Education benefits are a critical offering to retain top talent
The top reason why employees pursue higher education and training is to keep up with or get ahead of any changes in their specific position, according to a recent survey. Read the following blog post for more on why education benefits are critical when it pertains to retaining top talent.
The American workplace is changing rapidly and so are the expectations workers have of their employers. Under pressure to keep pace with technology’s transformation of the labor market, employers are racing to up- and re-skill their workforce. They know that frontline workers, whose tasks are often most susceptible to automation, need training to remain viable and competitive.
According to this year’s Bright Horizons Working Learning Index, which surveyed more than 30,000 working learners, employees are well aware that their workplace is changing. When asked to select their top three reasons for pursuing more education or training, the most prevalent answer was that they wanted to “keep pace with or get ahead of changes in my position.” This beat out all other reasons, including advancement, opportunities at another organization and even earning more money at work.
Generation Z workers now rank education over all other benefits in importance, excluding healthcare. But they tend to differentiate between education and training, ranking education benefits above training and development.
That’s with good reason: a college degree is still the great lever for economic mobility and career advancement among frontline workers, driving higher lifetime earnings that total more than $2 million, on average. But with college costs rising, Gen Z is looking to employers to fill the gap. About four in ten Gen Z employees believe their tuition reimbursement program is the single best benefit offered by their employer. Twice as many say it is among the top three voluntary benefits.
Among the surveyed workers, three-quarters (76%) say a tuition reimbursement program would make them more likely to remain at their organization, and eight in 10 (81%) say it would make them more likely to recommend working there to a friend. Nearly two-thirds (64%) say such benefits make them “happier at work.”
Indeed, employees of all generations rank education benefits far above those offered for wellness and even above highly coveted benefits like life or disability insurance and paid family leave. In this survey, only retirement savings programs and paid sick or vacation time ranked more highly.
Importantly, nearly half (49%) said they would not have pursued education if their employers did not offer tuition assistance. Slightly more (55%) say the time commitment required for a degree or certification under their employer’s tuition assistance program is the biggest challenge they faced — as a result, many see the value of competency-based and self-paced learning options, often delivered online.
Data like this may change the calculus for employers considering investments in not just upskilling but education. While it may seem counterintuitive, employers must offer their frontline workers broad learning opportunities and educational benefits that can help them move beyond their current positions and pursue the next steps of their careers. Companies must have the foresight to invest in their potential.
SOURCE: Donovan, P. (22 November 2019) "Education benefits are a critical offering to retain top talent" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/offering-education-benefits-retains-top-talent
What to do when your state says you need a retirement plan
Did you know: Almost 25 percent of U.S. adults lack any retirement savings. In response to these findings, many states are beginning to require employees to participate in state-sponsored retirement programs. Read the following blog post to learn what to do when your state requires you to participate in a state-sponsored retirement plan.
We’re all too aware of the looming retirement crisis. Almost 25% of adults in the United States lack any retirement savings, according to the Federal Reserve. In response, a number of states have decided to enact legislation that require employees to participate in their state-sponsored retirement program.
What does this mean for business owners not currently offering a plan?
For businesses operating in a state where legislation has been proposed, it’s very likely that they will have to make some changes in the not-so-distant future. Some state plans come with penalties for not enrolling, while others offer appealing incentives for involvement. However, the real question may not be whether you want to offer a state-sponsored plan, but rather, whether a state-sponsored plan is the right option.
Most state-sponsored plans are designated as Roth IRAs, using investments chosen by the state, and are low-cost. However, there are also benefits to creating a customized plan that works for you and your employees. Issuing your own plan allows you to:
- Select your own investments to include the right fund variety and offer user-friendly models like target-date funds;
- Create your own plan design so you have more control over things like company matching and eligibility rules;
- Derive significantly greater tax benefits because a 401(k) plan allows deductions of pre-tax earnings of up to $19,000 whereas an IRA only permits deductions of up to $6,000 in earnings;
- Borrow against your plan in times of emergency; and
- Keep costs equally low thanks to new entrants and advanced technology that eliminates overhead.
- While state-sponsored plans are getting the conversation started, it’s important to look at the bigger picture strategy and determine the best short- and long-term decisions.
To better understand the urgency behind any retirement plan decision, it’s worth digging deeper into the specific requirements of your state. But regardless of what state you’re in, there are many perks to offering a company-sponsored retirement plan such as tax incentives, recruitment and retention benefits, and investing in your employee’s future. And thanks to new entrants and advanced technology, many traditional inefficiencies and excess fees have been eliminated, keeping costs down.
States are putting emphasis on the retirement crisis and stepping in to help. But at the end of the day, this is about setting your employees — and yourself — up for retirement security. Look at the current proposals in your jurisdiction, think about what you’re trying to accomplish, and determine what will offer the greatest value for you and your team. Everyone deserves retirement security.
SOURCE: Brecher, A. (22 November 2019) "What to do when your state says you need a retirement plan" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/what-to-do-when-your-state-says-you-need-a-retirement-plan
Key factors in choosing your benefits during open enrollment
Employers are now realizing that in order to attract and retain talent, they have to provide the best benefits. But, how do employees select the right benefits out of all the available options? Read the following blog post from Employee Benefit News for a few key factors to consider when choosing your benefits during open enrollment.
Even if you are a veteran in choosing employer-sponsored benefits, the landscape is shifting. Over the past years, we’ve seen changes to mental health counseling stipends, extended maternity/paternity leave and family building. Companies across industries are realizing that in order to attract and retain talent, they need to provide best in class benefits that save employers unforeseen costs in the long run, and shows employees that their employers are invested in their wellbeing — in and out of the office.
With all these available options and only a short window to select what’s right for you, here’s what should you look out for during open enrollment.
Which benefits matter to me?
The beauty of a diverse workforce is that employees may represent various walks of life. However, this means that not all benefits make sense for every person. Perhaps your boss is prioritizing childcare for his toddler while your colleague is looking to refinance student loans. Whatever your life circumstance, ask yourself, “Which benefits are most pertinent to my life and life goals in the coming year?”
For instance, fertility benefits may not be immediately attractive at first glance, even if you’re actively thinking about starting a family. But 1 in 8 couples will be impacted by infertility and treatment without coverage can be wildly expensive. It’s important to make sure you’re thinking critically and getting all the necessary information when browsing for your benefits. Rule of thumb: if this could impact you in the coming year, even if you’re not 100% sure, opt-in for coverage.
What’s actually covered?
During open enrollment, be sure to ask your benefits team about how robust each offering is and what’s included. A particular benefit may look like it has a lot to offer, but after further investigation, you may uncover restrictions, unforeseen out of pocket costs and other obstacles that may make it harder for you to utilize the benefit.
With fertility benefits, many conventional carriers offer coverage with a dollar maximum, meaning you’d max out on coverage before completing a full IVF cycle. Plus, there are additional costs outside of the basic IVF procedure, like diagnostic testing, medications, and genetic testing which may come with a hefty price tag you’d have to pay for. Without adequate coverage, many people have to make cost-based decisions, forgoing the technology they need to reach a successful outcome.
As an alternative, Progyny’s coverage is bundled, meaning your entire treatment event is covered and you do not have to worry about what is or is not included, or fear running out of coverage mid-way through. Many vendors have similar disruptive solutions to ensure they’re not leaving their members high and dry during difficult times.
When sifting through options, be sure you’re asking what’s covered and not covered under your plan. A lot of benefits may seem expansive, but make sure you’re getting the most out of the coverage that’s available to you. Ask: Are the best clinics in your area included in your plan as “in-network”? Do you have to meet medical necessity requirements before being allowed to access your benefits?
Which benefits are supported?
Once you’ve opted in for benefits during open enrollment, how do you access your benefit? How do you move forward with treatment? Does your benefit provide access to the doctors in your area? Since many of these offerings are complex and without proper onboarding, how can you be expected to understand the next steps?
With the growing emphasis on mental health and concierge member experience, companies like Progyny try to eliminate some of the member’s burden and create an easy to use benefit model that provides member support. For example, our dedicated Patient Care Advocates — a concierge-style fertility coach — helps members navigate the clinical and emotional aspects of your fertility treatment, making a difficult process a bit easier.
Another important factor to consider when shopping for benefits is access to care where you live — are the doctors that your insurance covers close by and easy to get to? When choosing your benefits, look out for any information about access to support. The goal of a benefit is to make your life easier, not leave you feeling confused and stressed in times of need.
What do I do if I’m unhappy with the benefits offered during open enrollment?
Often times, employers are unaware of what an employee wants until it’s brought to their attention. If you are unhappy with the benefits offered, raise the issue with your HR team! You are your own best advocate and change begins with you.
Not sure where to start? If you are comfortable, speak with your colleagues. Seek out a company resource group to see if others have similar needs. This way you can help form a plan or a way to approach HR. Once you have an idea of what you need, talk to HR to explain why the proposed benefit would be pertinent to you and your colleagues. Employers understand that the key to keeping good talent is making sure they’re happy.
Open enrollment can be overwhelming but take advantage of the resources you have. Ask questions, do your research, and discuss the options with experts in your office. With an arsenal of helpful information at your disposal, open enrollment should be stress-free and get you excited for all of the incredible employer-sponsored benefits in your future.
SOURCE: Ajmani, K. (25 November 2019) "Key factors in choosing your benefits during open enrollment" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/how-to-choose-benefits-during-open-enrollment
Know your people, know your data: Keys to measuring employee engagement
According to research, over half of employees believe that health insurance is important in terms of their job satisfaction. Read the following blog post for ways employers can measure employee engagement.
Offering a total compensation and benefits package that fits employee needs drives morale, motivation and performance in the workplace.
Simply put, people who are happy and healthy are more productive. When an organization offers benefits that appeal to employees (and workers know how to use these benefits) employers should see an increase in total productivity.
On the other hand, if a company is off the mark with the total compensation package, or simply hasn’t communicated the benefits to people correctly, it will either see unchanged productivity or a decline. Organizations struggling to find improvement in productivity should look at their employee benefits offerings for answers.
Providing effective group health insurance and well-being programs is a good way to reduce the amount of sick leave worker's take. If employees promptly get healthcare when they’re ill, they’re more likely to be healthier overall. If an organization doesn’t offer appropriate health benefits, the result can be presenteeism.
Additionally, the cost of presenteeism multiplies when sick staff are contagious. One sick person refusing to take a day off can snowball into multiple people arriving ill to work on subsequent days. When illnesses reach critical mass and it’s harder for people to recover from things like the flu or a cold, organizations may find themselves short-staffed when employees finally pay to see a doctor.
Job satisfaction and morale are also linked to employee benefits. Research shows more than half of employees believe that health insurance is important in terms of their job satisfaction — even more crucial if staff live in an area where medical services are expensive.
Strategies to measure benefits engagement. HR staff have multiple ways of measuring how certain workplace functions are performing. Here are some effective methods organizations can use to measure benefits engagement.
Staff surveys. Questionnaires that seek to understand what benefits your staff know they have, and how they’ll use them.
Pulse surveys. Asking staff short, frequent questions about a benefits platform.
Focus groups. Gathering cross-functional groups of staff members together to have a facilitated discussion about benefits.
Exit surveys. Include questions about benefits and satisfaction levels during exit surveys, and then investigate what their next employer might be offering to have lured them away.
If organizations are not regularly questioning how well their benefits plan is performing, they may be missing an opportunity to get key insights into how employees feel about their packages.
Offering employee benefits isn’t just to support an organization’s staff, it should also support an organization’s long-term sustainability. Employee engagement is one key measure. The challenge for organizations is ensuring not only that they include benefits that will be relevant to staff, but also that they properly educate them in what those benefits are.
The less staff are educated on what benefits exist and how they can use them, the less likely they are to engage with them. Not having an appropriate communication strategy can often set benefits plan performance behind.
Working with analytics and claims data can indicate when specific benefits aren’t being used. Knowing what causes the lack of engagement requires a bit of discussion and investigation, but finding sustainable solutions is completely dependent on understanding whether the issue is the benefits themselves, or the communication to staff.
SOURCE: Rider, S. (1 November 2019) "Know your people, know your data: Keys to measuring employee engagement" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/using-data-to-measure-employee-engagement
DOL’s new fluctuating workweek rule may pave road for worker bonuses
The Department of Labor’s new fluctuating workweek rule could give employers additional flexibility when calculating employee overtime pay and could potentially make it easier for workers to get bonuses. Read the following blog post to learn more about this newly proposed rule.
The Department of Labor’s new proposal would give employers additional flexibility when calculating overtime pay for salaried, non-exempt employees who work irregular hours — and may make it easier for some workers to get bonuses.
The new proposal, released this week, clarifies for employers that bonuses paid on top of fixed salaries are compatible with the so-called “fluctuating workweek” method of compensation, or a way of calculating overtime pay for workers whose hours vary week-to-week. Supplemental payments, such as bonuses or overtime pay, must be included when calculating the regular rate of pay under the Fair Labor Standards Act, according to the DOL.
"For far too long, job creators have faced uncertainty regarding their ability to provide bonus pay for workers with fluctuating workweeks," says Cheryl Stanton, wage and hour division administrator, at the DOL in a statement. "This proposed rule will provide much-needed clarity for job creators who are looking for new ways to better compensate their workers."
Paul DeCamp, an attorney with the law firm Epstein Becker Green’s labor and workforce management practice, says the DOL rule clears up ambiguity surrounding when employers can use the fluctuating workweek rule. A preamble in a 2011 Obama-era regulation suggested that bonuses were contrary to a flexible workweek, DeCamp says.
“The department’s past rulemakings have created ambiguity — paying employees a bonus makes the fluctuating workweek calculation unavailable,” DeCamp says. “During the last administration, some people with DOL took the position that the fluctuating workweek was only available when the compensation the employee received was in the form of salary.”
This new update may make it easier for employers to pay out bonuses or other kinds of compensation to a specific group of workers. Labor Secretary Eugene Scalia says the proposal will remove burdens on American workers and make it easier for them to get extra pay.
"At a time when there are more job openings than job seekers, this proposal would allow America's workers to reap even more benefits from the competitive labor market,” Scalia says.
DeCamp adds that the update will make it easier for employers to provide bonuses to these workers, without being concerned they are going to impact their overtime calculation.
“What this does is it makes it possible for employers who have salaried non-exempt employees to pay other types of compensation too — without worrying that in paying that bonus or other type of compensation they’re going to screw up their overtime calculation,” DeCamp says.
But DeCamp warns that employers should not confuse this regulation with the overtime rule that the DOL finalized in September, which raised the minimum salary threshold for overtime eligibility to $35,568 per year.
“These two regulations are not interlocking. They don’t really deal with the same subject,” he says. “They’re both talking about very different employee groups.”
SOURCE: Hroncich, C. (6 November 2019) "DOL’s new fluctuating workweek rule may pave road for worker bonuses" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/dols-fluctuating-workweek-rule-helps-with-worker-bonuses
IRS increases retirement contributions for 2020
Recently, the Internal Revenue Service (IRS) announced that workers contributing to 401(k), 403(b), 457 and the federal government’s Thrift Savings Plans will be able to add up to $19,500 in 2020. Read this blog post to learn more about this increase in retirement contributions.
The IRS said this week that workers contributing to 401(k), 403(b), 457 and the federal government’s Thrift Savings Plans plans can add $19,500 next year, an increase from $19,000 in 2019.
The move could help workers save more for retirement, but it may be inconvenient for employers who’ve already started open enrollment, experts say. Employees are now able to set aside $500 more for retirement.
“Every penny counts when you’re saving for retirement, and the higher contribution limit is definitely going to help,” says Jacob Mattinson, partner at McDermott, Will & Emery, a Chicago-based law firm. “But since companies are in the midst of open enrollment, employers may have to go back in and change the entries for employees who want to contribute the max.”
There are about 27.1 million 401(k) plan participants using roughly 110,794 employer-sponsored 401(k) plans, the Employee Benefit Research Institute says. Ninety-three percent of employers offer a 401(k) plan, and around 74% of companies match workers’ contributions, according to data from the Society for Human Resource Management.
While the vast majority of employers do offer retirement savings plans, employees may still be struggling to sock away money. Around 70% of workers say debt has negatively impacted their ability to save for retirement, EBRI says.
“Thirty-two percent of workers with a major debt problem are not at all confident about their prospects for a financially secure retirement, compared with 5% of workers without a debt problem,” says Craig Copeland, EBRI senior research associate.
The IRS also upped contribution limits on Savings Incentive Match Plan for Employees plans, or SIMPLE retirement accounts, to $13,500 from $13,000. The agency did not change the contribution limits to IRAs, which remain at $6,000 annually.
SOURCE: Hroncich, C. (7 November 2019) "IRS increases retirement contributions for 2020" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/irs-increases-retirement-contributions-for-2020
A benefits wishlist for millennial employees
Did you know: 63 percent of millennials would struggle to cover an unexpected expense of $500. With millennials becoming the new core of today's workforce, many employers are tailoring their job postings, descriptions and benefits to correspond with the millennial wish list. Read the following article to learn more.
Millennials are the new core workforce. Their concept of work is different than the standards set by previous generations. They bring bold, new approaches of what work should be, how and where it should be performed, and what the rewards for work should be.
While this has made some employers uncomfortable, millennials are not likely to change their ways. Employers must reassess their concepts to bring out the best of the unique millennial personality.
When I look at the U.S. workforce, I see a dramatic shift in the attitudes, personalities and attributes of millennials, which makes up the majority of the workforce. Millennials bring many positive attributes to the table, including a preference for flat management structures, multiple degrees, technological skills, energy and self-confidence. They also have high expectations for themselves, prefer to work in teams, are able to multitask and seek out challenges.
However, millennials have the highest levels of stress and depression of any generation. About 20% of millennial workers have suffered work-related depression. Millennials want their own living space, but they’re less likely to become homeowners because of student loan debt. Only 6% of millennials feel they're making enough to cover basic needs, according to an Economic Innovation Group national survey of millennials. As a result, 63% of millennials would struggle to cover an unexpected $500 expense. This generation wants to live within their means, but they’ve never been taught how — they need and want to be educated on how to achieve financial independence.
Think about your corporate strategy for attracting millennials. Here are just a few of the ways companies are tailoring their job postings, descriptions and benefits to correspond with the millennial wish list.
Working with meaning. Millennials want to have meaning in their work. Past generations may have worked simply because they needed to pay the bills. Millennials want to get paid too, but they also want to know that their employer is doing more than making and selling products or services. They aspire to social causes and want to know why the organization exists and how they can personally participate and contribute in that culture.
Continued personal growth and career advancement. Millennials want to be coached and have work-life balance. They want management feedback, even if it’s negative. Regular pay increases and promotions are important to them too. It shows that you’re invested in their career path and value their contributions.
Flexible hours and the ability to work remotely. They want flexible hours and the option to work from a location of their choice. This flexibility also contributes to their desire for no added workplace stress. Technology has made it possible to connect 24/7 from anywhere on any device. If you have yet to adapt your culture to accept this new norm, you’ll likely be missing out on this generation of candidates.
Technology. Millennials are smart-device people. Who better to move your organization forward than the individuals who grew up knowing how to download and use an app, or create a widget that solves a problem? They think technology-first and is required for any organization looking to remain competitive.
Financial wellness. A robust financial wellness program that includes self-directed education, competitions, games and rewards will pique millennial interest. Products and services like financial coaching, cashflow tracking, early wage access and credit resources that address their financial challenges will keep them engaged. Above all, a financial wellness program must be tailored to each individual employee to achieve maximum participation and behavioral change.
Employers must be vigilant in order to keep the best and brightest talent. They should also be proactive in managing their employees on a personal level, especially millennials. Otherwise, they are likely to be disengaged and move on — and that will cost money.
As managers and leaders of the organization, it is your responsibility to ensure that millennials understand their future in the company and to communicate that they don’t have to go somewhere else to advance. Employers and leaders have a responsibility to provide millennials with a desirable place to land, and a culture that encourages them to thrive. Don’t give millennials reasons to leave your organization. We need to support them, engage them, reward them and give them reasons to stay.
SOURCE: Kilby, D. (6 November 2019) "A benefits wishlist for millennial employees" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/what-employee-benefits-do-millennials-want
Subway’s new program helps workers get degrees
What voluntary benefits does your organization offer? Subway is now offering a program that gives workers access to career readiness and high school diploma programs. Read the following blog post to learn more about this new benefit.
Subway is making it easier for employees to get high school and college degrees.
The sandwich franchise is launching a new education benefit for employees in 331 restaurants in central Florida. The program, which began piloting last month, gives workers access to a career readiness and high school diploma program.
“I think something like this really does bring value and improves the lives of [our] employees,” says Michael Robling, an operations specialist at Subway for North America.
Subway’s program includes a career readiness boot camp and high school degree program offered through Penn Foster. Robling says the company has partnerships with several universities to help employees get college degrees at a discount. The company also offers scholarships for employees through the Frederick A. DeLuca Foundation, a private foundation created by one of Subway's co-founders.
“This is definitely just a start,” Robling says.
This move comes after Mexican-inspired restaurant chain Chipotle began offering free college degrees to its 80,000 employees from 75 business and technology degree programs. Employees at Chipotle can earn their associates or bachelor degrees online from the University of Arizona, Bellevue University, Brandman University, Southern New Hampshire University and Wilmington University.
More than half of employers offer a tuition assistance benefit to employees, according to data from the Society for Human Resource Management. Indeed, companies including Disney, Walmart and Discover, Chick-fil-A, Hulu, Lowe’s, McDonald’s and Taco Bell all also announced education benefits last year.
Robling says he thinks more employers will begin to invest in benefits that help workers achieve higher education goals. Employees at Subway are appreciative of the opportunity and it may help the company retain workers long-term, he adds.
“If the franchise owner is looking out for me, I’m going to be happier at work,” he says. “That’s one of the big positives of this program.”
SOURCE: Hroncich, C. (11 November 2019) "Subway’s new program helps workers get degrees" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/education-assistance-for-college-and-high-school-diplomas
What will Workplace Wellness Look Like in 2020?
What will 2020 have in store of workplace wellness? Currently, all indicators are pointing toward a rapid evolution of the workplace wellness industry. Read this blog post to learn more about what wellness will look like in 2020.
As we look toward 2020, all indicators point towards a rapid evolution of the U.S. workplace wellness industry characterized by innovative solutions for managing health care costs that serve the increasing need for proactive ownership of well-being. However, are advances in related disciplines being leveraged optimally, cohesively and creatively to provide for maximum benefit to both the employee and employer?
The corporate model of wellness programs ranges from education programs, to a more evolved model of on-site fitness facilities, incentive programs and HR driven wellness initiatives as part of an overall health and benefits offering. The 2014 SHRM Survey of Strategic Benefits - Wellness Initiatives shows that 76 percent of all surveyed companies had some form of wellness programs/resources. Among those companies two-thirds offered some form of incentive or reward program.
The results of these types of programs have already demonstrated the positive impact of a collaborative responsibility partnership between employer and employee in implementing a wellness approach and the reduction of medical costs.
Several key performance indicators have been used for evaluation, including reductions in monthly medical cost spend, hospital admissions and employee absenteeism. According to SHRM, of the 30 percent who conducted a cost analysis of their wellness programs, 93 percent noted their programs were somewhat or very effective in cutting costs.
This certainly demonstrates a return on investment (ROI) to the employer. In addition, the positive qualitative effect on the organizational culture cannot be understated, with direct impact on talent and team spirit as well as other variables that are incremental to the quantitative benefits measured.
This is particularly important given that variables such as an increasingly aging workforce (by 2020, the number of Americans in the 55 to 64 age group will have grown by 73 percent since 2000), an increase in predominant disease states (by 2030, 40.5 percent of the US population is expected to have some form of cardiovascular disease) and rapidly changing regulations added to the equation, employers are evaluating best and "next" practices to determine if these programs are truly optimized to realize their full potential of impact.
For the next iteration of workplace wellness, the lessons learned can be leveraged from the evolution of the traditional health benefit offering to a health exchange model or to the advances and learnings in personalized therapeutic medicine. The current opportunity requires a creative and innovative approach to health and wellness ownership. Coupling a predictive, proactive and fact-based wellness management approach with employee-owned and led wellness decisions can provide a powerful and personalized platform.
By maintaining this initiative in a structured and sustainable manner, employers are able to provide a more targeted approach of spending proactive wellness dollars for maximum ROI and decreasing the reactive spend on medical costs.
These personalized programs will enable companies to better track and monitor costs and ROI with the goal to have more than 30 percent of the companies properly monitoring cost efficiencies. This is further supported by the fact that 90 percent said they would increase their investment in wellness programs if they could quantify the ROI.
Targeted Wellness
Traditional medical treatment has evolved significantly from standard diagnostic evaluations to increased utilization of scientific advances, specifically in terms of personalized medicine. Medical decisions and treatments are tailored to an individual patient through a data-based approach to drive the efficiency and effectiveness of patient treatment.
Similarly, there is an opportunity for the employee - within the framework of privacy regulations - to leverage this fact-based approach to optimize the value derived from a wellness offering. Two-thirds of employers involved in wellness initiatives typically provide some type of defined contribution or incentive towards wellness (e.g., fitness rebate); however, an opportunity exists to focus this spend on the desired health outcomes. This would provide the maximum benefit to the employee from a well-being standpoint, as well as to the employer for its investment.
While the powerful combination of data analytics and segmentation analysis allows a human resources team to facilitate a fact-based decision-making approach to right-fit an organization with the right individual in the right role at the right time, an organization can effectively manage the time and money dedicated to workplace wellness by creating a tailored program based on the individual employee's current needs and critical influencing factors.
Wellness Exchanges
Employers have made the journey from self-funded managed health care to the growing trend of providing employees with a "shopping mall" of health insurance options, and on to formal health exchanges - gradually increasing the patient-centric involvement of employees in managing their own health care choices.
The value drivers for this organizational transition include increased price competition based on the marketplace model as well as cost savings influenced by employers not overbuying health care coverage for their employees. This is exemplified by the vast majority of participants switching to cheaper plans in their first year of choice coverage.
This undertaking by an organization is by no means a small effort, and it requires a good amount of diligence and change management - not only in creating the road map for the transformation journey, but also in properly structuring, executing and sustaining this approach. In a well-planned and structured implementation journey, the return on investment can be well recognized.
Similarly, a workplace wellness exchange can offer a suite of proactive health program choices designed to give the employee the responsibility to make an informed and impactful decision that is tailored to drive specific health outcomes.
A marketplace approach can also drive competitive offerings from wellness solution providers and encourage a spirit of innovative and cost-conscious platform options - further maximizing use of wellness dollars. This model will encourage individuals to leverage their own personal health ecosystem information (e.g., current state baseline, lifestyle, environmental factors and disease state predisposition) to choose a solution that may help reduce reactive health care dollars spent based on disease state prevention and risk factor reduction.
According to SHRM, year-over-year employee participation has remained flat. An innovative and personalized approach could help motivate and boost participation and would also continue to ensure that the individual employee's wellness responsibility is shared in partnership with the employer. This would require an independent review of the process, structure and plan design, specifically as it relates to patient privacy and the impact to the holistic benefits offering.
Regardless of a company's ability to track ROI, an overwhelming majority (72 percent) think their wellness initiatives are very or somewhat effective in reducing health care costs and 78 percent thought they improved the overall physical health of their employees.
As the impact of reactive medical claim costs on employers continues to increase due to a variety of influencers, proactive workplace wellness will likely evolve and become an inherent component of an organization's benefits offering.
This presents an opportunity to leverage recent learnings from other initiatives in the life sciences vertical to create an effective and efficient workplace wellness platform that is data-driven and tailored to the needs of the employee - providing a marketplace for choice and competition, and reinforcing the shared partnership responsibility between the employer and employee.
SOURCE: Pervaaz, V. (Accessed 01 November 2019) "What will Workplace Wellness Look Like in 2020?" (Web Blog Post). Retrieved from https://www.corporatewellnessmagazine.com/article/workplace-wellness-in-2020
IRS updates rules on retirement plan hardship distributions
Recently, the Internal Revenue Service (IRS) finalized updates to the hardship distribution regulations. These new regulations make the requirements more flexible and participant friendly. Read this blog post to learn more about these updated regulations.
Employers who allow for hardship distributions from their 401(k) or 403(b) plans should be aware that the Internal Revenue Service recently finalized updates to the hardship distribution regulations to reflect legislative changes. The new rules make the hardship distribution requirements more flexible and participant-friendly.
Hardship distributions are in-service distributions from 401(k) or 403(b) plans that are available only to participants with an immediate and heavy financial need. Plans are not required to offer hardship distributions. But there are certain requirements if a plan does offer hardship distributions. Generally, a hardship distribution may be made to a participant only if the participant has an immediate and heavy financial need, and the distribution is necessary and not in excess of the amount needed (plus related taxes or penalties) to satisfy that financial need.
An administrator of a 401(k) or 403(b) plan can determine whether a participant satisfies these requirements based on all of the facts and circumstances, or the administrator may rely on certain tests that the IRS has established, called safe harbors.
Over the last fifteen years, Congress has changed the laws that apply to hardship distributions. The new rules align existing IRS regulations with Congress’s legislative changes. Some of the changes are mandatory and some are optional. The new rules make the following changes. The following changes are required.
Elimination of six-month suspension.
Employers may no longer impose a six-month suspension of employee elective deferrals following the receipt of a hardship distribution.
Required certification of financial need.
Employers must now require participants to certify in writing or by other electronic means that they do not have sufficient cash or liquid assets reasonably available, in order to satisfy the financial need and qualify for a hardship distribution.
There were also some optional changes made to hardship distributions.
Removal of the requirement to take a plan loan.
Employers have the option, but are not mandated, to eliminate the requirement that participants take a plan loan before qualifying for a hardship distribution. In order to qualify for a hardship distribution, participants are still required to first take all available distributions from all of the employer’s tax-qualified and nonqualified deferred compensation plans to satisfy the participant’s immediate and heavy financial need. The optional elimination of the plan loan requirement may first apply beginning January 1, 2019.
Expanded safe harbor expenses to qualify for hardship.
The new hardship distribution regulations expand the existing list of pre-approved expenses that are deemed to be an immediate and heavy financial need. Prior to the new regulations, the list included the following expenses:
- Expenses for deductible medical care under Section 213(d) of the Internal Revenue Code;
- Costs related to the purchase of a principal residence;
- Payment of tuition and related expenses for a spouse, child, or dependent;
- Payment of amounts to prevent eviction or foreclosure related to the participant’s principal residence;
- Payments for burial or funeral expenses for a spouse, child, or dependent; and
- Expenses for repair of damage to a principal residence that would qualify for a casualty loss deduction under Section 165 of the Internal Revenue Code.
The new regulations expand this list of permissible expenses by adding a participant’s primary beneficiary under the plan as a person for whom medical, tuition and burial expenses can be incurred. The new regulations also clarify that the immediate and heavy financial need for principal residence repair and casualty loss expenses is not affected by recent changes to Section 165 of the Internal Revenue Code, which allows for a deduction of such expenses only if the principal residence is located in a federally declared disaster zone. Finally, the new regulations add an additional permissible financial need to the list above for expenses incurred due to federally declared disasters.
New contribution sources for hardships.
The law and regulations provide that employers may now elect to allow participants to obtain hardship distributions from safe harbor contributions that employers use to satisfy nondiscrimination requirements, qualified nonelective elective contributions (QNECS), qualified matching contributions (QMACs) and earnings on elective deferral contributions. However, 403(b) plans are not permitted to make hardship distributions from earnings on elective deferrals, and QNECS and QMACs are distributable as hardship distributions only from 403(b) plans not held in a custodial account.
As this list indicates, the new regulations make substantial changes to the hardship distribution rules.
The deadline for adopting this amendment depends on the type of plan the employer maintains and when the employer elects to apply the changes. Plan sponsors should work with their document providers and legal counsel to determine the specific deadlines for making amendments.
SOURCE: Tavares, L. (01 November 2019) "IRS updates rules on retirement plan hardship distributions" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/irs-updates-rules-on-401k-403b-plan-hardship-distributions