, always check to make sure your doctor is in network prior to any service. (https://providersearch.medmutual.com/NetworkRealignment.aspx)
Q. Does the OSMA HBP provide the employer with a Summary Plan Description (SPD)?
A. Yes. We provide each employer with an SPDfor the OSMA HBP that meets ERISA compliance regulations. (All employers are responsible for providing SPD's for all of their health and welfare benefits.)
Q. What is the cost to me for joining the OSMA HBP?
A. Each group will have a monthly funding rate based on a variety of factors including but not limited to:
• Number of CoveredEmployees
• Medical History
• Gender
• Tobacco Usage
• Location
Q. Why should I change plans now?
A. Due to the constant policy evolution of the ACA and the uncertainty of future year premiums, many groups will be able to experience a competitive rate that may not be available from Ohio's ACA Marketplace. The OSMA Insurance Agency will provide an easy to understand comparison between the ACA plans and the HBP.
Q. If I leave my current plan (including an ACA plan) will I be subject to preexisting conditions limitations?
A. No. The coverage will be offered on a guarantee issue basis with no preexisting condition exclusion.
Q. What happens if I decide to leave the OSMA HBP in the future?
A. Members may elect to withdraw from participation in the Plan at the end of a calendar month by giving written notice to the Plan at least thirty (30) days prior to the end of such month.
Q.Is there a fee to be part of the OSMA HB Plan?
A. No. There is no fee to join the OSMA Health Benefit Plan but at least one insured must be an active member of the Ohio State Medical Association.
Q. Is the OSMA HBP permitted by the ACA?
A. Yes. The OSMA HBP is a self-fund ed option allowed under the ACA. The OSMA Insurance Agency is authorized to offer health insurance plans as a Federally-facilitated Marketplace Certified agent and Certified Patient Protection and Affordable Care Act (PPACA) Professional.
Q. What is the OSMA Health Benefit Plan's legal structure?
A. The OSMA HBP is technically known as a multiple employer welfare arrangement (MEWA). A MEWA provides health and welfare benefits to employees of two or more employers who pool their contributions, enabling them to offer health insurance rates and benefits typically available only to larger groups.
Q. How secure is the OSMA's HBP?
A. The Ohio Department of Insurance and several federal government agencies coordinate the oversight and regulation of the OSMA HBP. This multi-jurisdiction gives the State of Ohio's Department of Insurance primary responsibility for overseeing the financial soundness the OSMA HBP, while the U.S. Department of Labor provides oversight for employee benefit plans and the Internal Revenue Service ensures the nonprofit tax status of the OSMA HBP.
Q. Is there a situation when my practice should use the ACA's marketplace options?
A. The Ohio Department of Insurance and several federal government agencies coordinate the oversight and regulation of the OSMA HBP. This multi-jurisdiction gives the State of Ohio's Department of Insurance primary responsibility for overseeing the financial soundness the OSMA HBP, while the U.S. Department of Labor provides oversight for employee benefit plans and the Internal Revenue Service ensures the nonprofit tax status of the OSMA HBP.
Q. How do I learn more about the OSMA Health Benefit Plan?
A. Contact Saxon' s Expert at jcharlton@gosaxon.com or visit our website at https://gosaxon.com/get-the-best-of-both-worlds-with-osma/
For the full download click Here.
The benefits of financial wellness counseling
Are your employees being properly educated on the benefits on their financial well-being? If not take a look at this article from Benefits Pro about the value of educating your employees in financial wellness by Jack Craver
Money Management International, a nonprofit credit counseling organization, is touting the results of a recent survey it conducted as evidence that employers can significantly reduce stress among their employees by offering them financial counseling resources.
MMI announced recently 86 percent of the 150 employees it provided financial counseling to at an Oregon-based nonprofit health agency say they have less stress related to money as a result of the counseling.
In addition, most of the employees at Samaritan Health Services say the counseling led to them achieving certain financial goals, such as reducing debt (60 percent), setting aside more money for retirement (38 percent), boosting their credit score (30 percent) or buying a home (8 percent).
"At MMI, we know that financial coaching, counseling, and education work, but seeing the incredible, positive impact this program has made on the financial outlook of these clients is simply amazing,” says Julie Griffith, Mapping Your Future account manager, in a statement accompanying the study’s release.
Other research has shown employers are increasingly viewing financial counseling as a key component of wellness initiatives due to the significant psychological and emotional toll money-related anxiety takes on employees.
In addition to causing depression, sleep deprivation and all sorts of health problems that reduce an employee’s productivity, financial stress often distracts employees from their work. A survey last year showed that 37 percent of U.S. employees report spending time on the job thinking about or dealing with personal finances.
The awakening to the importance of financial wellness coincides with a number of studies which shed light on young Americans’ lack of savings. One study found a solid majority of Americans have less than $500 in savings. Another found that the U.S. personal savings rate was just 5.7 percent, roughly half of what it was 50 years ago.
See the original article Here.
Source:
Craver J. (2017 March 08). The benefits of financial wellness counseling [Web blog post]. Retrieved from address https://www.benefitspro.com/2017/03/08/the-benefits-of-financial-wellness-counseling
Caregiving Benefits Can Sharpen Your Competitive Edge
Interesting article from the Society of Human Resources about the benefits of leveraging caregiving benefits in your employee benefits program by Hank Jackson
Whether caring for an aging parent, welcoming a newborn child or handling family medical situations, life events can create some of the most stressful and demanding challenges in our personal and work lives. For those without employer-provided paid leave, the burden is even heavier. People often need extended periods of time off to cover responsibilities at home, but many are forced to rely on the federal floor of unpaid leave guaranteed by the Family and Medical Leave Act.
High costs are cited as the biggest barrier to paid leave, but now, more than ever, companies risk losing great talent to rivals with more robust policies—here and abroad. In addition, employers struggle with a growing patchwork of state and local leave laws that hinder innovation and add compliance costs. This is why SHRM is advocating for public policies that would provide relief to employers while guaranteeing paid leave and expanded flexibility options for full-time and part-time employees. The issue of paid leave is a hot one—featured during the presidential campaign and poised to be a focus of congressional consideration in 2017.
Last year, more than two dozen large U.S. employers—including American Express, Deloitte, Ernst and Young, Campbell’s, First Data and Etsy—announced they would significantly strengthen paid family leave benefits. Their approaches vary, ranging from extending the time employees can take paid leave to broadening categories of eligible individuals and covered situations. But in all instances, a powerful business case was behind the decision. They believe it is a winning strategy and are promoting it widely to stakeholders and shareholders.
A carefully analyzed and applied family leave benefit can be a differentiator in today’s hyper-competitive talent marketplace. Even medium-sized and small enterprises can offer budget- and family-friendly policies, such as flexible schedules. The important thing is to develop a workplace where an employee’s work-life needs are valued and supported, balanced with the right benefits, rewards and adaptability across an employee’s life cycle.
Paid parental leave and other work-flexible programs are not only about competing or compliance. They are about doing the right thing for the organization and the employee. As HR professionals, it’s up to us to help our organizations grow a culture where both employees and employers win. This is part of the compact to create the 21st Century workplace employees of all ages want—innovative, fair and competitive with other businesses.
See the original article Here.
Source:
Jackson H. (2017 March 09). Caregiving benefits can sharpen your competitive edge [Web blog post]. Retrieved from address https://blog.shrm.org/blog/caregiving-benefits-can-sharpen-your-competitive-edge
Why employers should rethink their benefits strategies
Has your employee benefits program grown old and stale? Take a look at the great article from Employee Benefits Advisors about the benefits of upgrading your employee benefits to match your employees' needs by Chris Bruce.
Historically, employee benefits have been viewed as a routine piece of the HR process. However, the mentality of employees today has shifted, especially among the growing population of millennial employees. Today’s workforce expects more from their employers than the traditional healthcare and retirement options, in terms of both specific benefit offerings and communications about those offerings.
For companies, it’s critical they address the evolving needs of their workforce. With unemployment rates plunging to their lowest levels since before the financial crisis, the search for talent is heating up, and organizations need to work harder than ever to retain top talent in a competitive job market. To do this, I see three steps that organizations need to take when rethinking their benefits strategy and engaging with employees: embrace a proactive rather than reactive benefits strategy, think digital when it comes to employee communications and consider the next generation of employee benefits as a way to differentiate from the competition.
1. Reconsider your benefits evaluation process
The benefits process at most companies is reactive — executives and HR only look to evaluate current offerings when insurance contracts expire or a problem emerges. When the evaluation does happen, the two factors that often concern employers the most are product and price. Employers often gravitate toward well-known insurers that offer the schemes that appear familiar. However, this can often lead companies to choose providers who fall short on innovation and overall customer experience for employees.
This approach needs to be flipped on its head. Companies should be proactive in determining which benefit schemes best meet the needs of their workforce. The first step is going straight to the source: talk to employees. Employers can’t know what benefits would be most appealing to their employee base unless they ask. By turning the evaluation process to employees first, companies can better tailor new benefits to meet the needs of their workers, and also identify existing benefits that might be outdated or irrelevant, therefore saving resources on wasted offerings.
Data and analytics also are playing an increasing role across the HR function, and benefits is no exception. By leveraging technology solutions that allow HR to track benefits usage and engagement, teams can better determine what is resonating with employees and where benefits can be cut back or where they should be ramped up.
2. Put down the brochure and think digital engagement
Employee education is another area of benefits that can often perplex companies. According to a recent survey from Aflac, half of employees only spend 30 minutes or less making benefit selections during the open enrollment period each year. This means employers have a short window of time to educate employees and make sure they are armed with the right information to feel confident in their benefits selection.
To do this effectively, HR needs to move past flat communication like brochures, handouts and lengthy employee packets and look for ways to meet employees where they live — online. By testing out innovations that create a rich experience, while still being simple and intuitive, employers can grab the attention of their workforce and make sure key information is communicated. For example, exploring opportunities to create cross-device experiences for employees so they can interact on-the-go, including augmented reality applications or digital interactive magazines. Additionally, for large corporations, hosting a virtual benefits fair can provide a forum for employees to ask questions in a dynamic setting.
3. Embrace the next-generation of benefits
As organizations become more savvy and nimble, personalization will have a huge impact in encouraging employee engagement and driving satisfaction among today’s increasingly diverse workforce. We have already started to see some companies embrace this new approach to benefits, adding out-of-the-box items to normal offerings — from debt consolidation services and wearable health tracking technology to genome testing and wedding concierge services.
The fact is, the days of “status-quo” benefits are gone, and employees today want benefit options that match their current life circumstances. To best engage employees, organizations need to be proactive in evaluating benefits regularly and using analytics to track usage, identify opportunities to implement digital communication elements and look for ways to introduce new benefits to meet the needs of their employee base. By following these steps, organizations can gain a competitive edge when it comes to attracting and retaining top talent.
See the original article Here.
Source:
Bruce C. (2017 March 10). Why employers should rethink their benefits strategies [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/3-steps-employers-can-take-to-rethink-benefits-strategy?feed=00000152-1377-d1cc-a5fa-7fff0c920000
Progressive benefits are the lure for new talent
There are many different ways to attracted new talent to your workplace. Take a peek at this freat article from Employee Benefits Advisors about which benefits are best for attracting new talent by Paula Aven Glagych
Live trees indoors, pets at work and an in-office happy hour. Underground Elephant is very forward-thinking when it comes to how it treats its employees and the benefits it offers.
From its fun headquarters space in the east village of San Diego to its outside-the-box thinking on workplace benefits, the digital marketing company “wants to really create an environment where employees want to come to work every day and feel like they are being rewarded,” says Amy Zebrowski, HR business partner at Underground Elephant. “It is a very challenging and fast-paced environment.”
Underground Elephant, which was founded in 2008, provides marketing and technology services to financial service and insurance companies. It offers staffers healthcare and retirement benefits but wanted to show them that it is invested in their education and their family’s education by offering a choice between three non-traditional benefits. People who have worked for the company for one year can choose between a student loan repayment program through Student Loan Genius; a 529 college savings plan through Gradvisor; or $2,000 in company stock options.
If they choose the student loan or college savings plan options, Underground Elephant will contribute $1,500 a year to the program.
Gradvisor founder and CEO Marcos Cordero had wanted to offer a student loan reimbursement program for a couple of years. The company hires many entry-level employees straight out of college, trains them and helps them build their careers at the company.
“We know a lot of employees with student loan debt. We wanted to help them address that and support their financial wellbeing. We didn’t want to exclude employees who don’t have student loans. Our goal was to create a more inclusive program,” Zebrowski says.
Student Loan Genius’ platform allows employees to explore different loan repayment options and to find the one that best fits their situation. Employees can also have their student loan payments taken directly out of their paycheck each month.
The Gradvisor 529 college savings plan helps parents and grandparents save money for future educational expenses.
The cost of college
Cordero says that his 529 platform is popular because recent Gallup data shows that “for employees with children under 18, this is their number one financial concern. It supersedes retirement and unexpected medical bills.”
He added that the cost of college is rising faster than any other expense in the home and millennials, in particular, are feeling the pinch. Many of them left college with huge student loans and they want to make sure their children don’t fall into the same trap. Baby Boomers are also intrigued by the 529 plan because they have “more disposable income to help grandchildren save for college,” Cordero says.
He believes that this benefit will continue to grow over the next decade, but currently “more employers offer pet insurance than college savings.” That is in large part due to the state-by-state complexity of the programs. Each state offers a different 529 plan.
The Gradvisor platform takes into consideration an employee’s risk tolerance, financial situation and household tax filing when determining the best 529 plan for them. The company serves as a fiduciary so it takes “all of those inputs and recommends the most suitable and best fit investment option and asset allocation for the client. We don’t get any commissions or sales charges from the 529 plan. Our advice is 100% objective,” he says. Companies pay to offer the program on a per user per month basis.
“If you look at our stats, our customers tend to save earlier. We’re rolling out this really intuitive step-by-step platform that takes a lot of that fear or intimidation away,” Cordero says.
The average parent who takes advantage of Gradvisor starts saving when their child is five years old, compared to seven in the general population, which adds a couple more years of compounded growth. They also save twice as much as the average person.
Both the student debt repayment and college savings benefits programs were introduced to the company’s employees in January for implementation in March.
“The response has been great. All of our employees are excited about it. It can be a huge help with financial expenses if you are paying toward a student loan it is reducing the overall interest of the life of the loan. Overall it is very positive,” Zebrowski says.
The company’s primary goal in offering these three benefits was to retain good employees and to “show we are invested in their education and their family’s education and financial wellness,” she says.
Based on the company’s younger employee base, there are more participants in the student loan program, but there’s also a lot of interest in the 529 plans.
“I think a lot of people are conscious of the future and saving for families down the line. We’ve had a good response to both,” Zebrowski says.
The company offers a 1% employer match on all employee contributions to its 401(k) plan. The company employs 55 people currently and has been listed as one of the fastest-growing companies in its industry.
The benefit of perks
Underground Elephant wants to be innovative with its benefits because California’s tech industry is very competitive. Many people want to live in San Diego, so “attracting talent, in addition to that retention piece, that certainly factors in,” she says.
The company’s new headquarters building is unique in that it has live trees in the middle of the work space.
“The idea is to make it more open to give people the feeling of being connected to the outdoors,” she says. It has pool, ping pong and is setting up a new game room so employees can get together and have fun. It also has an onsite bar where the company offers regular happy hours.
Employees can bring pets to the office and it has a snack area where the company provides breakfast or lunch once a week.
For the past couple of years, the company has participated in a forum program where the company is divided into groups of eight to 10 employees and these groups participate in challenges throughout the year, including cultural challenges, scavenger hunts, community and charitable events.
“Each year we reevaluate our cultural programs to see what is working and what isn’t working; what people enjoy. The goal is to create as much engagement as possible,” she says.
Underground Elephant offers a full suite of health benefits, including full medical, dental and vision, long and short term disability and voluntary life insurance.
“We want to prepare people for success here or outside the company. Ultimately, the goal is to give people the skills and experience to promote within Underground Elephant or to transfer to other jobs as well,” she says. “Our people tend to be very successful.”
See the original article Here.
Source:
Glagych P. (2017 February 28). Progressive benefits are the lure for new talent [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/progressive-benefits-are-the-lure-for-new-talent?feed=00000152-1377-d1cc-a5fa-7fff0c920000
ACA replacement proposal leaked: Some of the finer points for HR
Does the repeal of the ACA have you worried? Checkout this great article about some of the changes that will come with the repeal of the ACA by Jared Bilski.
A draft of the Republicans’ Affordable Care Act (ACA) replacement bill that was leaked to the public is likely to look a lot different when it’s finalized. Still, it gives employers a good indication of how Republicans will start to deliver on their promises to “repeal and replace” Obamacare.
It should come as no surprise to employers that the GOP replacement bill, which was obtained by POLITICO, would scrap a cornerstone of the ACA — the individual mandate — as well as income-based subsidies and all of the laws current taxes (at least one replacement tax is included in the legislation).
According to the discussion draft of the replacement bill, it would offer tax credits for purchasing insurance; however, those credits would be based on age instead of income.
For example, a person under the age of 30 would receive a credit of $2,000. A person over the age of 60, on the other hand, would receive double that amount.
Some of the other highlights of the leaked legislation include:
End of ACA essential health benefits
Obamacare’s essential health benefits mandates require health plans to cover 10 categories of healthcare services, which include:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription medications
- Rehabilitative and habilitative services and devices
- Lab services
- Preventive and wellness services and chronic disease management, and
- Pediatric services, including oral and vision care.
Under the bill, individual states would make the decisions about what types of services plans must cover — beginning in 2020.
A Medicaid expansion overhaul
The Medicaid expansion under Obamacare that has covered millions of people will be phased out by 2020 under the GOP bill. The replacement proposal: States would receive a set dollar amount for each person.
There would also be variations in the funding amounts based on an individual’s health status. In other words, more money would be allocated for disabled individuals, which is a huge departure from the open-ended entitlement of the current Medicaid program.
Pre-existing conditions, older individuals
One of the most popular elements of the ACA would apparently remain untouched under the GOP bill: the Obamacare provision that prohibits health plans from discriminating against people with pre-existing conditions.
However, the legislation does take aim at older individuals. The GOP would allow insurers to charge older people up to five times more for healthcare than younger individuals. The current ACA limits that difference to three times as much.
The bill does aim to remedy this discrepancy by providing bigger tax credits for older people.
Taxes get axed
There is a slew of taxes built into the ACA — the manufacturer tax, and taxes on medical devices, health plans and even tanning beds — and the Republican bill would repeal those taxes.
But those taxes help cover the cost of the ACA. So to make up for the shortfall that would result in killing those taxes, the GOP is floating the idea of changing the tax treatment of employer-based health insurance. As employers are well aware, employer-sponsored health plan premiums currently aren’t taxed. Under the GOP proposal, this would be changed for some premiums over a certain threshold — although the specifics of such a change remain murky.
Such a move would surely be met by fierce opposition from the business community. In fact, major employer groups are already preparing to fight such a proposition.
See the original article Here.
Source:
Bilski J. (2017 March 01). ACA replacement proposal leaked: some of the finer points for HR [Web blog post]. Retrieved from address https://www.hrmorning.com/aca-replacement-proposal-leaked-some-of-the-finer-points-for-hr/
How are your retirement health care savings stacking up?
Are you properly investing in your health saving account? Take a look at the this article from Benefits Pro about the importance of saving money for your healthcare by Reese Feuerman
For all ages, it's imperative to balance near-term and long-term savings goals, but the makeup of those savings goals has changed dramatically over the past 10 years.
With the continued rise in health care costs, and increased cost sharing between employers and employees, more employees and employers have been migrating to consumer-driven health care (CDH) to provide lower-cost alternatives.
With the increased adoption in these plans for employee cost savings purposes, employers have likewise realized similar cost savings to their bottom line. But what role does CDH play in the long term?
The Greatest Generation was able to rely on their pensions, Social Security, Medicaid, and the like as a means to support them in retirement for both medical and living expenses. However, as the Baby Boomers continue their journey towards retirement, reliance upon future proof retirement funds are fading into the sunset for coming generations. According to a 2015 study from the Government Accountability Office (GAO), 29% of American’s 55 and older do not have money set aside in a pension plan or alternative retirement plan.
To make matters worse, some experts are forecasting Social Security funding will be depleted by 2034, leaving even more retirees potentially without a plan. As such, Generation X and beyond must look for more creatives measures for savings to make up the difference.
In 1978, 401(k) plans were introduced to provide the workforce with a secondary means for retirement savings while also providing significant tax benefits. However, even when actively funded, with rising health care costs and a depleted Social Security system—the solution this workforce has paid into for their entire career—will not be enough.
According to Healthview Services, the average retiree couple will spend $288,000 for just health care expenses during retirement. This sum could easily consume one-third of total retiree savings. This is a contributing factor to the rise and rapid adoption of tax-advantage health accounts to supplement retirement savings. Introduced to the market in 2003, Health Savings Accounts (HSA) have provided employees with an option to set aside pre-tax funds to either cover current year health care expenses, like the familiar Flexible Spending Account (FSA), or carry over the funds year-over-year to pay for medical expenses later or during retirement. The pretax money employees are able to set aside in these accounts to cover health care expenses, will over time, be on par with retirement savings contributions, such as a 401(k) and 403(b), because of increasing costs and triple-tax savings.
It is important for consumers to understand these retirement options and how they could be leveraged for greater financial wealth. As a result, the Health Care Stack, an analysis authored by ConnectYourCare, acts as a life savings model and illustrates the amount of pretax money consumers can contribute for both their lifestyle and health expenses in retirement.
For illustrative purposes, according to current IRS guidelines, the average American under the age of 50 could set aside up to $24,750 each year pre-tax for retirement to cover their health care and living expenses. In this example, if a worker in his or her 30s starts to set aside the maximum contributions (based on IRS guidelines) for HSA contributions, assuming a rate of return of 3%, they would have $330,000 saved in their HSA to cover health care expenses once they reach the retirement age of 65. This number could be even greater if President Trump’s administration passes any number of proposed bills to increase the HSA contribution limits to match the maximum out-of-pocket expenses included in high deductible health plans. This allocation would not only cover average medical expenses, but also provide a triple-tax advantage for consumers from now through retirement.
In addition to the long-term retirement goals, the yearly pre-tax savings may be even greater if notional accounts are factored in, with approved IRS limits of a $2,600 per year maximum for Flexible Spending Accounts, $5,000 per year maximum for Dependent Care FSA, and $6,120 per year maximum for commuter plans. This equals $38,470 (or $44,820 if HSA contributions increase) of pre-tax contributions that consumers could save by offsetting the tax burden and could invest towards retirement.
For those consumers over the age of 50, the savings potential is even greater as they can contribute to a post retirement catch-up for their 401K plans equaling a total of $24,000, plus they may take advantage of the $6,750 HSA savings, as well as the additional $1,000 catch up. If certain proposed bills are passed, the increase could be $38,100 a year that they could set aside, in pre-tax assets, for retirement.
Not only will an individual’s expenses be covered, but there are other benefits brought forth by proper planning, including the potential to reach ones retirement savings goals early. Let’s say that after meeting with a licensed financial investor it was determined that an individual needed $1.8 million in order to retire, and according to national averages, close to $288,000 to cover health care costs.
Given the proper investment strategy around contributions to both retirement and HSA plans, an individual could - theoretically -save enough to meet their retirement investment needs by the age of 60 for both lifestyle and health care expense coverage, if they started making careful investments in their 20s (assuming the worker is making $50,000 per year with a 3% annual increase).
In comparison, under current proposals, which include the increased HSA limits, retirement savings could be achieved even earlier with the coverage threshold being at 57 for the average worker. This is a tremendous opportunity to transform retirement investment programs for all American workers who would otherwise be left on their own. Talk about the American dream!
While there is not a one-size fits all strategy, it is important for everyone to understand their options and see how these pretax accounts outlined in the Health Care Stack play an important consideration in ones future retirement planning.
Taking the time now to fully understand tax-favored benefit accounts will provide him or her with the appropriate coverage to enjoy life well into their golden years. Retirement is just around the corner, are you ready?
See the original article Here.
Source:
Feuerman (2017 March 02). How are your retirement health care savings stacking up?[Web blog post]. Retrieved from address https://www.benefitspro.com/2017/03/02/how-are-your-retirement-health-care-savings-stacki?ref=hp-in-depth
Employers embrace new strategies to cut healthcare costs
Are you looking for a new solution for cutting your healthcare cost? Take a look at the great article from Employee Benefits Advisor about what other employers are doing to cut their cost healthcare cost by Phil Albinus
As employers await a new health plan to replace the Affordable Care Act and consensus grows that high deductible health plans (HDHPs) are not the perfect vehicle for cutting healthcare costs, employers are incorporating innovative strategies to achieve greater savings.
Employers are offering HSAs, wellness incentives and price transparency tools at higher rates in an effort to cut the costs of their employee health plans. And when savings appear to plateau, they are implementing innovative reward plans to those who adopt these benefits, according to the 2017 Medical Plan Trends and Observation Report conducted by employee-engagement firm DirectPath and research firm CEB. They examined 975 employee benefit plans to analyze how they functioned in terms of plan design, cost savings measures and options for care.
The report found that 67% of firms offer HSAs while only 15% offer employee-funded Health Reimbursement Arrangements. As “use of high deductible plans seem to have (at least temporarily) plateaued under the current uncertainty around the future of the ACA, employer contributions to HSAs increased almost 10%,” according to the report.
Wellness programs continue to gain traction. Fifty-eight percent of 2017 plans offer some type of wellness incentive, which is up from 50% in 2016. When it comes to price transparency tools, 51% of employers offer them to help employees choose the best service, and 18% plan to add similar tools in the next three years. When these tools are used, price comparison requests saw an average employee savings of $173 per procedure and average employer savings of $409 per procedure, according to CEB research.
“What was interesting was the level of creativity within these incentives and surcharges. There were paycheck credits, gift cards, points that could be redeemed for rewards,” says Kim Buckey, vice president of client services at DirectPath. “One employer reduced the co-pays for office visits to $20 if you participated in the wellness program. We are seeing a level of creativity that we haven’t seen before.”
Surcharges on tobacco use has gone down while surcharges for non-employees such as spouses has risen. “While the percentage of organizations with spousal surcharges remained static (26% in 2017, as compared to 27% in 2016), average surcharge amounts increased dramatically to $152 per month, a more than 40% increase from 2016,” according to the report.
Tobacco surcharges going down “is reflective of employers putting incentives in, so they are taking a carrot approach instead of the stick,” says Buckey.
Telemedicine adoption appears to be mired in confusion among employees. More than 55% of employees with access to these programs were not aware of their availability, and almost 60% of employees who have telemedicine programs don’t feel they are easy to access, according to a separate CEB survey.
Employers seem to be introducing transparency and wellness programs because the savings from HDHPs appear to have plateaued, says Buckey. She also noted recent research that HSAs only deliver initial savings at the expense of the employee’s health.
“With high deductible plans and HSAs, there has been a lot of noise how they aren’t the silver bullet in controlling costs. Some researchers find that it has a three-year effect on costs because employees delay getting care and by the time they get it, it’s now an acute or chronic condition instead of something that could have been headed off early,” she says.
“And there is a tremendous lack of understanding on how these plans work for lower income employees, [it’s] hard to set aside money for those plans,” she says.
Educating employees to be smarter healthcare consumers is key. “What is becoming really obvious is that there is room to play in all these areas of cost shifting and high deductible plans and wellness but we can no longer put them in place and hope for the best,” she says. We have to focus on educating employees and their families,” she says. “If we are expecting them to act like consumers, we have to arm them with the tools. Most people don’t know where to start.”
She adds, “we know how to shop for a TV or car insurance but 99% of people don’t know where to start to figure out where to shop for prescription drugs or for the hospital where to have your knee surgery. Or if you get different prices from different hospitals, how do you even make the choice?”
When asked if the results of this year’s report surprised her – Buckey has worked on the past five – she said yes and no.
Given that the data is based on information from last summer for plans that would be in effect by 2017, she concedes that given the current political climate “a lot is up in the air.” Most employers were hesitant to make substantive changes to their plans due to the election, she says. We may see the same thing this year as changes are made to the ACA and the Cadillac Tax, she adds.
“What I was interested in were the incremental changes and some of the creativity being applied to longstanding issues of getting costs under control,” she says.
See the original article Here.
Source:
Albinus P. (2017 March 05). Employers embrace new strategies to cut healthcare costs [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/employers-embrace-new-strategies-to-cut-healthcare-costs?brief=00000152-1443-d1cc-a5fa-7cfba3c60000
Two-thirds of Americans aren’t putting money in their 401(k)
Did you know only about a third of Americans are putting money away into their retirement accounts? Check out this interesting article from Employee Benefits Advisors about some of the statics of Americans 401(k) savings by Ben Steverman.
(Bloomberg) – Americans aren’t saving enough for retirement.
True, this has been a refrain for longer than many can remember. But now some disturbing numbers show exactly how bad it’s gotten. Two-thirds of all Americans don’t contribute anything to a 401(k) or other retirement account available through their employer.
Millions aren’t saving on the job because they either don’t have access to a workplace retirement plan or they do but aren’t putting money in it. Many just can’t spare the cash, but a new analysis shows there are other reasons, too.
Until now, the exact size of the problem has been unclear. Surveys can be unreliable: Small businesses are difficult to assess, and many workers just don’t know what plan options they have, especially if employers aren’t making much effort to sign them up. Information on a 401(k) may be part of a stack of paper handed out on their first day, that they don’t read or understand, and ultimately set aside and never think about again.
Now, U.S. Census Bureau researchers have come up with estimates that rely on tax data, which should be more reliable than surveys. Their conclusion: Only about a third of workers are saving in a 401(k) or similar tax-deferred retirement plan. Also, the gap is far wider than expected between the number of employers offering retirement plans, and the number of workers saving in them.
Only 14% of employers offer plans
Census researchers Michael Gideon and Joshua Mitchell analyzed W-2 tax records from 2012 to identify 6.2 million unique employers and 155 million individual workers, who held 219 million distinct jobs. This data produced estimates starkly different from previous surveys.
For example, previous estimates suggested more than 40% of private-sector employers sponsored a retirement plan. Tax records uncovered a much bigger pool of small businesses, showing that, overall, just 14% of all employers offer a 401(k) or other defined contribution plan to their workers.
Bigger companies are the likeliest to offer 401(k) plans, and since they employ more people than small firms, skew the overall number of U.S. workers who have the option. Gideon and Mitchell estimate 79% of Americans work at places that sponsor a 401(k)-style plan. The good news is that’s more than 20 points higher than previous estimates. The bad news is that just 41% of workers at those employers are making contributions to such a plan—more than 20 points lower than previous estimates.
The combined result of those two numbers is that just 32% of American workers are saving anything in a workplace retirement account. Four out of five workers are employed by companies that offer a 401(k) or similar plan, but most workers aren’t using them—either because they’re not eligible or because they aren’t signing up.
Lawmakers have proposed a variety of ways to get more people to save. Several states are experimenting with strategies to get every worker signed up for a retirement account. But they face serious pushback from the Republican-controlled Congress and the financial industry.
The demise of the pension
Census researchers are still studying the tax data, cross-referencing it with other databases to get a fuller picture of how Americans are saving. For example, researchers are using retirement plan filing documents to get a better sense of how many workers are still covered by traditional pensions, also known as defined benefit plans. According to a Pew Charitable Trusts analysis of survey data released Feb. 15, only 10% of workers over age 22 have a traditional pension. Just 6% of millennials have a pension while 13% of baby boomers do.
Not surprisingly, the Census data suggest well-paid workers find it easier to save than the lowest-paid. But income isn’t the only factor. Eligibility is also a major issue for part-time workers and people who change jobs frequently. Companies often require employees to work for a certain amount of time before they can sign up for a 401(k), and employers aren’t required to allow part-time workers into a plan until they’ve worked 1,000 hours during the previous year.
Another problem made clear by the new report is that many workers simply don’t know their company 401(k) exists. Workers also might never get around to filling out the paperwork, or could be intimidated and confused by the need to make investment decisions. Companies can help solve all those problem by automatically signing up eligible workers, and requiring them to opt out if they don’t want to participate. Doing so has been proven to boost enrollment, but momentum has now stalled for automatic 401(k) features.
House moves to block auto-enrollment
California, Oregon, Illinois, Maryland, and Connecticut have started programs designed to encourage workers to save. Employers in those states would be required to either offer a retirement plan, or automatically enroll their workers in a state-sponsored individual retirement account. The states had the blessing of the Obama administration, which issued rules allowing states and even large cities to create portable retirement accounts if they want.
On Feb. 15, however, the U.S. House of Representatives voted to rescind those rules. Echoing the arguments of the financial industry, Republicans argued state auto-enrollment plans constitute unfair competition to the financial industry. If the Republican-controlled U.S. Senate and President Donald Trump also sign off, any state and city auto-IRA plans would be placed in jeopardy.
Whatever the outcome, any effort to get workers to save for retirement faces a daunting challenge: Can Americans spare the money? Student debt and auto loans are at record levels, according to Federal Reserve data released Feb. 16, and overall consumer debt is rising at the fastest pace in three years.
Retirement is an important goal, but many Americans seem to have more pressing financial concerns.
See the original article Here.
Source:
Steverman B. (2017 February 21). Two-thirds of americans aren't putting money in their 401(k) [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/two-thirds-of-americans-arent-putting-money-in-their-401-k?feed=00000152-1377-d1cc-a5fa-7fff0c920000