8 renewal considerations for 2020
Are you prepared for open enrollment 2020? With renewal season quickly approaching, plan administrators have a lot of considerations to make regarding employee health plans. Read the following blog post from Employee Benefit News for eight things to consider this year.
The triumphant return of the Affordable Care Act premium tax (the health insurer provider fee).
This tax of about 4% is under Congressional moratorium for 2019 and returns for 2020. Thus, fully insured January 2020 medical, dental and vision renewals will be about 4% higher than they would have been otherwise. Of note, this tax does not apply to most self-funded contracts, including so-called level-funded arrangements. Thus, if your plans are presently fully insured, now may be a good time to re-evaluate the pricing of self-funded plans.
Ensure your renewal timeline includes all vendor decision deadlines.
As the benefits landscape continues to shift and more companies are carving out certain plan components, including the pharmacy benefit manager, you may be surprised with how early these vendors need decisions in order to accommodate benefit changes and plan amendments. Check your contracts and ask your consultant. Further, it seems that our HRIS and benefit administration platforms are ironically asking for earlier and earlier decisions, even with the technology seemingly improving.
Amending your health plan for the new HSA-eligible expenses.
In July of this year, the U.S. Treasury loosened the definition of preventive care expenses for individuals with certain conditions.
While these regulations took effect immediately, they won’t impact your health plan until your health plan documents are amended. Has your insurer or third-party administrator automatically already made this amendment? Or, will it occur automatically with your renewal? Or is it optional? If your answer begins with “I would assume…,” double-check.
Amending your health plan for the new prescription drug coupon regulations.
As we discussed in July of this year, these regulations go into effect when plans renew in 2020. In short, plans can only prevent coupons from discounting plan accumulators (e.g., deductible, out-of-pocket maximum) if there is a “medically advisable” generic equivalent.
If your plan is fully insured, what action is your insurer taking? Does it seem compliant? If your plan is self-funded, what are your options? If you can keep the accumulator program and make it compliant, is there enough projected program savings to justify keeping this program?
Is your group life plan in compliance with the Section 79 nondiscrimination rules?
A benefit myth that floats around from time to time is that the first $50,000 in group term life insurance benefits is always non-taxable. But, that’s only true if the plan passes the Section 79 nondiscrimination rules. Generally, as long as there isn’t discrimination in eligibility terms and the benefit is either a flat benefit or a salary multiple (e.g., $100,000 flat, 1 x salary to $250,000), the plan passes testing. Ask your attorney, accountant, and benefits consultant about this testing. If you have two or more classes for life insurance, the benefit is probably discriminatory. If you fail the testing, it’s not the end of the world. It just means that you’ll likely need to tax your Section 79-defined “key employees” on the entire benefit, not just the amount in excess of $50,000.
Is your group life maximum benefit higher than the guaranteed issue amount?
Surprisingly, I still routinely see plans where the employer-paid benefit maximum exceeds the guaranteed issue amount. Thus, certain highly compensated employees must undergo and pass medical underwriting in order to secure the full employer-paid benefit. What often happens is that, as benefit managers turnover, this nuance is lost and new hires are not told they need to go through underwriting in order to secure the promised benefit. Thus, for example, an employee may think he or she has $650,000 in benefit, while he or she only contractually has $450,000. What this means is the employer is unknowingly self-funding the delta — in this example, $200,000. See the problem?
Please pick up your group life insurance certificate and confirm that the entire employer-paid benefit is guaranteed issue. If it is not, negotiate, change carriers, or lower the benefit.
Double-check that you haven’t unintentionally disqualified participant health savings accounts (HSAs).
As we discussed last December, unintentional disqualification is not difficult.
First, ensure that the deductibles are equal to or greater than the 2020 IRS HSA statutory minimums and the out-of-pocket maximums are equal to or less than the 2020 IRS HSA statutory maximums. Remember that the IRS HSA maximum out-of-pocket limits are not the same as the Affordable Care Act (ACA) out-of-pocket maximum limits. (Note to Congress – can we please align these limits?)
Also, remember that in order for a family deductible to have a compliantly embedded single deductible, the embedded single deductible must be equal to or greater than the statutory minimum family deductible.
Complicating matters, also ensure that no individual in the family plan can be subject to an out-of-pocket maximum greater than the ACA statutory individual out-of-pocket maximum.
Finally, did you generously introduce any new standalone benefits for 2020, like a telemedicine program, that Treasury would consider “other health coverage”? If yes, there’s still time to reverse course before 2020. Talk with your tax advisor, attorney, and benefits consultant.
Once all decisions are made, spend some time with your existing Wrap Document and Wrap Summary Plan Description.
For employers using these documents, it’s easy to forget to make annual amendments. And, it’s easy to forget, depending on the preparer, how much detail is often in these documents. For example, if your vision vendor changes or even if your vision vendor’s address changes, an amendment is likely in order. Ask your attorney, benefits consultant, and third party administrators for help.
SOURCE: Pace, Z. (Accessed 9 September 2019) "8 renewal considerations for 2020" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/healthcare-renewal-considerations-for-2020
A 401(k) plan administrators’ guide to the recent IRS revenue ruling
The IRS recently released a new revenue ruling that provides 401(k) plan administrators with helpful guidance on reporting and withholding from 401(k) plan distributions. Read the blog post below to learn more about this new ruling.
The IRS recently issued revenue ruling 2019-19. The revenue ruling provides 401(k) plan administrators with helpful guidance on how to report and withhold from 401(k) plan distributions when a plan participant actually receives the distribution but for some reason, does not cash the check.
Unfortunately, this new guidance does not provide answers to the complex issues that 401(k) plan administrators face when the plan must make a distribution, but the plan participant is missing.
Let’s hope revenue ruling 2019-19 is just the first in a series of much-needed guidance from the IRS and the Department of Labor about how 401(k) plan administrators should handle the increasingly common administrative issues related to uncashed checks and missing plan participants.
There are many situations in which a 401(k) plan must make a distribution to a plan participant. For example, plans must distribute small benefit cash outs (e.g., account balances that are $1,000 or less) or required minimum distributions to plan participants who reach age 70 and a half. This may come as a surprise, but plan participants fail to actually cash these checks with some regularity.
In the ruling, the IRS confirmed that 401(k) plan administrators should withhold taxes on a 401(k) plan distribution and report the distribution on a Form 1099-R in the year the check is distributed to the participant, even if the participant does not cash the check until a later year.
Similarly, the participant needs to include the plan distribution as taxable income in the year in which the plan makes the distribution even if the participant fails to cash the check until a later year. While this guidance is not surprising, it does provide clarity to 401(k) plan administrators as to how they must withhold and report normal course and required plan distributions. In particular, 401(k) plan administrators should not reverse the tax withholding or reporting of the distribution when the participant receives the distribution and simply does not cash the check until a later year.
Unfortunately, this new IRS guidance has limited use because the ruling uses an example that specifically concedes that the plan participant actually received the plan distribution check, but simply failed to cash it. What should 401(k) plan administrators do when the participant may not have received the distribution check at all (e.g., a check is returned for an invalid address) or the plan itself does not have current contact information for the participant?
Retirement plan administrators have an ERISA fiduciary obligation to implement a diligent and prudent process to find missing plan participants and to take additional steps to make sure participants actually receive plan distributions. Uncashed 401(k) plan distribution checks are still retirement plan assets which means the 401(k) plan administrator is still subject to ERISA fiduciary standards of care, prudence and diligence related to those amounts. As a result, the IRS and DOL have increased their focus on uncashed checks and missing participants in retirement plan audits.
Plan administrators would be well-served by establishing and implementing a consistent process to stay on top of any missing plan participants or uncashed checks and taking steps to locate those participants and properly address uncashed checks. Plan administrators should also carefully document the steps that they take in this regard. The IRS and DOL have currently provided limited guidance on the steps a 401(k) plan administrator can take to locate missing participants, but more guidance is needed — let’s hope revenue ruling 2019-19 is just the beginning.
This article originally appeared on the Foley & Lardner website. The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.
SOURCE: Dreyfus Bardunias, K. (6 September 2019) "A 401(k) plan administrators’ guide to the recent IRS revenue ruling" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/401k-administrators-guide-to-the-irs-revenue-ruling-2019-19
Survey: What Employees Want Most from Their Workspaces
This year, employers across the country are expected to spend an average of $3.6 million on employer-sponsored wellness programs. Some of the benefits companies are investing in include onsite gyms, standing desks, meditation rooms and nursing hotlines. Continue reading this blog post to learn more about what employees want most out of their workspaces.
In an effort to support a healthier and more productive workforce, employers across the country are expected to spend an average of $3.6 million on wellness programs in 2019. Think onsite gyms. Standing desks. Meditation rooms. Nursing hotlines. These are just some of the benefits companies are investing in.
But is any of it paying off?
The results of a recent Harvard study suggest that wellness programs, offered by 80% of large U.S. companies, yield unimpressive results — and our findings mirror this. Future Workplace and View recently surveyed 1,601 workers across North America to figure out which wellness perks matter to them most and how these perks impact productivity.
Surprisingly, we found employees want the basics first: better air quality, access to natural light, and the ability to personalize their workspace. Half of the employees we surveyed said poor air quality makes them sleepier during the day, and more than a third reported up to an hour in lost productivity as a result. In fact, air quality and light were the biggest influencers of employee performance, happiness, and wellbeing, while fitness facilities and technology-based health tools were the most trivial.
Organizations have the power to make improvements in these areas, and they need to, both for their workers and themselves. A high-quality workplace — one with natural light, good ventilation, and comfortable temperatures — can reduce absenteeism up to four days a year. With unscheduled absenteeism costing companies an estimated $3,600 annually per hourly worker and $2,650 each year for salaried workers, this can have a major impact on your bottom line.
Other research finds that employees who are satisfied with their work environments are 16% more productive, 18% more likely to stay, and 30% more attracted to their company over competitors. Two-thirds of our survey respondents said that a workplace focused on their health and wellbeing would make them more likely to accept a new job or keep the job they have. This means that companies willing to adapt to an employee-centric view of workplace wellness will not only increase their productivity, they will also improve their ability to attract and retain talent.
To get started, here are three steps you can take to improve your work environments and the wellbeing of your employees:
1. Stop spending money on pointless office perks. A good rule of thumb is to never assume that you know what your employees want — but instead, find ways to ask them. If more employers did, they might put less emphasis on office perks that only a minority of employees will take advantage of (like an onsite gym), and more on changes in the workplace environment that impact all employees (like air quality and access to light).
The number one environmental factor cited in our survey was better air quality. Fifty-eight percent of respondents said that fresh, allergen-free air would improve their wellness. Fifty percent said they would work and feel better with some view of the outdoors, while one third said they would want the ability to adjust the temperature in their workspace. Only one in three survey respondents characterized their office temperature as ideal.
Noise distractions bothered more than a third of those surveyed, impacting their ability to concentrate. Employees said sounds like phones ringing, typing on keyboards, and distractions from coworkers all impacted their concentration.
Almost half of our respondents wanted to see their companies improve these environmental factors, and in many instances, more than they wanted to be offered office perks. The first step, then, is to take a look at where you are spending your money, and consider cutting expenses that aren’t worth the cost.
2. Personalize when possible. We’ve all gotten used to personalizing our outside-of-work lives. We binge the shows we want to watch and listen to the music we like to hear, even if our partners or friends have different preferences. We adjust our thermostats without having to get up off our couches, and dim our lights to our level of satisfaction.
Employees are beginning to expect these same privileges in the workplace. Our survey revealed that employees, by a margin of 42% to 28%, would rather be able to personalize their work environment than opt for unlimited vacation. Specifically, what employees want to personalize:
- Workspace temperature: Nearly half want an app that will let them set the temperature in their workspace.
- Overhead and desk lighting: One-third wants to control their overhead and desk lighting, as well as the levels of natural light streaming in.
- Noise levels: One-third would like to “soundscape” their workspace.
While these asks may sound exclusive to the personal offices of higher-ups — they’re not. Hewlett Packard Enterprise headquarters is just one example of a company that has managed to help employees control the noise level in an open floor plan. Their building was actually designed to manage ambient sound in order to reduce worker distractions. Some companies like Regeneron Pharmaceuticals, have gone a step further, allowing employees to control the amount of natural light streaming in through the glass of their office windows with a cell phone app.
But for organizations that don’t want to invest in a completely new building, there is a more organic route. Cisco, for example, has managed the acoustic levels in their space by creating a floor plan without assigned seating that includes neighborhoods of workspaces designed specifically for employees collaborating in person, remotely, or those who choose to work alone.
This same strategy applies to light or temperature. You can position employees who want a higher temperature and more light around the edge of your floor plan, and those who like it quieter and cooler in the core.
3. Create a holistic view of workplace wellness. When deciding what changes to make to your organization, remember that workplace wellness is not just about the physical health of your employees. It includes physical wellness, emotional wellness, and environmental wellness. To create a truly healthy work environment, you must take all three of these areas into consideration:
- Emotional wellness: Give employees access to natural light, and quiet rooms where they can comfortably focus on their work.
- Physical wellness: Provide people with healthy food options, and ergonomically designed work stations.
- Environmental wellness: Make sure your workspaces have adequate air quality, light, temperature, and proper acoustics.
Companies that adapt to a more holistic view of workplace wellness will soon realize no one department alone can solve the puzzle. Our study results, along with the results from the World Green Building Council report, push organizations to take a closer look at what changes they can make that will actually matter. My suggestion: consider how you can get back to the basics employees want, and invest in the core areas that will have the most impact.
Employers look to virtual services to curb rising health costs
Employers are looking for ways to stem the rising costs of healthcare and find ways to better engage employees. According to the National Business Group on Health, 64 percent of employers believe virtual care will play a significant role in healthcare delivery. Read this blog post to learn more about virtual services.
WASHINGTON — With the continued cost of healthcare benefits expected to increase by another 5%, topping $15,000 per employee, employers are looking for ways to stem the increase and better engage employees in holistic well-being.
One of those ways is through virtual care. The number of employers who believe virtual care will play a significant role in how healthcare is delivered in the future continues to grow, up to 64% going into 2020 from 52% in 2019, according to the National Business Group on Health’s annual healthcare strategy survey.
“Virtual care solutions bring healthcare to the consumer rather than the consumer to healthcare,” Brian Marcotte, president and CEO of NBGH said at a press briefing Tuesday. “They continue to gain momentum as employers seek different ways to deliver cost-effective, quality healthcare while improving access and the consumer experience. Of particular note is the growing interest among employers to offer virtual care for mental health as well as musculoskeletal conditions.”
The majority of respondents (51%) will offer more virtual care programs next year, according to the survey. Nearly all employers will offer telehealth for minor, acute services while 82% will offer virtual mental health services — a figure that’s expected to grow to 95% by 2022.
Virtual care for musculoskeletal management shows the greatest potential for growth, the study noted. While 23% of employers will offer musculoskeletal management virtual services next year, another 38% are considering it by 2022. Physical therapy is the best way to address musculoskeletal conditions and help avoid surgery, but it can be inconvenient and costly, said Ellen Kelsay, chief strategy officer at NBGH.
“Where we’ve seen a lot of development in areas of virtual solutions is to provide remote physical therapy treatments,” she said. “Employees can access treatment through their virtual app wherever it’s convenient for them.”
Regardless, employee utilization of virtual services still remains low. For example, while roughly 70% of large companies provide telemedicine coverage, only 3% of employees use it, according to prior NBGH data.
But many resources are out of sight and out of mind, Kelsay said. However, employers are focusing on offering high-touch concierge services to help workers better navigate the healthcare system.
Employers are reaching a point of saturation with the number of solutions that are available, but from the employee’s perspective, they just don’t know where to start, she added. “These concierge and navigator services really help point employees in the direction to the solution at the point in time they need it.”
In addition, the use of predictive analytics and claims data is also an opportunity to help employers get the right programs in front of employees in the moment, Marcotte added.
“Some of these engagement platforms are getting at personal messaging and predictive analytics. It’s not where we want it to be yet, but as that continues to get better, I think you’ll see utilization go up,” he said.
Employers shouldn’t fear expansion of Medicare
A new survey from the National Business Group on Health found that only 23 percent of large employers believe Medicare eligibility should drop to age 50. Read this article from Employee Benefits Advisor to learn more about the potential expansion of Medicare.
Like a significant chunk of American voters, a majority of large employers want to expand Medicare. Just not too much.
A new survey of 147 large employers from the National Business Group on Health found that 55% of them support a Medicare expansion that’s limited to older Americans. Only 23% think eligibility should drop to age 50, however, and 45% don’t think it should expand at all. A majority believe that a broader “Medicare for All” plan would increase health costs.
The same survey also highlights why employers should consider coming around on health reform that reduces their role in the system. The growth in health costs has outpaced inflation and wage growth for years, and the surveyed businesses expect it to rise 5% to $15,375 for each employee next year.
About 70% of those costs will fall on the companies, which plan to try everything from boosting virtual health services to investing in health concierges to rein them in, according to the survey.
History suggests that their best efforts might not amount to much.
Employer-sponsored insurance is America’s single largest source of health coverage. That’s mostly true because the IRS exempted employer health benefits from taxes in 1943, a move that created the federal government’s single biggest tax expenditure. Large companies derive some benefit from the current system because they can provide a significant tax-free benefit that helps them compete for talent and pay people less. But it comes with significant drawbacks. Employers have to devote substantial resources to providing healthcare and controlling costs. Many of them have no particular expertise or advantage in doing so.
The results are mixed. Yes, individuals with private insurance are generally satisfied with the quality of their coverage. They’re not nearly as happy about the cost as deductibles rise. The U.S. pays more than any other developed country for healthcare and medicines and receives worse results on a variety of metrics.
Employers pay particularly high prices and spend heavily on plans that have higher overhead than public alternatives. A recent RAND study found that employer-sponsored plans paid hospitals at 241% of Medicare rates in 2017. Employers are already effectively subsidizing public programs, not to mention the profitability of insurers, health care providers and drugmakers.
It’s not entirely their fault. The American system inherently fragments negotiating power, which gives providers a significant advantage and makes it difficult for even the largest employers to get a good deal. Turning a larger piece of healthcare over to the government would free companies to focus more time and resources on their actual business instead of on navigating the world’s most expensive and convoluted healthcare market.
Big businesses most likely fear big Medicare expansion in large part because it would lead to a significant tax increase. But looking at any tax increase as an enemy is a mistake. Those taxes represent a trade-off; they would replace some or all of the billions of dollars that employers are currently spending on care. Depending on what taxes are imposed and whether the public plan is able to control costs better than the current system — and it could hardly do worse — many employers could come out ahead.
There are a lot of unknowns when it comes to Medicare for All and plans that move the country in that direction. Employers are right to be skeptical until they know more, but the results could well shake out in their favor, and they shouldn’t be so quick to discount the approach.
SOURCE: Nisen, M. (15 August 2019)"Employers shouldn’t fear expansion of Medicare" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/articles/employers-shouldnt-fear-expansion-of-medicare
15 states where $1 million in retirement savings will last the longest
How much do you have saved for retirement? According to GOBankingRates data, employees who have $1 million in retirement savings can make it last for more than 20 years in Mississippi, Arkansas, Oklahoma and Missouri. In this article, Paola Peralta writes on the importance of understanding what better retirement choices can do for your future.
Employees with $1 million in retirement savings can make it stretch for more than 20 years in Mississippi, Arkansas, Oklahoma and Missouri, according to GOBankingRates data in an article from Business Insider. Retirees in New Mexico, Tennessee, Michigan and Kansas can also live on a similar amount of savings, data shows. Retirees with $1 million can expect their savings to last in average span of 19 years, GOBankingRates estimates.
Less choice could mean better retirement outcomes
The amount of income that seniors can replace in retirement is a good measure to determine whether there is a looming retirement crisis in the U.S., according to retirement expert Mark Miller in this article from Morningstar. However, it is hard to make generalizations, he explains. “I think it varies tremendously, depending which demographic group you’re looking at, you can do it generationally or otherwise,” Miller says.
Retirement requires a shift in thinking
As retirees needs change, they should be ready to adjust their mindset and modify their investment strategies, an expert in Kiplinger writes. Retirees should focus more on preservation and distribution after the accumulation phase, the expert writes. “In retirement, it’s important to think of your savings as income rather than a lump sum. It’s not all about achieving maximum return on investment anymore," the expert says. "It’s about how you can get the maximum return from your portfolio and into your pocket."
Employees nearing retirement? 12 features to look for in their next home
Seniors who intend to move to a new home in retirement should consider a property that offers low yard maintenance, a single-story open floor plan and easy access to loved ones and essential amenities, according to a Forbes article. They should ensure that the new house is cheap to maintain and won’t trigger a hefty tax bill, says one expert. “If those costs are low, it can be a great investment.”
SOURCE: Peralta, P. (15 August, 2019) "15 states where $1M in retirement savings lasts the longest"(Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/states-where-retirement-savings-will-last-the-longest
The case for expanding wellness beyond the physical
Can addressing mental health, financial wellness and substance abuse in the workplace help employees feel fulfilled both personally and professionally? Newly released data shows that employees who have access to wellness programs that address most or all of the five aspects of well-being are more likely to say their job performance is excellent. Read this blog post to learn more about expanding wellness programs.
Client's wellness programs that only focus on physical fitness may need to rethink their approach.
By expanding wellness offerings to include programs that support workers’ mental and financial wellness, employer clients can increase the overall wellbeing of their workforce. Newly released data from Optum and the National Business Group on Health shows that employees who are offered programs that address most or all of the five aspects of wellbeing — physical, mental, financial, social and community — are significantly more likely to say their job performance is excellent, have a positive impression of their employer, and recommend their company as a place to work.
Over the last decade, workplace wellness initiatives have evolved beyond health risk assessments, physical fitness and nutrition programs. Many programs now include resources to address mental health, financial wellness and substance abuse.
“[Employers] must commit to looking beyond clinical health outcomes,” says Chuck Gillespie, CEO of the National Wellness Institute, speaking at a webcast from the International Foundation of Employee Benefit Plans. “You want employees to be fulfilled both personally and professionally.”
Even though some clients address financial, social and community health, most still focus on physical and mental health.
However, there are benefit trends that address wellness beyond physical fitness. The emergence of financial wellness benefits — such as early pay access, student loan assistance and retirement saving plans — may help employees feel less stressed and more financially secure, which has shown to improve overall health.
But having a good wellness program in place isn’t enough — employers also have to make sure that the offerings are inclusive and personalized, and that the programs have successful participation and engagement rates.
“These programs need to be adapted to who you are,” Gillespie says. “Customization has to be a key factor of what you’re looking at, because everybody is not going to fit inside your box.”
Effective wellness programs use both health and wellness data points and best practices, while keeping an eye on developing trends. Multi-dimensional wellness — looking at aspects such as social and community — can help companies understand the needs of their employees better.
“Employers need to better recognize personal choices, and if the employees are in an environment where they are functioning optimally,” Gillespie says. “Smokers hang out with smokers; the cultural foods that you eat with family may not be nutritious; is there social isolation; do you contribute to your community. [Most benefits] are work-oriented, but for most people, their life is their home life. It’s important to look at the degrees of which you feel positive and enthusiastic about your work and life.”
SOURCE: Nedlund, E. (15 August 2019) "The case for expanding wellness beyond the physical" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/the-case-for-expanding-wellness-beyond-the-physical
Cadillac Tax May Finally Be Running Out of Gas
The Cadillac tax - a 40 percent tax on the most generous employer-provided health insurance plans - may be about to change. The Cadillac tax was supposed to take effect in 2018 but has been delayed twice and recently, the House voted to repeal this tax entirely. Read this blog post to learn more about this potential change.
The politics of healthcare are changing. And one of the most controversial parts of the Affordable Care Act — the so-called Cadillac tax — may be about to change with it.
The Cadillac tax is a 40% tax on the most generous employer-provided health insurance plans — those that cost more than $11,200 for an individual policy or $30,150 for family coverage. It was supposed to take effect in 2018, but Congress has delayed it twice. And the House recently voted overwhelmingly — 419-6 — to repeal it entirely. A Senate companion bill has 61 co-sponsors — more than enough to ensure passage.
The tax was always an unpopular and controversial part of the 2010 health law because the expectation was that employers would cut benefits to avoid paying the tax. But ACA backers said it was necessary to help pay for the law’s nearly $1 trillion cost and help stem the use of what was seen as potentially unnecessary care. In the ensuing years, however, public opinion has shifted decisively, as premiums and out-of-pocket costs have soared. Now the biggest health issue is not how much the nation is spending on healthcare, but how much individuals are.
“Voters deeply care about healthcare still,” said Heather Meade, a spokeswoman for the Alliance to Fight the 40, a coalition of business, labor and patient advocacy groups urging repeal of the Cadillac tax. “But it is about their own personal cost and their ability to afford healthcare.”
Stan Dorn, a senior fellow at Families USA, recently wrote in the journal Health Affairs that the backers of the ACA thought the tax was necessary to sell the law to people concerned about its price tag and to cut back on overly generous benefits that could drive up health costs. But transitions in healthcare, such as the increasing use of high-deductible plans, make that argument less compelling, he said.
“Nowadays, few observers would argue that [employer-sponsored insurance] gives most workers and their families’ excessive coverage,” he wrote.
The possibility of the tax has been “casting a statutory shadow over 180 million Americans’ health plans, which we know, from HR administrators and employee reps in real life, has added pressure to shift coverage into higher-deductible plans, which falls on the backs of working Americans,” said Rep. Joe Courtney (D-Conn.).
Support or opposition to the Cadillac tax has never broken down cleanly along party lines. For example, economists from across the ideological spectrum supported its inclusion in the ACA, and many continue to endorse it.
“If people have insurance that pays for too much, they don’t have enough skin in the game. They may be too quick to seek professional medical care. They may too easily accede when physicians recommend superfluous tests and treatments,” wrote N. Gregory Mankiw, an economics adviser in the George W. Bush administration, and Lawrence Summers, an economic aide to President Barack Obama, in a 2015 column. “Such behavior can drive national health spending beyond what is necessary and desirable.”
At the same time, however, the tax has been bitterly opposed by organized labor, a key constituency for Democrats. “Many unions have been unable to bargain for higher wages, but they have been taking more generous health benefits instead for years,” said Robert Blendon, a professor at the Harvard T.H. Chan School of Public Health who studies health and public opinion.
Now, unions say, those benefits are disappearing, with premiums, deductibles and other cost sharing rising as employers scramble to stay under the threshold for the impending tax. “Employers are using the tax as justification to shift more costs to employees, raising costs for workers and their families,” said a letter to members of Congress from the Service Employees International Union.
Deductibles have been rising for a number of reasons, the possibility of the tax among them. According to a 2018 survey by the federal government’s National Center for Health Statistics, nearly half of Americans under age 65 (47%) had high-deductible health plans. Those are plans that have deductibles of at least $1,350 for individual coverage or $2,700 for family coverage.
It’s not yet clear if the Senate will take up the House-passed bill, or one like it.
The senators leading the charge in that chamber — Mike Rounds (R-S.D.) and Martin Heinrich (D-N.M.) — have already written to Senate Majority Leader Mitch McConnell to urge him to bring the bill to the floor following the House’s overwhelming vote.
“At a time when healthcare expenses continue to go up, and Congress remains divided on many issues, the repeal of the Cadillac tax is something that has true bipartisan support,” the letter said.
Still, there is opposition. A letter to the Senate on July 29 from economists and other health experts argued that the tax “will help curtail the growth of private health insurance premiums by encouraging employers to limit the costs of plans to the tax-free amount.” The letter also pointed out that repealing the tax “would add directly to the federal budget deficit, an estimated $197 billion over the next decade, according to the Joint Committee on Taxation.”
Still, if McConnell does bring the bill up, there is little doubt it would pass, despite support for the tax from economists and budget watchdogs.
“When employers and employees agree in lockstep that they hate it, there are not enough economists out there to outvote them,” said former Senate GOP aide Rodney Whitlock, now a healthcare consultant.
Harvard professor Blendon agrees. “Voters are saying, ‘We want you to lower our health costs,’” he said. The Cadillac tax, at least for those affected by it, would do the opposite.
SOURCE: Rovner, J. ( 19 August, 2019) "Cadillac tax may finally be running out of gas" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/articles/obamacare-excise-tax-may-be-at-an-end
Employer-sponsored savings programs could be the future of financial wellness
An estimated 43 percent of hourly workers have less than $400 set aside in their savings for emergencies. For those workers, an accident or unexpected expense can be financially devastating. Read this blog post from Employee Benefits Advisor to learn more about employer-sponsored savings programs.
For 43% of hourly workers who report having less than $400 in savings set aside for emergencies, an accident or unexpected expense can be financially devastating.
But employer-sponsored savings programs could be a viable solution. Low- and middle-income employees who are more financially secure have been shown to be less stressed and more productive when they have an employer-sponsored savings program, which may lead to lower healthcare costs, better customer service and stronger attendance, a new survey from nonprofit organization Commonwealth finds.
The national survey of 1,309 employees earning less than $60,000 a year found that employers offering workers savings interventions at the time of raise, can positively impact their employees’ personal finances. Three-quarters of hourly employees surveyed believe that if their employer offered savings options at the time of a raise, they would be less stressed and more confident about their finances.
“There's a lot of talk about financial stress, but when you're really living paycheck-to-paycheck, that stress is about being able to pay your bills on time,” says Commonwealth’s executive director Timothy Flacke. “It's about cash flow, and that's a particularly acute form of anxiety.”
The report analyzes the potential effects of savings programs including split direct-deposit paychecks, low-interest loans and savings accounts — and compares how those programs alleviate employees’ financial stress. Workers surveyed believe if their employer-provided savings tools they would be happier and more productive. Moreover, the survey found individuals with more in savings were less likely to have financial worries than those with little savings.
One of the companies partnered with Commonwealth to link raises with savings is Minnesota-based education company New Horizon Academy. In the beginning of the year, the company piloted a new savings program that gives its employees the option to have the raise diverted through the payroll system to a savings account each pay period, instead of having it go into their normal checking account.
“Through this, our employees are beginning to build up some financial reserves in case of an emergency, or life circumstances that requires them to dip into a savings account,” says Chad Dunkley, CEO of New Horizon Academy. Although it’s too early to state results from the pilot program, the company hopes it will have a positive long-term impact on the financial health of its employees, Dunkley says.
“This is just one of those additional ways [to] stabilize our employees, so they can come into the classroom without the financial stress that certain situations cause when you're not prepared for an emergency, whether it's new tires on your car or health issues,” he says.
SOURCE: Nedlund, E. (19 August 2019) "Employer-sponsored savings programs could be the future of financial wellness" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/reduce-stress-increase-productivity-with-financial-wellness
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