Retirement income calculators: What to know about their projections
Nick Thornton outlines how retirement income calculator are not all the same. Do you have the guidance of a trusted expert?
Original Post from BenefitsPro.com on June 24, 2016
Not all retirement income projection tools are the same.
In fact, the modeling tools, which are becoming default features on recordkeeping and retail advisory platforms, generate wildly varying interpretations of how retirement savings will translate into income when the golden years arrive.
A new study from Corporate Insight, a provider of research and analytics to the financial services industry, surveyed 12 income-modeling tools — six from recordkeepers’ platforms, and six from retail advisory providers.
What the company found could call into question the value of some modeling tools in their existing form.
For retirement needs analysis, the Consumer Price Index isn't enough.
Analysts at Corporate Insight created a hypothetical saver profile: A single, 40-year old male New York resident who makes $100,000 a year and defers 10 percent of his income to a defined contribution plan, which has a balance of $100,000. His employer match is 3 percent. His 401(k) is allocated to suit his moderate level of risk tolerance, and he anticipates drawing a $1,500 a month Social Security benefit upon retiring at age 67.
Those factors, and others, were in put into the calculators, with a goal to replace 85 percent of income in retirement.
What came out was a variance in projections that amounted to nearly $30,000 in annual income, in the case of the greatest discrepancy.
$6,013 a month vs. $3,772 a month
MassMutual’s Retirement Planner tool, which is part of its recordkeeping platform, projected Corporate Insight’s hypothetical saver’s monthly income at $6,013. TIAA’s Retirement Advisor tool, a part of its recordkeeping platform, estimated the same input data to generate $3,772 a month.
The average monthly projection for the 12 modeling tools was $4,792.
No two calculators generated the same projected income.
But the Principal’s Retirement Wellness Planner, Prudential’s Retirement Income Calculator, and WealthMSI’s Retirement Planner 1, the tool of the plan rollover specialist that was acquired by DST in 2015, projected incomes within $88 of one another.
Gap analysis component
Nine of the 12 analyzed tools feature a “gap analysis” component, which compares current retirement income projections to a predetermined income replacement goal.
That analysis — measuring how an investor’s savings tendencies measure against the set goal — provides valuable context to income projection modeling, say Corporate Insight’s analysts, “and should be incorporated into the results of all retirement planning tools,” according to the report. MassMutual, the CalcXML 401(k) income calculator, and Capital One’s Retire My Way tool do not offer the gap analysis.
The nine tools that do offer gap analysis base their conclusions on vastly different income replacement rate goals.
For instance, Principal’s tool sets a monthly income replacement goal of about $9,000 for Corporate Insight’s hypothetical saver, the highest among the tools. TIAA set the lowest monthly income replacement rate goal, at about $4,900. The average income goal is set at about $6,600.
6 reasons for variation in the projection models
Corporate Insight identified six factors that led to the wide variation in modeling projections: taxes, inflation rates, salary growth, Social Security benefits, investment returns, and age —including expected retirement age and life expectancy assumptions.
Among those variables, assumptions on investment returns were the greatest reason for the wide discrepancy in projections, according to Corporate Insight.
Some of the calculators only permit one investment return assumption, meaning income projections don’t account for lower returns on less risky portfolio allocations after retirement.
Capital One assumes a pre- and post-retirement return of 7.35 percent for investors that select a “moderate” asset allocation strategy. Its tool projects the third highest monthly income at roughly $5,500, despite the fact it does not account for Social Security income or increased salary deferrals as income grows throughout a saver’s career.
Principal’s tool assumes a life expectancy of 92 years, and a 7 percent pre and post-retirement investment return.
The Merrill Lynch and WealthMSI tools apply more modest post-retirement return expectations, at 4.7 percent and 4 percent, respectively.
Part of the explanation behind MassMutual’s highest income projection is that the tool provides a non-adjustable Social Security benefit estimator, which offered a high benefit relative to Corporate Insight’s hypothetical saver’s earnings history, the analysts said.
Betterment and TIAA’s projection tools offer the lowest incomes at $3,791 and $3,772, respectively, largely because they are the only among the surveyed calculators to account for taxes and estimate projections in post-tax amounts, Corporate Insight’s report said.
Takeaways for sponsors and participants
While becoming a common feature, income replacement projection tools are still a relatively novel concept, and are likely to evolve as utilization increases.
Drew Way, senior retirement analyst at Corporate Insight and lead author of the study, said the data suggests sponsors and participants need to regard the tools as more of a guide than an exact predictor of retirement income.
“The biggest takeaway from this study is that individuals using retirement planning calculators need to be mindful that the underlying assumptions the tools employ can have a profound impact on both the results and the goal recommendations,” Way told BenefitsPro in an email.
"It's important, then, to at least know the assumptions a tool is using and to understand that it’s not meant to provide a 100 percent accurate analysis of an individual's level of retirement readiness,” he added. "Instead, the tools are meant to give users an approximation of where they stand with regard to achieving their retirement goals, and to equip them with the knowledge to then make appropriate actions to help them achieve those goals.”
Ready the full article at: https://www.benefitspro.com/2016/06/24/retirement-income-calculators-what-to-know-about-t?ref=mostpopular&page_all=1
Source:
Thornton, N. (2016, June 24). Retirement income calculators: What to know about their projections [Web log post]. Retrieved from https://www.benefitspro.com/2016/06/24/retirement-income-calculators-what-to-know-about-t?ref=mostpopular&page_all=1
Is your culture keeping up with your growth?
Found a great read on the shift in culture within organizations by Ranjit Jose.
Original Post from SHRM.org on July 5, 2016
The other day, I grabbed coffee and caught up with a friend who is Founder & CEO of a fast growing startup here in San Francisco. The last time we had spoken, his company had around twenty employees. But over the last year, they have been growing at a torrid pace and are now at more than a hundred employees. While this has been an amazing ride for him, the growth has come with its own special brand of challenges. And according to him, the top one has been the question of how to maintain the great culture they have built through the tough first few years of the company.
His story reflects one of the key challenges most growing companies face: ensuring that the original corporate culture develops at the same speed as the business. Corporate culture is defined as “the beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions.” A corporation’s ideologies and actions are not explicit but rather become clear over time.
At young companies like my friend’s, the founders and early employees are the ones that create the culture and company values. As long as the company is small, it is very easy to ensure that the culture is well sustained. However, as soon as the company starts expanding, and as new employees start filling the ranks, most businesses witness a dissipation of the workplace methods and beliefs previously practiced if the culture is not intentionally managed.
Here are a few chief signs that your flourishing company’s culture is in danger.
Lack of openness
As a company expands, it becomes challenging for the employers to keep in continuous and thorough contact with their employees. It is far easier to get feedback from a small team; when newer employees expand these original teams, the culture of open communication and direct feedback begins to dissolve.
This is often in part due to the previous workers’ unfamiliarity with the newly hired staff. Dr. Keith Denton, from Missouri State University, explains that when this lack of confidence exists, employees “are more likely to be evasive, competitive, devious, defensive or uncertain in their actions with one another."
With the absence of openness between team members, the initial trust that is developed at the foundation of a startup slowly dissipates. Make sure that you have mechanisms and tools in place to ensure that a thriving open environment is maintained.
Isolated Employees
Your employees should all be working together for the common goals of the company. Employees can reach common goals through department collaboration, regular team and general discussions, socializing, and consistent motivation.
When a company expands, contact between employees from different departments start becoming less frequent, and workers may feel as though their opinions and feedback are not heard. The Catalyst Research Center for Advancing Leader Effectiveness surveyed 1,500 people from six different countries and discovered that workers feel important when they “ feel that they both belong…[and] are unique.” Understandably, when the number of workers grows, employees may witness a decrease in attention and feel as though their opinions are drowned in the monotone of their many colleagues.
When this happens, they do not feel like a valued team member and may begin to isolate themselves to just get their job done. To prevent this, ensure that you have structures in place to encourage and promote interaction between employees across departments and seniority levels.
Cliques
Another sign that your corporation’s culture is not growing at the same speed as your workforce is the formation of cliques. Cliques form when employers are not in touch with all employees; workers with similar beliefs and behaviors begin to group together instead of maintaining the corporation's previously overarching culture.
David Parnell, for instance, a communication coach, legal recruiter, and author of In-House explains that forming groups is innately human: “minimal group paradigm studies have shown us to form groups within minutes in a novel situation, and if there are no salient reasons for doing so, groups will even form based on irrelevant criteria such as shirt colors.” To illustrate this, one CareerBuilder survey found that 43% of surveyed employees admitted to having a “work clique.”
More often than not, these subdivisions start with staff who have previously worked together. When the new staff enter the workplace, due to the differences in experience, familiarity, and opinions, the workforce divides further into varying groups, and a uniform employee culture begins to break down.
To ensure that the overall corporate culture is not compromised by the beliefs and actions of smaller groups, it is important that companies have methods of hearing from both experienced and newer employees so that a uniform intra-corporate culture is better circulated.
How to strengthen company culture alongside growth
A big part of safe-guarding your culture is ensuring your people are engaged across the whole organization. And in order to keep employees engaged, growing corporations must first strengthen their internal communications by giving their workforce a channel to consistently give their opinions and feedback. If employees know that their input is heard and respected by their company, they will invest more into the relationships with their co-workers. They will also feel heard and valued engendering a deeper connection with the organization, resulting in higher loyalty and retention.
Once you have opened up the ability to conveniently hear back from employees, it is important to track problems that arise, monitor engagement, and respond to any issues in a timely and strategic way. This will not only continuously improve your company, but show employees that their participation and feedback really matters, because it truly does!
All of this eventually serve to ensure that as you grow, your newer employees feel valued and as much a part of the team as the founding members. Recognizing any sense of disconnect with your people and acting to re-engage employees can ensure that, even as you grow, your culture grows with you.
Read the original article here: https://blog.shrm.org/blog/is-your-culture-keeping-up-with-your-growth
Source:
Jose, R (2016, July 5). Is your culture keeping up with your growth? [Web log post]. Retrieved from https://blog.shrm.org/blog/is-your-culture-keeping-up-with-your-growth
5 adjectives you want to hear job candidates say
Christian Schappel gives some great tips on hiring the right person for your company.
Original Post from HRMorning.com on June 22, 2016
It’s difficult to tell what kind of person someone is just by their resume. Heck, it can even be difficult to tell when face to face with the person. But there are some approaches that will do the trick.
Obviously, you want a hire who’s self-motivated, honest and trustworthy — in addition to having the background you’re looking for, of course.
While candidates will likely tell you they’re all those things if asked, it’s also likely they’re doing so because they know that’s what you want to hear (whether it’s true or not).
As a result, Dave Porter, managing partner at Baystate Financial in Boston, a company that holds its recruiters and managers accountable for the results of those they bring on board, says companies should ask candidates to describe their character.
Five words Porter says you want to hear candidates say that indicate they’re made of the right stuff:
- Honest
- Respectful
- Punctual
- Curious, and
- Accountable.
Whether or not you hear adjectives like these will tell you “how much the candidate cares about others and about doing the right thing,” Porter says in his book Where Winners Live: Sell More, Earn More, Achieve More Through Personal Accountability.
‘When nobody was looking’
Porter has another suggestion as well. Ask candidates this question: When in your life have you made a decision that you’re proud of — when nobody was looking?
If candidates take a while to answer, they’re likely not good fits for Baystate Financial. Porter says, candidates with integrity should have little trouble recalling situations — and the decisions they made in them — that reveal their true character.
In his book, Porter said one candidate, Leonard, told a story about finding a camera in the back seat of a Boston taxi. When the driver told Leonard he was going to keep the camera, Leonard refused to give it to the driver and instead took it to the taxi company’s lost and found. Leonard got the job.
Those are the kinds of stories you want to hear — along with adjectives like those described above.
Bad indicators
What you don’t want to hear, Porter says, are indicators the candidate has what he describes as an “all-about-me” attitude.
Some of those indicators could be dropping adjectives like:
- Carefree
- Fun
- Laid back.
However, describing themselves in those ways aren’t necessarily deal breakers. Those qualities can actually be good things, Porter says, when balanced out by professional attributes. But finding out whether that’s the case requires deeper probing.
Read the original article here: https://www.hrmorning.com/5-adjectives-you-want-to-hear-job-candidates-say/
Source:
Schappel, C. (2016, June 22). 5 adjectives you want to hear job candidates say [Web log post]. Retrieved from https://www.hrmorning.com/5-adjectives-you-want-to-hear-job-candidates-say/
3 keys to creating an employee-centric wellness plan
Interesting read by Rae Shanahan highlighting how technology can be incorporated into your wellness plan. See the full article below.
Original Post from BenefitsPro.com on July 14, 2016
As smartphones become more entrenched in our daily lives, the wellness technology industry has exploded to more than $8 billion, driven largely by wearable devices and more than 160,000 wellness-relatedmobile apps.
Employers are capitalizing on the tech advances, making workplace wellness programs more digital, social, and connected.
Particularly as more mobile-focused millennials enter the workforce, companies are expanding web-based competitions and incentives for getting physically healthy.
Programs that allow employees to track FitBit data and awarding prizes for workers with the highest monthly step totals are becoming much more common. Even savvier companies are tying wellness to their overall benefits offerings, offering employees the chance to compete for an extra vacation day by reducing their body fat percentage.
While these incentivized programs are developed with the best of intentions to encourage employees toward better health habits, the unintended consequence is backlash from employees who are wary of revealing personal health data — especially on the internet.
Also, those employees who find themselves at the bottom of the online leaderboard may feel discouraged and demoralized, the opposite of an employer’s objective. Moreover, there is a concern that incentivized wellness programs tend to penalize those who don’t participate or are less successful.
Obviously, employers don’t want to disregard employees who don’t feel comfortable sharing sensitive health information. If employees don’t feel comfortable sharing these personal details with their employer, they should still have the opportunity to chase the incentives, and ultimately benefit from the wellness program.
Keeping all employees in mind, there are three keys to creating successful, employee-centric wellness programs that increase engagement while respecting privacy concerns.
Survey
A simple but effective first step is to survey employees on their thoughts and concerns around wellness programs. Providing employees a platform to voice their opinions allows employees to feel heard and for employers to empathize with their workforce while developing wellness programs. This step conveys the care and effort behind creating employee-centric programs that give everyone the opportunity to participate.
Accommodate
According to Businessolver’s Workplace Empathy Monitor, 1 in 3 employees would switch companies for equal pay if the other employer was more empathetic. The research reveals that embedding empathy in the workplace operations, such as wellness programs, is a key factor aspect of building trust and loyalty with employees.
At the end of the day, workplace wellness programs are designed to encourage a healthy lifestyle — not win points or prizes — and it’s important to keep that end goal in mind.
For example, rather than a competition to lower employee body weight or BMI, employers can instead offer employees a free yoga class once a week. This allows employees to participate in a healthy activity while connecting with colleagues, without having to worry about revealing personal and private information.
Being flexible with wellness programs is an empathetic behavior that broadens the circle of those wanting to participate, maintains the end goal of improving health, and ultimately benefits a company in recruiting and retention.
Communicate
Of course, the most fun, effective, and empathetic program does no good if employees don’t know about it and aren’t engaged.
So, the most beneficial step employers can take in creating a wellness program is effectively communicating with all employees that the program is open, what is necessary to participate, and keeping feedback channels open.
Make sure employees are completely briefed — maybe develop and share one-pagers for employees to quickly reference. Also, it’s imperative to provide an onsite contact who can be a champion for the program and answer any employee questions or concerns. With this, trust is built between employers and employees, and a wellness program has a stronger chance of succeeding right from the start.
Read original article here: https://www.benefitspro.com/2016/07/14/3-keys-to-creating-an-employee-centric-wellness-pl?ref=hp-in-depth&page_all=1
Source:
Shanahan, R. (2016, July 14). 3 keys to creating an employee-centric wellness plan [Web log post]. Retrieved from https://www.benefitspro.com/2016/07/14/3-keys-to-creating-an-employee-centric-wellness-pl?ref=hp-in-depth&page_all=1
5 rules for engaging millennials in wellness
As wellness programs become increasingly popular, it is important to understand how to get your employees engaged. Dr. Rajiv Kumar lends 6 tips to engaging millennials in your wellness program in the article below.
Original Post from BenefitsPro.com on June 27, 2016
These days, you can’t pick up a newspaper or turn on the TV without hearing a new indictment of millennials.
You know the stereotype: this newest generation of employees is selfish, narcissistic, entitled, and impatient.
I understand where this portrayal comes from — no one admires the guy with the selfie stick — but it’s an inaccurate generalization of my generation.
In fact, a growing body of data has revealed that the millennial generation is more altruistic, socially engaged, and health-minded than our predecessors, making us perfect consumers for employee well-being programs.
The trick is to speak the language of millennials, and as a millennial myself, I’ve got some advice to share.
Here are my five rules for engaging millennial employees in employee well-being programs.
Rule 1: Be legit.
The key to earning the trust of millennial employees is authenticity. Mine is a generation that has grown up with the internet, and thus has a very keen eye for public relations spin, marketing jargon, and advertising. Millennials have grown up truly surrounded by marketing, and they’re a bit immune.
Research has shown authenticity is of utmost value to millennials. 70 percent of millennials will stay loyal to a brand that has earned their trust. And 75 percent view themselves as authentic, meaning that being legit is the truest way to earn that trust.
When you’re considering your well-being benefits, create a brand that resonates and accurately represents your workforce. Use images of real people instead of photo-shopped models. Offer programs that allow people to set their own goals, rather than impose parameters and benchmarks.
Avoid jargon and long detailed benefits explanations. Instead, be straightforward. You’ll telegraph authenticity and your employees will connect with your brand.
Rule 2: Cut to the chase.
The millennial preference for all things direct and convenient is unsurprising given our obsession with authenticity. A marketplace devoid of middle men, where consumers are empowered to make their own informed decisions, is a millennial touchstone. Some of the country’s most impressive consumer companies have tapped into this preference. Consider Uber, Roku, and Airbnb.
The attributes that define the millennial marketplace — speed, convenience, transparency — are the ones that will also shape the future of well-being benefits.
45 percent of millennials say they’re more likely to participate in health and wellness programs if they’re easy or convenient to do. This means that we need to make enrolling in well-being programs straightforward and easy if we’re going to attract the next generation.
Seek out vendors that offer Single Sign On (SSO) integrations to relieve your employees of additional accounts, usernames, and passwords. When possible, offer programs that are flexible — that employees can tackle in their own time, on their own schedule.
This flexibility means programs can easily be accommodated and adopted within an existing or preferred schedule, and your engagement rates will climb.
Rule 3: There’s gotta be an app for that.
An appropriate motto for the millennial generation is “all mobile, all the time.” It may astonish older generations to hear that even a PC is passé to a millennial. Instead, we rely on our phones, tablets, and even our watches for all of the information we need.
Wellness and benefits cannot expect to be an exception to this rule. To remain relevant to millennials, you must allow them to enroll, participate, and access resources from their phone. This is absolutely critical, as millennials have little tolerance for anything else.
The good news is the industry is catching up to these preferences. Many well-being vendors have native apps that employees can download and access through their phones and smartwatches.
When selecting your wellbeing program, find a vendor that is committed to mobile innovation — this trend is advancing rapidly, and you’re going to want a partner that keeps up with the swift pace of mobile invention.
Rule 4: Sharing is caring.
For a generation that is constantly in touch, frequently checking in online, and publicly voicing our opinions, sharing is an important part of millennial life — professional and otherwise. Contrary to the stereotypes, this tendency to “overshare” isn’t just about self-involvement or grandstanding. In fact, sharing opinions, publicly voicing feedback, and reaching out to others serve an important purpose.
More than any other generational cohort, millennials rely on our friends, family, and peers for recommendations and suggestions. This is particularly true in the consumer arena — consider sites like Yelp and Amazon — but it has important implications for well-being benefits as well.
If you’re able to get an enthusiastic group of early adopters to enroll in your benefits program, you’ll likely enjoy a successful ripple effect with millennials. That’s because word-of-mouth is the most effective form of marketing for my generation. This ties back directly to our obsession with authenticity — we trust the recommendations and views of our friends and peers more than the promotional efforts of a corporate department.
When you’re implementing a well-being program, devote time and resources to building a champions network that will get the word out, share updates, and encourage others to join.
This will attract hard-to-engage populations and keep them invested throughout the program duration. Find a well-being vendor that has experience creating champion networks and your program will benefit immensely.
Rule 5: Offer well-being, not wellness.
Unlike previous generations who have used traditional milestones to measure success — climbing the corporate ladder, getting married, buying a house — millennials aspire towards balance, in life and in work. In fact, 97 percent of millennials named happiness as a primary interest. It’s nearly unanimous.
This focus on balance extends to the way millennials conceptualize health, which is much more focused on well-being than previous generations. 72 percent of millennials say they exercise once a week or more, and 95 percent say they care deeply about their health.
For wellness benefits to be relevant to millennials they can’t merely focus on the physical realm of health — clearly, millennials are already on that bandwagon.
Instead, they’ll be drawn to a range of programs that address other ways to find balance and achieve happiness. For example, financial wellness is of great interest to a generation that’s shouldering record levels of debt. My generation would also benefit greatly from emotional resiliency programs, since we are incredibly stressed.
To engage millennials in wellness, you have to extend the definition to embrace holistic wellbeing, incorporating programs that address the multiple factors that contribute to work/life balance, including mental, social, and emotional variables. Companies that adopt this millennial view of well-being will be much more successful in attracting, retaining, and engaging the most powerful generation in the workforce today.
Read the full article at: https://www.benefitspro.com/2016/06/27/5-rules-for-engaging-millennials-in-wellness?ref=hp-blogs&page_all=1
Source:
Kumar, R. (2016, June 27). 5 rules for engaging millennials in wellness [Web log post]. Retrieved from https://www.benefitspro.com/2016/06/27/5-rules-for-engaging-millennials-in-wellness?ref=hp-blogs&page_all=1
5 Top Employee Benefits Questions and How to Answer Them
Original Post from BenfitsPro.com
By: Monica Majors
Legislative changes continue to markedly affect the health benefits marketplace. Employers and their workers face challenges on a number of fronts. Along with those challenges come questions that range from current and future requirements of health care reform, to providing adequate plan coverage that serves employees well.
By understanding the top-of-mind employer benefit issues and responding to them appropriately and effectively, brokers and advisors can better serve existing clients, attract new ones, and help employees protect themselves and their families going forward.
1. How can I meet my employees’ needs?
A key concern of today’s employers is making sure benefits they offer for both prospective and current employees are competitive. Businesses recognize the role a solid benefit program plays in attracting and keeping good talent, and they want to know what is included in plans offered by their competitors.
Brokers serving the health benefits marketplace can best serve customers by knowing the current market landscape well, speaking confidently about it and sharing that knowledge with customers. Key to this knowledge is understanding what the employer currently offers, what types of employees make up its workforce, what their needs are, and what gaps may currently exist.
Then, talk with insurers and learn what industry and market insight they may possess based on geographic and industry-specific factors. Search out findings made available from insurance- and customer-specific industry research organizations and trade associations. You can also mine data from within your own office, such as aggregated customer information by industry.
Integrate all of this information with comprehensive benefit offerings available from the carriers you represent, and show employers how they can gain a competitive market advantage with the right benefit plan.
2. How can I control my costs?
The question of controlling costs is common for obvious reasons. Small groups, in particular, are looking for creative ways to keep their health benefit expenses down. Brokers can address this question by understanding current offerings and combining that with knowledge of the plans available through the carriers they represent.
Understanding the various coverage tiers available and sharing that knowledge with employers is key. Often, implementing a health benefit program that meets the minimum required coverage levels brings the lowest cost.
Other cost-reduction strategies include addressing coverage for dependents or part-time employees. Some employers may consider eliminating dependent coverage or reducing contributions for this coverage. Also, determine with the employer the cost versus the benefit of including part-time staff in the plan. Employers may need to make tough decisions to maintain viable programs for employees.
Employers need to consider other costs that may come into play. For example, new IRS and ACA reporting requirements for employers to notify employees about new mandates bring with them administrative expenses. While they may not be able to eliminate these costs, brokers can help provide guidance and increase awareness around the changing requirements. They can also recommend approaches that might help employers streamline the process to reduce the impact of the requirements.
3. What about exchanges?
Employer questions about health benefit exchanges are prevalent. How do the exchanges align with the employer’s desire to deliver benefits in a cost-effective manner? What advantages do they offer? What are the drawbacks? Brokers need to be familiar with individual and group exchanges — both private and public.
Brokers working with some employers may find that certain tax advantages come along with using a public exchange. Private exchanges offer other benefits, from cost-management tools to a broader set of administrative support options and a choice of benefit options that extend beyond basic medical coverage. Group or employer-focused exchanges are becoming increasingly popular as a way to efficiently manage health benefits. Brokers should become familiar with the pros and cons, as well as processes involved.
It’s important to understand the advantages for different employer groups, as well as the reputation and satisfaction levels of exchanges, and use that knowledge to help employers select the right option.
4. What’s on the horizon?
Large employers are concerned about looming changes. They wonder how new regulations—for example, the Cadillac tax —may affect them in the future. Brokers need to be knowledgeable about what is coming down the pike, and how to minimize negative resulting impacts.
Preparing for the Cadillac tax, for example, may require a strategy shift. While the tax is primarily levied against health plans for coverage deemed “too rich,” it will ultimately affect employers and workers. Health plans are likely to pass off at least some of the costs to employers in the form of higher premiums. Employers may then pass costs off to workers in the form of higher cost-sharing arrangements. Of course, employers will have to consider how this will impact employee retention and recruitment.
The Internal Revenue Service posts helpful information about the ACA’s requirements on employers on its website: irs.gov/affordable-care-act. The Centers for Medicare & Medicaid Services website is another valuable resource: cms.gov/cciio/.
5. Why you?
The final top question may be one employers don’t explicitly ask; but it’s one you need to answer: “Why should I use you as a broker?” How is it that you set yourself apart from other brokers — industry knowledge, market strategy or customer service? Brokers need to carefully and clearly explain benefit plan designs, educate employers, guide them through the maze of changes in the benefits arena, and explain all the implications.
Building knowledge is the first part of the answer. Learn about laws, regulations and your employers’ workforce attributes. Learn more about the products offered by carriers and through the exchanges. Combine that knowledge with employer and employee data you capture to design programs that can help employers attract and retain good workers. Work with financially strong carrier partners to find and deliver the right benefit plans, and consider offering your clients a multi-year strategy where appropriate. And leverage administrative, technology, client portals and other resources your carrier partners offer.
Be sure to document and explain the advantages you can bring to the employer. Also, encourage satisfied customers to provide testimonials, directly and on social platforms, and then share these testimonials and references to help differentiate yourself and your shop from your competitors.
By understanding the needs of your clients, offering cost control solutions and keeping businesses apprised of changes on the horizon, you set yourself apart from other brokers and demonstrate your value as a trusted adviser. New and existing clients will come to you year after year for help in designing affordable health benefit plans that will attract and hold onto good workers.
The Death of an Employee's Spouse
Original Post from BenefitsPro.com
By: Amy Florian
How often does it happen? An employee has returned to work after experiencing the death of a spouse. At first, she gets hugs and people tell her they are sorry for her loss. But after a few days, you notice that co-workers talk about everything and everyone except the person who died, even when it would be natural to include something about him in the conversation. They all tiptoe around it and avoid even mentioning his name. Why is everyone so afraid?
The truth is, they are well-meaning but uninformed. Most are afraid that if they say his name, they will make her sad or spoil her day. They think it is their job to cheer their co-worker up or take her mind off the reality.
They don’t realize it is not their job to “fix it.” They can’t take her grief away anyway. The loss is always on her mind, no matter how hard others try to avoid bringing it up. Nor do they realize how much she longs to hear his name, how badly she wants to know that someone besides herself remembers, or how hungry she is to share stories and memories.
Co-workers can be much more comforting if they can acknowledge and accept her sadness, continue to give her an understanding smile or a hug for weeks afterwards, or even cry with her. Grief that is shared is diminished, but grief that is repressed or denied festers inside until it finds a way to come out.
Besides, tears are healthy. Despite our fears to the contrary, no one in the history of the world has ever started crying and not been able to stop. Most people report feeling relieved or freed or even cleansed after a good cry, because tears contain physiological chemicals that relieve stress; we are supposed to cry when we are sad.
So what can you do when you notice that people are afraid to say the name? The easiest thing is to say the name yourself. Bring up a story or a memory that involves the spouse — maybe an interaction at a company event. That gives others permission to say the name, too.
Then you can coach your colleagues to do the same by addressing the issue explicitly, saying, “Sometimes people are afraid to mention the name of a deceased family member for fear of making the person sad. We always want to follow her lead, but most survivors love to hear their loved one’s name and share stories and memories of the person’s life. Please don’t be afraid.”
Continue on to talk about tears: “It’s true that she may cry, but that doesn’t mean you made her sad. The tears are there anyway, and every once in a while, they spill over. It’s better that her inevitable tears can be shared with people who care about her.”
In spite of your efforts, you will still find that some people are uncomfortable with grief and sadness. There will be others, though, who can learn to freely share whatever their grieving co-worker is experiencing. It is good for her, and it also builds the kind of camaraderie and bonding that help the business thrive. It’s the right thing to do, all the way around.
Health Care Consumerism Is More Than A Benefit Design
Original Post from BeneftisPro.com
By: Steven Auerbach
The shift to health care consumerism is well underway. Trends continue to point to increased financial responsibility for consumers with rising deductibles, increased consumer out-of-pocket responsibilities, and accelerated adoption of consumer-directed health care plans (CDHPs), health savings accounts (HSAs), and other account-based benefit offerings.
According to Mercer, enrollment in CDHPs among large employers nearly doubled in the past three years from 15 percent to 28 percent of covered employees.
Employer adoption of these consumer-directed benefit designs will continue to grow for the foreseeable future, driven by the need for cost control, the impact of health care reform and the looming excise tax. The costs of providing health care continue to rise, surpassing $25,000 for an average family for the first time in 2016 (Milliman Medical Index).
However, the fact that the term “consumer-directed health care (CDH)” has become almost synonymous with CDHPs and HSAs is a bit of a misnomer. In reality, CDH is much more than a benefit design – it is a paradigm shift for how consumers must manage their health care and make health care decisions going forward.
Dimensions of consumer-directed health care
The underlying premise of CDH is that, if given more financial responsibility for health care and empowered to make informed decisions, consumers will make better choices – leading to improved health outcomes and decreased overall health care costs. Implicit in this definition are two equally important dimensions:
- Benefit designs that require increased consumer financial accountability
- Empowerment and engagement to support decision-making
The market has made considerable progress shifting to benefit models that increase consumer financial responsibility, as evidenced by the data above. While new plan designs have been created and successfully implemented, financial accountability is only the beginning— behavior must change too, not just costs. We have only just begun to unlock the second dimension of health care consumerism.
Giving somebody new responsibility without the education, tools and support to manage those responsibilities is like giving a teenager the keys to the car without teaching them to drive.
Unlocking consumer engagement
So where does the health care industry really stand in terms of engaging and empowering consumers to make better choices? The health care industry is still struggling to drive meaningful consumer engagement.
Consumer fluency is low. Alegeus research is clear that consumers still don’t have a good grasp on how the plans work, how to predict and manage out of pocket costs, how to determine coverage, etc. Engagement overall is low. The average consumer interacts with their health plan just one or two times per year – and more than 40 percent of members have never taken the time to log-on, dial-in, subscribe, or download any content from their benefit providers.
And in many cases, consumers are resistant to change. When asked whether they wanted to take a more active role in managing their health care, 50 percent said no thanks.
Employers are now spending nearly $700 per employee on various employee engagement programs related to health care, per Fidelity. There are more tools and resources than ever before. Yet most of these programs are delivered with a “one-size-fits-all” approach, and the consumer experience is still very fragmented.
However, by its very nature, CDH may be the key to unlocking consumer engagement. CDHP members are significantly more engaged than their counterparts in traditional coverage for one very important reason…
People pay attention to their money
According to our research, people enrolled in CDHPs scored universally higher on all measures of engagement. CDHP members:
- Are considerably more fluent in the details of health care coverage, costs and billing
- Are more value-conscious - 50 percent more likely to research and compare costs for health care purchases
- Interact more frequently– the average CDHP member interacts with their account 10-50 times per year
- Leverage available resources & channels - one-third more likely to consume content and engage with their benefit service providers through available channels
- Are more likely to participate - twice as likely to participate in employer engagement and wellness programs
Although CDHP members interact more frequently, the key to true engagement and behavior change is not just driving more interactions, it is driving strategic engagement that is targeted, timely and relevant.
Health & wealth must converge
The path to true, meaningful engagement in health care may lie in the convergence of these financial components with the traditional health care domain. No matter what age, health status, or consumer segment, the responsibility for managing finances and costs will become universal.
The convergence of claims, financial transactions and other behavioral and demographic data will provide a robust foundation for targeted engagement.
The fact that consumers pay closer attention to their finances presents a unique opportunity to tap into a captive audience with personalized offers, messages and value-added tools designed to improve engagement, influence behavior and enhance decision-making.
For the vision of consumer-directed health care to be fully realized, it is imperative that employers and benefit providers do not overlook the critical importance of education and targeted engagement to empower better decision making – and better outcomes for all stakeholders.
8 Common But Costly Benefits Communication Mistakes
Original Post from HRMorning.com
By: Tim Gould
Here are a few stats that really drive home just how critical benefits communication is for HR pros.
When employees that were offered rich employer benefits received poor communication, just 22% of those workers reported being satisfied with their benefits.
On the other hand, when employers with less-rich benefits communicated those benefits effectively, 76% of workers reported being satisfied with their employers’ benefit offerings.
These stats were part of a recent study by Towers Watson WorkUSA.
At the 2015 Mid-Sized Retirement & Healthcare Plan Management Conference in San Diego, Benefits Strategist Julie Adamik used those surprising stats as an opening to launch into a presentation about effective benefits communication.
What to avoid
During the presentation, Adamik covered some of the most common — and costly — benefits communication mistakes, which included:
1. Holding a boring benefits presentation. There’s a common misconception among workers that anything about benefits is going to be boring. But when HR pros don’t make the effort to make their benefits presentations interesting, the message is bound to be lost on employees.
2. Letting Legal draft all of your benefit communications. When employers let a legal department write all your benefits communications, there’s a very good chance the documents will be littered with legalese that confuses employees, bores them to the point of tuning out or both.
3. Not allotting enough of the budget to the benefits communications. Upper management often doesn’t have a handle on just how much solid benefits communications are going to cost — at least not in the same way HR does.
Benefits communication must be more detailed than standard inter-office communications, so it’s likely to take more time to prepare and produce.
4. Relying on workers will bring their benefits info home and discuss it with their family members.Effective benefits communication should always try to include spouses and family members.
5. Assuming employees will simply act on the messages in the benefit communications. It’s up to HR to specifically tell staffers what they should do with the benefits info as well as why.
6. Thinking workers will read their open enrollment materials cover to cover on their own time. The more HR can go over during the actual open enrollment meeting, the better. Of course, enrollment time shouldn’t be the only time benefits info should be addressed. Communication should be a year-long process.
7. Opting for “professional-sounding” language instead of simple “plain-speak” English. Sure, HR pros’ world is filled with jargon, buzzwords and benefits-related acronyms, but rank-and-file employees’ worlds are not. Keep the benefit communications as simple as possible.
8. Covering too much info. It’s only natural to try and cram everything possible into your open enrollment materials, but when there’s just too much being thrown at employees, they suffer from information overload — and retain little (if any) of what was covered.
Remember, continuous education is a proven way to improve employees’ decision-making regarding their benefits, which should be the goal of every communication effort..
Adapted from “Effective Benefit Communications” by Julie Adamik, CEBS, CCP, CBP, as presented at the 2015 Mid-Sized Retirement & Healthcare Plan Management Conference in San Diego.
Technology: Talking to a Financial Coach Reboots Financial Wellness and Narrows Gender Gap
Original post businesswire.com
In a year marked by increased market volatility and slow economic growth, it’s not a surprise that overall financial wellness levels remained virtually unchanged. Employees appear stuck, hitting a brick wall with debt, lack of emergency funds and inadequate retirement savings. However, the latest study from Financial Finesse shows that the way forward to improved employee financial wellness – and to narrow the financial Gender Gap – could be human-to-human coaching, with technology playing a supporting role.
The Year in Review: 2015, an analysis of employee financial trends based on anonymous data collected by workplace financial wellness firm Financial Finesse, describes a year where most employees have been treading water in terms of their financial wellness. Overall financial wellness levels were unchanged at 4.8 out of 10 vs. 4.7 in 2014.
The study shows that while technology was helpful in increasing employee awareness of their financial vulnerabilities, online interactions alone did not improve employee financial wellness. By contrast, employees who had five interactions including conversations on the phone or in person with a financial planner professional showed substantial progress. Those repeat interactions with a financial coach appear to help an employee get “unstuck,” and advance in key areas. For these regular participants:
- 80% have a handle on cash flow, compared to 66% of online-only users
- 72% have an emergency fund, compared to 50% of online-only users
- 98% contribute to their retirement plan, compared to 89% of online-only users
- 48% are on track for retirement, compared to 21% of online-only users
- 64% are confident in their investment strategy, compared to 42% of online-only users
Employers who offer financial wellness programs consider tailoring communications to address these vulnerabilities in particular:
- 58% may not be saving enough for retirement, with only 16% of Millennials on track to achieve their retirement goals.
- 51% don’t have an emergency fund. While this declines with age, a worrisome 25% of employees 65 and older still don’t have an emergency fund.
- 34% may be living beyond their means. For employees with family incomes of $100,000 or lower, less than half pay off their credit cards every month.
- 33% may have serious debt problems. Debt may be hurting African American and Latino employees the most, with 75% of African American and 66% of Latino employees saying getting out of debt is a top concern.
- Concern over market volatility is high. Many employees grew nervous about their retirement plan savings and turned to their financial wellness program for guidance on how to handle these market fluctuations.