CBO estimate of AHCA impact on employer-sponsored benefits is off the mark
Does the implementation of the AHCA have you worried about your employee benefits? Take a look at this great article from Employee Benefit News about what the implementaion of the AHCA will mean for employers by Joel Wood.
In breaking down the Congressional Budget Office’s assessment of the proposed American Health Care Act, let’s look at the impact of the AHCA on employer-sponsored plans. The CBO estimates that 2 million fewer Americans will have employer-sponsored coverage in 2020, growing to seven million by 2027. Here’s CBO’s rationale:
- The mandate penalties are eliminated, and thus many will drop.
- The tax credits are available to people with a broader range of incomes than the Obamacare credits/subsidies
- Some employers will drop coverage and increase compensation in the belief that non-group insurance is a close substitute.
These are valid points. The CBO experts are basing their estimates on sound economics and inside the constraints of their authority, and so of course we worry about any proposal that devolves employer-sponsored care. But, we also have to note that the CBO said much the same about the Affordable Care Act, which largely didn’t happen. And CBO notwithstanding, we at the Council of Insurance Agents & Brokers, too, feared something of a death spiral after the ACA was enacted.
The ACA’s employer penalties were very small in comparison to premiums, and it made sense that many would dump their plans, give their employees cash, and send them to the subsidized exchanges. Also, the subsidies were pretty rich — graduating out at 400% of the poverty line. That’s more than $90,000 for a family of four.
What we didn’t take into account in reference to the ACA were a number of things:
- A core assumption of the ACA was that states would all be forced to expand Medicaid to 138% of the poverty line, and the exchange subsidies would kick in above that amount. The courts struck that down and 19 (all-red) states never adopted the expansion, creating a massive donut hole.
- We underestimated how chaotic would be the rollout of Healthcare.gov.
- We knew the exchanges would be a model of adverse selection, but a “bailout” of insurance carriers through the “risk corridor” program was supposed to keep them in the game. Republicans balked, sued, and the reinsurance payments have been so lacking that most of the exchanges are currently in a “death spiral” (as described by Mark Bertolini, CEO of Aetna).
So employer-sponsored health insurance has, well, thrived since the enactment of the ACA — perhaps in spite of it, not because of it.
If the CBO is correct and seven million people lose ESI over the next decade, that’s problematic. But it ignores other opportunities that are being created through the proposed GOP bill and Trump Administration executive actions.
Employers-sponsored opportunities
Republicans propose significant expansion of HSAs that will compliment higher-deductible ESI plans. They want work-arounds for state mandates on essential health benefits, even though their goal of “buying across state lines” can’t be realized through the tricky budget reconciliation process. And, ultimately, Republicans want to realize the potential for the ACA wellness provisions that have been eviscerated through years of EEOC/ADA/GINA conflicts. That would be a big win for employers.
The most important tradeoff between the “discussion draft” of a few weeks ago and the AHCA is that GOP House leaders junked their plan to tax 10% of employee contributions for ESI plans, in favor of pushing the Cadillac tax out five more years, to 2025.
Personally, I figure I’ve got another decade left in me to lobby for this industry, and that would get me eight years along the way. That’s a terrific tradeoff in my book, especially as Ways & Means Chairman Kevin Brady (R-Texas) emphasized he never intends for that tax to go into effect — it’s purely a budgetary gimmick. And, it’s a ridiculous “score” from CBO anyway. Everybody knows that no employer is going to pay that tax; they’ll work their plan design to get under the numbers.
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My conclusions at this moment in time, thus, are:
- Have we won the war among GOP leaders with respect to “hands off” of ESI while trying to solve the death-spiral problems in the individual/exchange marketplace? Not yet. We won a battle, not a war. Sadly and frustratingly, too many Republican leaders have bought into the elite conservative/libertarian economic intelligentsia that pure consumerism should drive healthcare, and that ESI is an “historic accident.” As our friend Ed Fensholt at Lockton always says, “Penicillin was an historic accident, too, but look how that turned out.”
- Was former Speaker John Boehner right recently when he said that there’s no way you can get to the requisite 51 votes in the Senate right now with this current AHCA construct? You bet he was right. If you do the House plan and defund Planned Parenthood, you lose votes of pro-choice Republicans in the Senate. If Ryan and Trump relent to the Freedom Caucus on hacking the Medicaid expansion in 2018 instead of 2020, they’ll lose votes of Republicans in Medicaid-expanded states. In any event, they probably lose the votes of Ted Cruz (R-Texas) and Ben Sasse (R-Neb.) and a number of other Republicans who view the AHCA as “Obamacare Lite” and demand a more straightforward repeal.
- Was Paul Ryan (R-Wis.) right when he said this on Face the Nation recently? “Look,” he said, “the most important thing for a person like myself who runs for office and tells the people we’re asking to hire us, ‘This is what I’ll do if I get elected.’ And then if you don’t do that, you’re breaking your word.” You bet he’s right. Republicans ran on this. They voted 60 times in the House to repeal the ACA. If they can’t do this, they can’t do tax reform, they can’t do 12 appropriations bills. Their margins for error (21 votes in the House; two in the Senate) are almost impossibly narrow, and the press hates this bill. But I wouldn’t pronounce this effort dead, by a long stretch.
Sometimes, when lobbying blank-faced Republican leaders on the importance of ESI, I feel like the old BB King lyric: “Nobody loves me but my mother, and she could be jivin’, too.”
But because of, or in spite of, current legislative efforts that are dominating the headlines, I feel relatively well-poised for ESI to continue to be the means through which a majority of Americans receive the health insurance they like and they want to keep. Our job is for them to keep it. Notwithstanding lots of obstacles, we will.
See the original article Here.
Source:
Wood J. (2017 March 21). CBO estimate of AHCA impact on employer-sponsored benefits is off the mark [Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/cbo-estimate-of-ahca-impact-on-employer-sponsored-benefits-is-off-the-mark
ACA replacement proposal leaked: Some of the finer points for HR
Does the repeal of the ACA have you worried? Checkout this great article about some of the changes that will come with the repeal of the ACA by Jared Bilski.
A draft of the Republicans’ Affordable Care Act (ACA) replacement bill that was leaked to the public is likely to look a lot different when it’s finalized. Still, it gives employers a good indication of how Republicans will start to deliver on their promises to “repeal and replace” Obamacare.
It should come as no surprise to employers that the GOP replacement bill, which was obtained by POLITICO, would scrap a cornerstone of the ACA — the individual mandate — as well as income-based subsidies and all of the laws current taxes (at least one replacement tax is included in the legislation).
According to the discussion draft of the replacement bill, it would offer tax credits for purchasing insurance; however, those credits would be based on age instead of income.
For example, a person under the age of 30 would receive a credit of $2,000. A person over the age of 60, on the other hand, would receive double that amount.
Some of the other highlights of the leaked legislation include:
End of ACA essential health benefits
Obamacare’s essential health benefits mandates require health plans to cover 10 categories of healthcare services, which include:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription medications
- Rehabilitative and habilitative services and devices
- Lab services
- Preventive and wellness services and chronic disease management, and
- Pediatric services, including oral and vision care.
Under the bill, individual states would make the decisions about what types of services plans must cover — beginning in 2020.
A Medicaid expansion overhaul
The Medicaid expansion under Obamacare that has covered millions of people will be phased out by 2020 under the GOP bill. The replacement proposal: States would receive a set dollar amount for each person.
There would also be variations in the funding amounts based on an individual’s health status. In other words, more money would be allocated for disabled individuals, which is a huge departure from the open-ended entitlement of the current Medicaid program.
Pre-existing conditions, older individuals
One of the most popular elements of the ACA would apparently remain untouched under the GOP bill: the Obamacare provision that prohibits health plans from discriminating against people with pre-existing conditions.
However, the legislation does take aim at older individuals. The GOP would allow insurers to charge older people up to five times more for healthcare than younger individuals. The current ACA limits that difference to three times as much.
The bill does aim to remedy this discrepancy by providing bigger tax credits for older people.
Taxes get axed
There is a slew of taxes built into the ACA — the manufacturer tax, and taxes on medical devices, health plans and even tanning beds — and the Republican bill would repeal those taxes.
But those taxes help cover the cost of the ACA. So to make up for the shortfall that would result in killing those taxes, the GOP is floating the idea of changing the tax treatment of employer-based health insurance. As employers are well aware, employer-sponsored health plan premiums currently aren’t taxed. Under the GOP proposal, this would be changed for some premiums over a certain threshold — although the specifics of such a change remain murky.
Such a move would surely be met by fierce opposition from the business community. In fact, major employer groups are already preparing to fight such a proposition.
See the original article Here.
Source:
Bilski J. (2017 March 01). ACA replacement proposal leaked: some of the finer points for HR [Web blog post]. Retrieved from address https://www.hrmorning.com/aca-replacement-proposal-leaked-some-of-the-finer-points-for-hr/
Employers embrace new strategies to cut healthcare costs
Are you looking for a new solution for cutting your healthcare cost? Take a look at the great article from Employee Benefits Advisor about what other employers are doing to cut their cost healthcare cost by Phil Albinus
As employers await a new health plan to replace the Affordable Care Act and consensus grows that high deductible health plans (HDHPs) are not the perfect vehicle for cutting healthcare costs, employers are incorporating innovative strategies to achieve greater savings.
Employers are offering HSAs, wellness incentives and price transparency tools at higher rates in an effort to cut the costs of their employee health plans. And when savings appear to plateau, they are implementing innovative reward plans to those who adopt these benefits, according to the 2017 Medical Plan Trends and Observation Report conducted by employee-engagement firm DirectPath and research firm CEB. They examined 975 employee benefit plans to analyze how they functioned in terms of plan design, cost savings measures and options for care.
The report found that 67% of firms offer HSAs while only 15% offer employee-funded Health Reimbursement Arrangements. As “use of high deductible plans seem to have (at least temporarily) plateaued under the current uncertainty around the future of the ACA, employer contributions to HSAs increased almost 10%,” according to the report.
Wellness programs continue to gain traction. Fifty-eight percent of 2017 plans offer some type of wellness incentive, which is up from 50% in 2016. When it comes to price transparency tools, 51% of employers offer them to help employees choose the best service, and 18% plan to add similar tools in the next three years. When these tools are used, price comparison requests saw an average employee savings of $173 per procedure and average employer savings of $409 per procedure, according to CEB research.
“What was interesting was the level of creativity within these incentives and surcharges. There were paycheck credits, gift cards, points that could be redeemed for rewards,” says Kim Buckey, vice president of client services at DirectPath. “One employer reduced the co-pays for office visits to $20 if you participated in the wellness program. We are seeing a level of creativity that we haven’t seen before.”
Surcharges on tobacco use has gone down while surcharges for non-employees such as spouses has risen. “While the percentage of organizations with spousal surcharges remained static (26% in 2017, as compared to 27% in 2016), average surcharge amounts increased dramatically to $152 per month, a more than 40% increase from 2016,” according to the report.
Tobacco surcharges going down “is reflective of employers putting incentives in, so they are taking a carrot approach instead of the stick,” says Buckey.
Telemedicine adoption appears to be mired in confusion among employees. More than 55% of employees with access to these programs were not aware of their availability, and almost 60% of employees who have telemedicine programs don’t feel they are easy to access, according to a separate CEB survey.
Employers seem to be introducing transparency and wellness programs because the savings from HDHPs appear to have plateaued, says Buckey. She also noted recent research that HSAs only deliver initial savings at the expense of the employee’s health.
“With high deductible plans and HSAs, there has been a lot of noise how they aren’t the silver bullet in controlling costs. Some researchers find that it has a three-year effect on costs because employees delay getting care and by the time they get it, it’s now an acute or chronic condition instead of something that could have been headed off early,” she says.
“And there is a tremendous lack of understanding on how these plans work for lower income employees, [it’s] hard to set aside money for those plans,” she says.
Educating employees to be smarter healthcare consumers is key. “What is becoming really obvious is that there is room to play in all these areas of cost shifting and high deductible plans and wellness but we can no longer put them in place and hope for the best,” she says. We have to focus on educating employees and their families,” she says. “If we are expecting them to act like consumers, we have to arm them with the tools. Most people don’t know where to start.”
She adds, “we know how to shop for a TV or car insurance but 99% of people don’t know where to start to figure out where to shop for prescription drugs or for the hospital where to have your knee surgery. Or if you get different prices from different hospitals, how do you even make the choice?”
When asked if the results of this year’s report surprised her – Buckey has worked on the past five – she said yes and no.
Given that the data is based on information from last summer for plans that would be in effect by 2017, she concedes that given the current political climate “a lot is up in the air.” Most employers were hesitant to make substantive changes to their plans due to the election, she says. We may see the same thing this year as changes are made to the ACA and the Cadillac Tax, she adds.
“What I was interested in were the incremental changes and some of the creativity being applied to longstanding issues of getting costs under control,” she says.
See the original article Here.
Source:
Albinus P. (2017 March 05). Employers embrace new strategies to cut healthcare costs [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/employers-embrace-new-strategies-to-cut-healthcare-costs?brief=00000152-1443-d1cc-a5fa-7cfba3c60000
Two-thirds of Americans aren’t putting money in their 401(k)
Did you know only about a third of Americans are putting money away into their retirement accounts? Check out this interesting article from Employee Benefits Advisors about some of the statics of Americans 401(k) savings by Ben Steverman.
(Bloomberg) – Americans aren’t saving enough for retirement.
True, this has been a refrain for longer than many can remember. But now some disturbing numbers show exactly how bad it’s gotten. Two-thirds of all Americans don’t contribute anything to a 401(k) or other retirement account available through their employer.
Millions aren’t saving on the job because they either don’t have access to a workplace retirement plan or they do but aren’t putting money in it. Many just can’t spare the cash, but a new analysis shows there are other reasons, too.
Until now, the exact size of the problem has been unclear. Surveys can be unreliable: Small businesses are difficult to assess, and many workers just don’t know what plan options they have, especially if employers aren’t making much effort to sign them up. Information on a 401(k) may be part of a stack of paper handed out on their first day, that they don’t read or understand, and ultimately set aside and never think about again.
Now, U.S. Census Bureau researchers have come up with estimates that rely on tax data, which should be more reliable than surveys. Their conclusion: Only about a third of workers are saving in a 401(k) or similar tax-deferred retirement plan. Also, the gap is far wider than expected between the number of employers offering retirement plans, and the number of workers saving in them.
Only 14% of employers offer plans
Census researchers Michael Gideon and Joshua Mitchell analyzed W-2 tax records from 2012 to identify 6.2 million unique employers and 155 million individual workers, who held 219 million distinct jobs. This data produced estimates starkly different from previous surveys.
For example, previous estimates suggested more than 40% of private-sector employers sponsored a retirement plan. Tax records uncovered a much bigger pool of small businesses, showing that, overall, just 14% of all employers offer a 401(k) or other defined contribution plan to their workers.
Bigger companies are the likeliest to offer 401(k) plans, and since they employ more people than small firms, skew the overall number of U.S. workers who have the option. Gideon and Mitchell estimate 79% of Americans work at places that sponsor a 401(k)-style plan. The good news is that’s more than 20 points higher than previous estimates. The bad news is that just 41% of workers at those employers are making contributions to such a plan—more than 20 points lower than previous estimates.
The combined result of those two numbers is that just 32% of American workers are saving anything in a workplace retirement account. Four out of five workers are employed by companies that offer a 401(k) or similar plan, but most workers aren’t using them—either because they’re not eligible or because they aren’t signing up.
Lawmakers have proposed a variety of ways to get more people to save. Several states are experimenting with strategies to get every worker signed up for a retirement account. But they face serious pushback from the Republican-controlled Congress and the financial industry.
The demise of the pension
Census researchers are still studying the tax data, cross-referencing it with other databases to get a fuller picture of how Americans are saving. For example, researchers are using retirement plan filing documents to get a better sense of how many workers are still covered by traditional pensions, also known as defined benefit plans. According to a Pew Charitable Trusts analysis of survey data released Feb. 15, only 10% of workers over age 22 have a traditional pension. Just 6% of millennials have a pension while 13% of baby boomers do.
Not surprisingly, the Census data suggest well-paid workers find it easier to save than the lowest-paid. But income isn’t the only factor. Eligibility is also a major issue for part-time workers and people who change jobs frequently. Companies often require employees to work for a certain amount of time before they can sign up for a 401(k), and employers aren’t required to allow part-time workers into a plan until they’ve worked 1,000 hours during the previous year.
Another problem made clear by the new report is that many workers simply don’t know their company 401(k) exists. Workers also might never get around to filling out the paperwork, or could be intimidated and confused by the need to make investment decisions. Companies can help solve all those problem by automatically signing up eligible workers, and requiring them to opt out if they don’t want to participate. Doing so has been proven to boost enrollment, but momentum has now stalled for automatic 401(k) features.
House moves to block auto-enrollment
California, Oregon, Illinois, Maryland, and Connecticut have started programs designed to encourage workers to save. Employers in those states would be required to either offer a retirement plan, or automatically enroll their workers in a state-sponsored individual retirement account. The states had the blessing of the Obama administration, which issued rules allowing states and even large cities to create portable retirement accounts if they want.
On Feb. 15, however, the U.S. House of Representatives voted to rescind those rules. Echoing the arguments of the financial industry, Republicans argued state auto-enrollment plans constitute unfair competition to the financial industry. If the Republican-controlled U.S. Senate and President Donald Trump also sign off, any state and city auto-IRA plans would be placed in jeopardy.
Whatever the outcome, any effort to get workers to save for retirement faces a daunting challenge: Can Americans spare the money? Student debt and auto loans are at record levels, according to Federal Reserve data released Feb. 16, and overall consumer debt is rising at the fastest pace in three years.
Retirement is an important goal, but many Americans seem to have more pressing financial concerns.
See the original article Here.
Source:
Steverman B. (2017 February 21). Two-thirds of americans aren't putting money in their 401(k) [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/news/two-thirds-of-americans-arent-putting-money-in-their-401-k?feed=00000152-1377-d1cc-a5fa-7fff0c920000
Employees desperately need more information on health plans, study says
Did you know that a lot of your employees may be unaware of the health care options your company offers? Take a peek at this great article from HR Morning on how to improve your employees knowledge of their healthcare options by Jared Bilski
As an increasing number of employees are being asked to make smarter healthcare spending decisions, communication is more important than ever. Unfortunately, it looks like many firms have a lot of room for improvement.
That’s one of the alarming takeaways from healthcare administrator Alegeus’ recent “State of Denial” study.
A number of the stats from the study point to a major employee healthcare problem that’s only getting worse. That problem: While employees’ health options are becoming increasingly complex, most workers don’t have the knowledge and/or accountability to make wise decisions involving those options.
Unaware and overwhelmed
Here are some of the most alarming stats from the study:
- 63% of employees said they don’t know the benefit of an HSA
- 50% don’t know how to predict current or future out-of-pocket healthcare expenditures and can’t select the best savings vehicle or rate
- 26% of HSA accountholders don’t know they can use HSA funds beyond the immediate plan year, and
- 41% of HSA accountholders were unaware they could invest HSA funds.
The study also highlighted some of the contradictions between what employees said they wanted or needed, and how they acted.
For example, although 70% of employees said they’d like to take a more active role in their healthcare decisions, just 50% intend to conduct more due diligence when purchasing healthcare in 2017.
The importance of one on one
One of the most effective ways to improve employees’ benefits understanding is through one-on-one communications.
To help ensure this is effective, here are three things HR pros should keep in mind, according to Winston Benefits, a voluntary benefits plan provider:
1. Prepare the right materials
When you’re doing a large-scale benefits presentation, you generally just hand out the materials, and employees look through and use those materials as they see fit.
But with individual sessions, benefits pros have to be prepared to explain those materials in any way an employee requests.
Example: Walking a worker through a tool or calculator in a step-by-step manner.
2. Look to your broker
In many cases, benefits brokers are willing to go on site for one-on-one sessions, and companies should take advantage whenever possible.
Employees will be comfortable knowing there’s an in-house HR or benefits pro at the broker, and a broker’s expertise can really improve workers’ overall understanding.
3. Allot enough time
The point of these meetings is to give employees all the time they need to understand their options and make informed decisions.
Rushing workers through these meetings will ensure the one-on-one education falls flat.
See the original article Here.
Source:
Bilski J. (2017 February 17). Employees desperately need more information on health plans, study says [Web blog post]. Retrieved from address https://www.hrmorning.com/employees-desperately-need-more-information-on-health-plans-study-says/
How to avoid a DOL 401(k) audit
Are you worried that your company's 401(k) plan might face a Department of Labor audit? Check out this great tips from Employee Benefits Network on how to avoid a 401 (k) aduit by Robert C. Lawton
There are many reasons for plan sponsors to do everything possible to avoid a Department of Labor 401(k) audit. They can be costly, time consuming and generally unpleasant.
The DOL, in its fact sheet for fiscal year 2016, indicates that the Employee Benefits Security Administration closed 2,002 civil investigations with 1,356 of those cases (67.7%) resulting in monetary penalties/additional contributions. The total amount EBSA recovered for Employee Retirement Income Security Act plan participants last year was $777.5 million.
In my experience, if a plan sponsor receives notification from the DOL that it has an interest in looking over their 401(k) plan, they need to be concerned. Not only do the statistics support the fact that DOL auditors do a good job of uncovering problems, but in my opinion, they are not an easy group to negotiate with to fix deficiencies.
As a result, the best policy plan sponsors should follow to ensure they don’t receive a visit from a DOL representative is to do everything possible to avoid encouraging such a visit. Here are some suggestions that may help plan sponsors avoid a DOL 401(k) audit:
1. Always respond to employee inquiries in a timely way. The most frequent trigger for a DOL 401(k) audit is a complaint received from a current or former employee. These complaints can originate from employees you have terminated who feel poorly treated or existing employees who feel ignored. Make sure you are sensitive to employee concerns and respond in a timely way to all questions. Keep copies of any correspondence. Be very professional in how you treat those individuals who are terminated — even though in certain instances that may be difficult. Terminated employees who feel they have been mistreated often call the DOL to “get back” at an employer.
2. Improve employee communication. Often employee frustrations come from not understanding a benefit program — or worse, misunderstanding it. If you are aware that employees are frustrated with your plan or there is a lot of behind the scenes discussion about it, schedule an education meeting as soon as possible to explain plan provisions.
3. Fix your plan — now. If the DOL decides to audit your 401(k) plan, as shown above, it frequently finds something wrong. Many times plan sponsors are aware that a certain provision in the plan is a friction point for employees. Or worse, they know the plan is brokenand no one has taken the time to fix it. Contact your benefits consultant, recordkeeper or benefits attorney to address these trouble spots before they cause an employee to call the DOL.
4. Conduct a “mock” DOL 401(k) audit. Many 401(k) plan sponsors have found it helpful to conduct a mock audit of their plan or hire a consulting firm to do one for them. If management hasn’t been responsive to your concerns about addressing a plan issue, having evidence to share with them that shows an audit failure can be very convincing.
5. Make sure your 5500 is filed correctly. The second most frequent cause of a DoL 401(k) audit relates to the annual Form 5500 filing. The most common 5500 errors include failing to file on time, not including all required schedules and failing to answer multiple-part questions. Ensure that your 5500 is filed by a competent provider and that it is filed on time. Most plan sponsors either use their recordkeeper or accountant to file their plan’s 5500. Don’t do it yourself. The fees a provider will charge to do the work for you are very reasonable.
6. Don’t be late with contribution submissions. Surprisingly, many employers still don’t view participant 401(k) contributions as participant money. They are, and the DOL is very interested in ensuring that participant 401(k) contributions are submitted promptly to the trustee. Be very consistent and timely with your deposits to the trust. Participants will track how long it takes for their payroll deductions to hit the trust. If they aren’t happy with how quickly that happens, they may call the DOL. If you have forgotten to submit a payroll to the trustee, or think you may have been late, call your benefits attorney. There are procedures to follow for late contribution submissions.
DOL audits are generally not pleasant. It wouldn’t be too strong to say that they are often adversarial. Because these visits are typically generated by employee complaints or Form 5500 errors, auditors have a pretty good idea that something is wrong. Consequently, I recommend that plan sponsors do everything they can to avoid a DOL 401(k) audit.
See the original article Here.
Source:
Lawton R. (2017 February 13). How to avoid a DOL 401(k) audit [Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/how-to-avoid-a-dol-401-k-audit?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
Employers adding financial well-being tools for preretirees
Take a peek at this interesting article from Benefits Pro, about the man tools and services employers are starting to offer to pre-retirees by Marlene Y. Satter,
As their employee base ages closer to retirement, employers are adding tools to help those older employees better prepare for the big day.
That’s according to Aon Hewitt’s “2017 Hot Topics in Retirement and Financial Wellbeing” survey, which found that employers are taking action to improve employee benefits and help workers plan for a secure financial footing, not just now but when they retire.
Not only are employers focusing on enhancing both accumulation and decumulation phases for defined contribution plan participants, they’re taking a range of steps to do so—from improved education to encouraging higher savings rates.
Just 15 percent of respondents are comfortable with the average savings rate in their plan; among the rest, 62 percent are very likely to act on increasing that savings level during 2017, whether by increasing defaults, changing contribution escalation provisions, or sending targeted communications to participants.
And only 10 percent of employers are satisfied with employees’ knowledge about how much constitutes an adequate amount of retirement savings, and nearly all dissatisfied employers (87 percent) are likely to take some action this year to help workers plan to reach retirement goals.
In addition, more employers are providing options for participants to convert their balances into retirement income. Currently just over half of employers (51 percent) allow individuals to receive automatic payments from the plan over an extended period of time.
They’re also derisking through various means, whether by adopting asset portfolios that match the characteristics of the plan’s liabilities (currently 40 percent of employers use this strategy, but the prevalence is expected to grow to more than 50 percent by year end), considering the purchase of annuities for at least some participants (28 percent are considering this action) or planning to offer a lump-sum window to terminated vested participants (32 percent are in this camp).
Why are employers suddenly so interested in how well employees are financially prepared for retirement?
According to Rob Austin, director of retirement research at Aon Hewitt, not only do employees not really understand how to convert a lump sum retirement plan balance into retirement income that they can live on, and employers are also worried that employees will mishandle that lump sum when the time comes and end up broke.
So some employers are tackling the issue by folding in more information about 401(k) plans with the annual enrollment process, in an effort to get employees to think more holistically about their benefits packages.
They're also encouraging them to consider increasing contributions to their retirement plan while they’re already enmeshed in other enrollments.
See the original article Here.
Source:
Satter M. (2017 February 13). Employers adding financial well-being tools for preretirees [Web blog post]. Retrieved from address https://www.benefitspro.com/2017/02/13/employers-adding-financial-well-being-tools-for-pr?ref=hp-top-stories
Where exactly are we in the ACA repeal process?
Worried about the ACA repeal process? Check out this informative article from HR Morning about the status of the ACA's repeal by Christian Schappel,
President Trump, along with other Republican lawmakers, have promised to “repeal and replace” the Affordable Care Act (ACA). But it hasn’t happened yet. Here’s why, as well as a timeline for what’s to come.
In his “Contract with the American Voter,” Donald Trump promised to repeal Obamacare within his first 100 days in office. But the reality is he can’t do it on his own. He needs votes to get it repealed outright — and he doesn’t have enough of them.
What’s the hold up?
Broad legislation that would repeal the ACA would require 60 votes in the Senate, and the GOP doesn’t control enough seats to make that a reality — or avoid a filibuster by the Democrats.
Still, that hasn’t stopped Trump from declaring war on the healthcare reform law. In one of his first acts as president, Trump issued an executive order that directs federal agencies to waive some of the requirements of the law that could impose a burden on individuals and certain businesses.
It was a clear sign from Trump that his administration plans to attack the ACA by any means necessary.
So what’s the plan now?
Congressional Republicans are now preparing to dismantle portions of the ACA using a process known as reconciliation. It will allow the GOP to vote on budgetary pieces of the health law, without giving the Democrats a chance to filibuster.
The problem for Republicans is reconciliation limits the extent to which they can reshape the law.
Parts of the law it appears they can roll back through reconciliation:
- The individual mandate (which is imposed through a tax)
- The employer mandate (which imposed through a tax), and
- The subsidies to help individuals purchase coverage (which require government funding).
The Republicans believe that through reconciliation they can knock the legs out from under the ACA and begin to implement their own health reforms.
Some of the things members of the GOP have indicated they want to do:
- Go to a more free-market approach, in which individuals would have greater ability to purchase health insurance across state lines
- Expand health savings accounts
- Allow individuals to deduct the cost of health insurance premiums from their income taxes, and
- Let states manage Medicaid funds.
Two popular ACA provisions Republicans said they plan to keep in health plans:
- The prohibition on denying coverage to those with pre-existing conditions, and
- The ability for children to stay on their parents’ plans until age 26.
So when is it all going to happen?
When it comes to a timeline for when the GOP hopes to initiate reforms, things are a little murky. The problem is, due to the reconciliation process — and complaints from insurers about what the requirement to provide coverage to those with pre-existing conditions will do to risk pools and pricing — things aren’t as cut and dried as employers would like them to be.
But here’s what we know:
- In late January, at its annual retreat, the GOP said it wants to bring a final reconciliation package to the floor of the House by late February or early March
- In a pre-Super Bowl interview with Fox News’ Bill O’Reilly, President Trump said the repeal and replace process is “complicated” and could take until “sometime next year,” and
- Just a few days after Trump’s statements to O’Reilly, House Speak Paul Ryan (R-WI) said the president’s remarks won’t alter the timeline for the House GOP to introduce significant repeal and replace legislation by the end of 2017. Still, Ryan did indicate that even if such legislation is passed, it could take some time for it to be fully implemented.
Bottom line: Employers are likely looking at a long legislative process, and an even longer implementation period.
Bills that could chip away at law
While Congress mulls larger-scale changes to the ACA, a few bills have been introduced for lawmakers to chew on.
The following could chip away at certain elements of reform:
- The Middle Class Health Benefits Tax Repeal Act (H.R. 173) would kill the 40% deductible excise tax (a.k.a., “the Cadillac tax”) on high-cost employer health plans
- The Health Savings Account Expansion Act (H.R. 247 and S. 28) would permit the reimbursement of health insurance premiums and increase the maximum allowable contribution, and
- The Healthcare Tax Relief and Mandate Repeal Act (H.R. 285) would kill both the individual and the employer health insurance mandates.
See the original article Here.
Source:
Schappel C. (2017 February 10). Where exactly are we in the ACA repeal process? [Web blog post]. Retrieved from address https://www.hrmorning.com/where-are-we-aca-obamacare-repeal-trump/
4 Basic Elements of Successful People Analytics
- We need to be clear about what question we are trying to answer.
- We need to gather the best available evidence—which, even if it not good, will be better than no evidence.
- We need to assess the quality of the evidence so we can make an informed judgment.
- Often, basic math is all we need to inform our judgment.
See the original article Here.
Source:
Creelman D. (2017 February 09). 4 basic elements of successful people analytics [Web blog post]. Retrieved from address https://blog.shrm.org/blog/4-basic-elements-of-successful-people-analytics
How Obama’s last healthcare legislation is further hurting the ACA’s chances of survival
Due to the most recent changes President Obama made to the ACA before leaving office, ACA repeal is looking more and more like a possibility. Take a look at this great article from Employee Benefits Advisors to see how the changes will affect the ACA repeal process by Craig Hasday
President Trump is delivering on what many had viewed as an unrealistic campaign promise: The repeal of Obamacare is right on track. In finalizing the budget, the GOP can now line out any ACA items with a fiscal impact, thanks to an executive order issued by Trump on his first day in office. By lining out the individual and employer penalty and eliminating some of the ACA taxes – voila – the ACA is gone.
The market reforms will stay, however (no pre-existing conditions, guaranteed issue coverage and dependents covered to age 26). But there is an enormous “if.” If the insurance carriers stay in the market.
One of the reasons the ACA is not working is the adverse selection issue. Insurance carriers must take all comers, and since the individual penalty for not obtaining coverage is full of loopholes, and not large enough to dissuade the young and healthy from rolling the dice, the risk pool has performed horrifically. That should be no surprise – I have been writing about it for years; a few examples here, here, here and here.
But if the individual penalty is repealed, it is going to get even worse. The healthy are going to leave and the risk pools will be left with a lot of expensive sick people who love the idea of guaranteed coverage, premiums and unlimited maximums.
The problem with QSEHRAs
The prior Congress and former President Obama didn't help matters with the passage of the 21st Century Cures Act, which was signed into law in December 2016. This law allows small employers who don't offer a group health plan to create a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). Employers can provide money to employees on a tax-free basis to pay for individual health insurance policies and to reimburse employees for certain medical expenses. This is going to make the small group pools worse and, my guess is, increase adverse selection even more.
Given the losses incurred to date and the additional selection being imposed on the healthcare system, the big question is will the health insurance carriers stay in the marketplace? If mainstream carriers refuse to offer policies – BOOM – the system implodes.
To quote the best show on Broadway, “Hamilton,” I would love “to be in the room where it happens.” This is going to be interesting to watch.
See the original article Here.
Source:
Hasday C. (2017 February 06). How Obama's last healthcare legislation is further hurting the ACA's chances of survival [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/how-obamas-last-healthcare-legislation-is-further-hurting-the-acas-chances-of-survival