Percent of Plans Offering HRA/HSA Option Plummet
Original post benefitspro.com
A study of some 10,000 employer sponsored plans by United Benefit Advisors of health plans revealed that about 24 percent of all health plans offered either an HSA or HRA component — a 29 percent decrease in the number of health plans nationally. That drop indicates that plan designers and health plan sponsors are still out of sync on the value of these accounts.
“Faulty plan design, in some instances, has led to smaller pricing gaps between traditional plans and HSA compatible plans,” says Steve Salinas, benefits advisor at Bridgeport Benefits, a California-based UBA Partner Firm. “Many insurers have added stipulations to their contracts disallowing employer-funded accounts in the presence of a high deductible plan.”
UBA’s data supports the overview that “enrollment and contributions to these account-based plans varied wildly based on employer size, industry, and region.”
It offered a large employer/small employer illustration of this near-chaotic situation. “While large employers typically offer the lowest contributions to account-based plans, companies with 200 to 1,000+ employees saw the most dramatic increases in enrollment, ranging from 50 to 90 percent over the last three years.”
In some respects, plan designers and consumers in California may be closer to figuring out how to design plans with HRAs and HSAs that strike a balance between the objectives of all three parties. California offers the best HRA and HSA plans for singles and families.
- California leads the country with the highest HRA contributions for singles, which average $2,288;
- California is the only region in the country that increased contributions over the last three years, making them the most generous in the nation by contributing $981 to singles and $1,789 to families;
- Families in California receive the second highest average family contribution to HRAs at $3,950, a 13 percent decrease from three years ago when they led the nation at $4,537;
- The average employer contribution to an HSA was $491 for a single employee and $882 for a family.
“In California, health insurance costs are so high that employees very often gravitate to the lowest cost options, typically the HSA-compatible high deductible plans,” says Keith McNeil, benefits advisor at Arrow Benefits Group in California, a UBA Partner Firm. “HRAs have been under health plan scrutiny due to the trend of self-insuring the high deductible through an HRA, which the health plan believes raises the cost of their plans. They have threatened penalties for non-compliance. So in the small group market, it has been much easier to simply offer HSA compatible plans and include the HSA as an option to members.”
“Large employers (1,000+ employees) have not typically offered competitive HRA or HSA plans because they are able to offer other types of more generous plans,” says Les McPhearson, CEO of UBA. “But this is the sector to watch: If they see the kind of double-digit cost increases other employer groups already have, they may have no choice but to offer more attractive HRA and HSA plans in an effort to control costs.”
Employers partner with academic institutions to create specialized programs
Originally posted August 27, 2014 by Nick Otto on https://ebn.benefitnews.com
It’s a new spin on an older system, as benefit managers are trying to evaluate the long-term benefits of helping to pay for their workers’ education — and more cost-effective and results-oriented methods of doing so. The big question: do these programs indeed serve to attract more candidates, and does the training necessarily produce workers who are better skilled and interested in staying with their current jobs?
In the past, tuition reimbursement programs were a more unstructured offering — occasionally the classes needed to be work-related in order to qualify for employer reimbursement, depending on an employer’s needs — resulting in a pleasant but not entirely critical employee benefit, with workers paid back for their studies as long as they maintained an acceptable
grade level.
Under a new model emerging at a variety of employers, direct partnerships with the online-specific satellites of accredited post-secondary institutions are helping to create more specialized and self-directed educational offerings, catered to the skill sets employers have found lacking in their workers. The participating college offers a discounted tuition rate and in exchange, the employer works to promote that particular program. Employees have less range of choice in educational offerings as a result, but may find the classes more individually suited to their needs and ultimately more important to their professional development.
“Corporate America is always trying to attract and retain the best talent, that’s certainly a very key HR strategy for most employers,” says Carol Sladek, partner and work-life consulting lead at Aon Hewitt. “So what we’re seeing is an increased interest on the part of employers to try to find the types of benefits and programs and policies that will help employees not only join their team, but stay on their teams and also help better employees along the way.”
Anthem Blue Cross and Blue Shield of New Hampshire partnered last year with College for America, a nonprofit college launched specifically for working adults and their employers, to create a competency-based program with no credit hours or courses. Students learn through projects targeted toward specific, employer-focused skills — communication, teamwork, ethics and others — resulting in either Associate- or Bachelor-level degrees. One of the biggest perks is the price tag: At $2,500 annually, the all-inclusive program is self-directed and online, providing an approach that allows students to progress through the program at their own pace.
Chris Dugan, director of public relations for Anthem’s New Hampshire operations, says it was one of the first companies to partner with the university last year, and since then, the insurer has had 56 employees participate in the program.
“Not only are employees going through this program stronger at their day job, but it could open up other opportunities in our company — so we promote this vigorously to our employees, and they seem to have strong interest [so far],” Dugan says. The convenience factor, plus Anthem’s arrangement to pay employees’ tuition, has also added to the new program’s success.
To date, College for America has enrolled nearly 1,000 students since its pilot launch in January 2013, adding more than 100 new students per month in recent months. Currently, it has about 60 employer partners — including corporate, government and nonprofit groups — offering the College for America program to their employees.
“We’re currently in program development discussions with several national employers and associations who see a specific labor market need where a competency-based, workforce-applicable degree would help with their talent development pipeline,” says Colin Van Ostern, a member of the college’s leadership team. “We’re seeing significant demand.”
Another example of corporate-academic partnerships can be seen with Starbucks, which recently created a program allowing any employee working 20 hours a week or more to be eligible for a full reimbursement if they enroll in Arizona State University’s online program as juniors or seniors. Freshmen and sophomores receive a partial scholarship and needs-based financial aid toward the foundational work of completing their degree.
According to data from EdAssist, an administrator of tuition assistance programs, spending on — and utilization of — tuition assistance varies by industry. Among health care companies in its database, for example, the average annual spending per employee on tuition assistance is $2,332, yet the industry boasts the highest utilization rate at 8%.
Anthem and Starbucks’ examples come in contrast to other employers’ internalized education programs — fast-food retailer McDonald’s and its well-known Hamburger University in Oak Brook, Ill., a corporate managerial training program that has offered skills-based training to thousands of company employees since being founded in 1961.
Whatever the venue, Karen Hutcheson a partner in the rewards and talent management practice at Mercer, says that employees are keen in keeping up with current skills.
“I’m finding employers also want to make sure their employees have those opportunities; it’s a win-win,” she says. “On the employer side, if you can educate your workforce in an affordable and manageable fashion, you can feed into stronger engagement.”
Higher education needs to be more nimble and responsive to student needs, she adds. And people in the workforce want strong skills, but the cost of traditional higher education is so high. “This is a nice way to marry the two together,” Hutcheson says.
Limiting options
On the flip side, overly focused programs do limit some employees’ options, and might lead to lower benefit participation.
“With the lack of choice, high potential employees may discount the value of obtaining a degree or graduate degree,” Hutcheson says. And although it’s still too early to tell, another potential downside would be the perceived value of an online degree versus the historical degree. “Not all Bachelors [degrees] are created the same,” she adds.
Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management, says the College for America model is part of a growing trend of employers working with community colleges, vocational schools and traditional universities to create structured programs.
Part of that growth, he says, seeks to offset a continued imbalance in the labor pool.
“During the height of the recession, there were employers desperate for skilled tradesmen and couldn’t find them to save their lives,” he says.
In the future, Elliott says he expects to see more corporate partnerships as a way of helping to drive down the cost of continuing education for employees — particularly in the Starbucks’ example.
“The reality is, these kids will be graduating with maybe $10,000 in debt,” compared to the much higher numbers in average student loan debt as the result of traditional, self-funded college programs. “You do the math.”
Aon Hewitt’s Sladek says that business costs and overall return on investment continue to be the biggest questions facing benefit managers as they consider the wider range of educational options.
“A lot of employers are sitting back waiting to see what will happen,” she says. “The Starbucks thing was really interesting and there was a lot of interest. I think a lot of other employers are standing on the edge watching.”
Hutcheson calls it a “wave of the future.”
“What we’re seeing in the workforce are people being more focused on building and maintaining skills,” she says. “We see employers wanting to see their employees be more prepared and in charge.”
Why employees need 401(k) investment advice
Originally posted August 21, 2014 by Michael Giardina on https://ebn.benefitnews.com
This retirement disconnect is not surprising, according to Schwab Retirement Plan Services, which released a survey this week of more than 1,000 401(k) plan participants. “We often see that participants are hesitant to take action when they’re not completely comfortable with the matter at hand, and this is especially true when it comes to financial decisions,” says Steve Anderson, head of retirement plan services at Charles Schwab.
Aside from health coverage, the survey found nearly 90% of workers agreed that the 401(k) is a “must-have” benefit, more than extra vacation days or the ability to telecommute. However, employees said they spent more time researching options for a new car (about 4.3 hours) or vacations (about 3.8 hours) than researching their 401(k) investment choices (2.1 hours).
“The fact that an overwhelming majority of workers demand 401(k)s is good news, because it shows that people understand that they are responsible for their own retirement,” Anderson tells EBN. “Participating in a 401(k) program helps workers develop the discipline to save, and the earlier they begin to save, the more prepared they will be for retirement.”
Meanwhile, about half of plan participants said that their defined contribution plan’s investment options can be more confusing than their health benefits options. But gaining the needed assistance to understand the real value of their retirement plan was not top-of-mind for employees, as respondents said they were more likely to hire someone to perform an oil change to their vehicle, landscape their yard or help with their taxes than to seek out assistance for their 401(k) investments.
Anderson adds that while educational resources from plan sponsors may be just what employees need to make sound investment decisions, he says that “if participants have to seek out these resources on their own, chances are they won’t utilize them to their full benefit.”
Even with the prevalence of auto-enrollment and auto-escalation, employers may still have to do more. Only one-quarter of employees with access to professional 401(k) advice report having used it, says Anderson.
“Now employers can take the next step in plan design by proactively delivering advice to their employees,” Anderson explains. “We know getting advice can make a big difference for workers, as we’ve witnessed the impact of 401(k) advice on participant outcomes.”
For example, 70% of respondents noted that they would feel extremely or very confident in their investment decisions if they used a financial professional. Meanwhile, only 39% highlight the same confidence level if they opted to make those investment choices themselves.
“Participants who receive advice save more, are better diversified and stay the course in times of market volatility,” Anderson explains.
Employers create game plan for expected health care cost increases
Originially posted on August 22, 2014 by Michael Giardina on https://ebn.benefitnews.com
Employers across the country predict that their health care costs will increase by 5.2% in 2015 if they decide to maintain their current health plan structures. With modest changes, this increase drops down to 4%, according to a recent Towers Watson’s survey of nearly 400 employee benefit professionals from midsize and large companies.
Meanwhile, Towers Watson finds that the rising tide of health care costs has become a main focus of executives, with two-thirds of chief financial officers and chief executive officers holding a key place in health benefit strategy discussions. It’s coming down to wire for many employers to get costs down as the ACA’s excise tax takes effect in 2018.
Randall Abbott, senior consultant with Towers Watson, says that many employers are approaching the cost conversation “as a balance of shareholder responsibility and social responsibility.” But it’s not a surprise that three-quarters of employers are worried about the excise tax, commonly referred to as the Cadillac tax.
“There is this impression that employers are just raising costs up,” Abbott explains, but highlights “they are doing it out of necessity.”
“They are trying to do it as thoughtfully and as responsibly as they can, and that’s a constant battle,” Abbott continues.
This battle, according to Towers Watson’s survey, is becoming a reality for many. More and more employers are planning to incorporate consumer-driven health plans, and other high-deductible health plans, into their coverage umbrella. By 2017, more than half of respondents expect to make this plan the only option, eliminating other plans.
“Inaction is not an option here,” Abbott explains, while noting that account-based health options such as health savings accounts can help all interested parties realize the costs at point-of-care.
Tom Meier, vice president of product development for Health Care Service Corporation, the nation’s largest customer-owned health insurer, agrees that CDHPs have been growing at record rates. Trade group America’s Health Insurance Plans reports that 15.5 million Americans were covered in HSA-eligible plans – a number that has tripled in the last six years.
“We’re seeing employers go all in on CDHPs, and I don’t see that slowing anytime soon,” Meier explains to EBN. “Employers are going to have to revisit their plan design and likely move out of those high cost benefit designs in order to comply and get under [the ACA’s excise tax] that threshold.”
Currently, HCSC has more than 2 million members enrolled in CDHPs under the insurer’s offering, which includes five Blue Cross and Blue Shield states. Meier adds that moving from $250 preferred provider organization health plan to a full-replacement $5,000 deductible CDHP is not something that employers should rush into. He adds that HR and benefit managers can also help to alleviate some of the expected employee unrest from the change by offering resources.
“As you’re asking them [employees] to be the consumers of care, you have to give them the tools to survive and thrive, or else you are kind of throwing them out into the wilderness,” Meier says.
Another growing trend for employees, which has been tabbed for movement in 2016 and 2017 by a third of Towers Watson survey respondents, is reducing company subsidies for spousal and dependent coverage. Also, 26% indicate they are considering excluding spousal coverage all together should they have coverage elsewhere.
Last summer, it was reported that UPS planned to stop providing coverage to a portion of employees’ spouses who were able to opt into medical coverage through their own employers. First reported by Kaiser Health News, it was disclosed that more cost associated with the landmark health care law was forcing the move. Of the more than 33,000 spouses being covered, UPS said that about 15,000 could gain coverage from their current employers.
UPS said in a memo to employees that “limiting plan eligibility is one way to manage ongoing health care costs, now and into the future, so that we can continue to provide affordable coverage for our employees.”
While UPS declined to comment on the past spousal health plan coverage change, Paul Fronstin, director of the Employee Benefit Research Institute’s health research and education program, notes that re-examining spousal coverage, as well as looking at HSA-eligible plans and health exchanges, are areas where employer interest is growing.
Fronstin adds that “everything is on the table,” however.
7 more retirement and annuity facts you should know
Originally posted August 8, 2014 by Warren S. Hersch on https://www.lifehealthpro.com
How many women and Gen-Xers have calculated how much money they will need to retire? To what extent does working with a financial advisor increase individuals’ retirement confidence? What are the tax implications of boomers who are retiring later, saving more and planning better?
Answers to these questions, among many others, are forthcoming in the Insured Retirement Institute’s “IRI Fact Book 2014.” The 198-page report, an all-encompassing guide to information, trends and data in the retirement income space, explores the state of the industry, annuity product innovations, and solutions for generating immediate and future income needs.
The report also details consumer use and attitudes towards annuities, spotlights trends among baby boomers and generation X women, examines boomer expectations for retirement this year, and delves into the regulation and taxation of annuities.
Fact 1: Three-quarters (75 percent) of households that own fixed annuities claim balances of less than $100,000, while 68 percent of variable annuity owners report balances below $100,000.
For households with between $500,000 and $2 million in investable assets – the sweet spot for advisors serving the “mass affluent market,” more than a quarter have a fixed annuity balance of $1-$19,000 (28.1 percent) or $20,000-$49,000 ($24.4 percent)
Others with investable assets between $500,000 and $2 million have the following fixed annuity balances:
● $50,000-$99,999: 8.7 percent of owners
●$100,000-$299,999: 15.5 percent owners
● $300,000-$499,999 3.2 percent of owners
● $500,000-plus: 0 percent of owners
Fact 2: Nearly half of households (43 percent) cite guaranteed monthly income payments as the primary reason for purchasing an annuity.
This fact holds true, the report states, among investors with less than $2 million in investable assets. Investors owning investable assets between $2 million and $5 million place the greatest importance on potential account growth (41 percent). The wealthiest investors value insuring portions of their assets (39 percent).
Households with $2 million to 5 million in investable assets cite the following reasons for purchasing a variable annuity:
● 33.7 percent: To generate a guaranteed payment each month in retirement.
● 41.0 percent: To provide a potential for account growth.
● 35.5 percent: To receive tax-deferral on earnings in the annuity.
● 30.7 percent: To provide diversification by adding another type of investment to the portfolio.
● 32.2 percent: To protect assets by insuring a minimum value of payments from the account.
● 17.4 percent: To set aside assets for heirs.
● 16.7 percent: To exchange an old annuity for a new one.
● 5.6 percent: Not sure why I purchased an annuity.
Fact 3: The economy has had a detrimental effect on retirement savings and planning for many women.
The report indicates that few women are confident that they will have enough retirement savings or that they have done a good job preparing financially for retirement.
● 51 percent of Boomer women and 57 percent of Gen-X women have weak or no confidence that they will have enough money to live comfortably in retirement or are unsure.
● Significant numbers of both Gen-X and Boomer women (69 percent and 46 percent, respectively) have not attempted to calculate how much they will need to retire.
● Though expecting personal savings to be a significant source of retirement income, only half of Boomer women with savings have $200,000 or more in retirement savings. And only one-quarter of Gen-X women have $100,000 or more saved for retirement.
● Fewer than half have worked with a financial advisor to plan for their retirement. Those who do seek an advisor report that retirement planning is a top reason.
Fact 4: Working with a financial advisor greatly increases retirement confidence.
● Among those who consult with a financial advisor, 73 percent feel very or somewhat prepared for retirement compared with 43 percent of those who did not.
● Among Boomers who have calculated their retirement savings needs, 44 percent are extremely or very confident compared with 29 percent of those who did not. Among Gen-Xers who completed the calculation, 47 percent are extremely or very confident, compared with 28 percent among those who did not.
● Annuity owners have higher levels of retirement confidence. Among boomers who own an annuity, 53 percent are extremely confident, compared with 31 percent who do not. Among Gen-Xers who own an annuity, 49 percent are extremely or very confident, compared with 31 percent among those who do not.
● 7 in 10 Boomer and 6 in 10 Gen-Xer annuity owners have completed a retirement savings needs calculation. This compares with 44 percent of Boomers and 34 percent of Gen-Xers who do not own an annuity.
● Nearly three-quarters (74 percent) of Boomer and 62 percent of Gen-Xer annuity owners have consulted with a financial advisor. This compares with 35 percent of Boomers and 30 percent of Gen-Xers who do not own an annuity.
Fact 5: Boomers are showing some optimism that their financial situation will improve during the next five years.
The report reveals also that boomers are retiring later, saving more and planning better.
- A quarter of Boomers postponed their plans to retire during the year past.
● 28 percent of Boomers plan to retire at age 70 or later.
● 80 percent of Boomers have retirement savings, with about half having saved $250,000 or more.
● 55 percent of Boomers have calculated a retirement savings goal, up from 50 percent in 2013.
Tax policy implications and positive actions
● Three in four Boomers say tax deferral is an important feature of a retirement investment.
● Nearly 40 percent of Boomers would be less likely to save for retirement if tax incentives for retirement savings, such as tax deferral, were reduced or eliminated.
● Boomers planning for retirement with the help of a financial advisor are more than twice as likely to be highly confident in their retirement plans compared to those planning for retirement on their own.
Fact 6: Most advisors (71 percent) have increased the net number of retirement income clients served during the year past.
The report shows that 60 percent of advisors have modestly increased their net number of retirement income clients, while 11 percent have significantly increased the number. An additional 28 percent and 2 percent, respectively, experienced no change or decreased their retirement income clientele.
The research adds nearly 6 in 10 (58 percent) advisors describe as well developed the processes and capabilities they’ve established for their retirement income clients. An additional 37 percent of advisors believe they have some but not all of the needed processes and capabilities.
Nine in ten advisors say that enhancing their retirement income processes and capabilities is a “priority.” For a majority, the priority level is high (54 percent). Fewer advisors describe the priority level as moderate (37 percent) or low.
Fact 7: Advisors generally rely on a combination of four major investment product categories for retirement income clients: mutual funds, ETFs, variable annuities and fixed income annuities.
For 1 in 3 advisors, all four categories are used in combination. About 2 in 9 advisors use mutual funds, ETFs and variable annuities. Other grouping include mutual funds and variable (1 in 8 advisors), income annuities (1 in 11 advisors), plus mutual funds and ETFs (1 in 12 advisors).
The following is a percentage-based breakdown of the most typical product combinations:
● 38 percent –Fund/ETF/FA/Fixed
● 22 percent –Fund/ETF/VA
● 8 percent—Fund/ETF
● 5 percent—Fund only
● 12 percent—Fund/VA
● 9 percent—Fund/VA/Fixed
Health care employers need cure-all for retirement epidemic
Originally posted Jully 11, 2014 by Michael Giardina on https://ebn.benefitnews.com.
Like other industries, health care employers and benefit plan managers in the health care sector are struggling mightily with their ability to address the retirement preparedness of their evolving workforces.
Whether it’s the remnants of the baby boomers or introduction of millennials, the workforce dynamic in the health care industry is going through a change as the it continues to cope with the ongoing hiccups of the Affordable Care Act. Plan fiduciaries at health worksites also caution the need to motivate their employees to save adequately and helping them learn how to invest wisely.
The health care segment includes more 4,000 defined contribution plans, with approximately 5,200 retirement plan participants. In total assets, the health care sector has more $317.8 billion, which is about 40% of the overall DC not-for-profit market.
Ty Minnich, vice president, not-for-profit institutional markets at Transamerica Retirement Solutions, says the root of the problem is the “pendulum shift” from defined benefit to DC retirement plans, which adds to the retirement confusion.
“The aging population, although affecting all industries, is creating a workforce management issue – particularly in health care, where the demand for younger employees is there,” says Minnich. “The technical expertise, the knowledge they need with the sophistication of the changes in medical delivery [is critical], yet they have employees entering the retirement period of their careers and they are not retiring because they are not ready to retire, from a financial perceptive.”
According to health care retirement plan sponsors, approximately 75% say that employee engagement is one of the most significant challenges in managing a retirement plan. Of the more than 100 hospital administrators and chief financial officers surveyed by Transamerica and the American Hospital Association, most agree that helping employees save for retirement and retaining employees are top goals for their retirement plan.
Another wrench in the operation of health care businesses has been the ACA, and its overnight transformation – according to some in consultancy space – of how business is done in the field.
“[Health care] is undergoing an enormous change, from the perspective on how they get reimbursed for their delivery model,” says Minnich. “What you seeing is that the smaller regional community-type organizations just can’t exist in this marketplace.”
David Zetter, of Zetter Healthcare Management Consultants, explains that he is seeing similar shifts in all aspects of benefits and services – from small practices to large groups and health systems that the health care accounting and consulting firm works with.
“I don’t see how health care practices are going to do it,” explains Zetter, also a board member of the National Society of Certified Healthcare Business Consultants. “It’s just getting so expensive, and reimbursements are going down. It’s tough for a doctor to make ends meet at this point in time and if they keep wanting to be the employer of choice they are going to have to ante up. Unfortunately that’s going to cost them quite a bit of money, especially from a benefits standpoint.”
Meanwhile, there has been a change in how plan sponsors measure plan success in the medical industry. There is more of a focus around retirement readiness rather just solely participation rates, according to the study. And this intensified focus on improving employee interaction and tailoring print and electronic education touch points exemplifies how health care retirement plan sponsors are reacting.
“It all indicates that the plan sponsors are not only realizing they have to do more to help participants get ready for retirement, but also helping participant to help themselves,” says Grace Basile, assistant director of market research at Transamerica Retirement Solutions. “There’s no more ‘set it and forget it,’ there’s no more just getting into the plan.” Instead, she says it’s all about “increasing [engagement] over time, [and] making sure your investments are appropriate for where you are in your age and career.”
Overall, employers and their employees have been riddled with uncertainty of retirement since the recession. However, according to the Employee Benefit Research Institute, retirement confidence reported some meager gains from the losses over the past five years. Approximately 18% of Americans are very confident and 37% are somewhat confident with the future financial needs.
Nevin Adams, co-director of the Employee Benefit Research Institute Center for Research on Retirement Income, adds that all employers – not just those in the health care space – are faced with the challenges of finding the sweet spot of automatic enrollment, default rates and participation.
“One of the things that we are really hearing from employers is that employee benefits are going to continue to be sort of a differentiating factor,” Adams tells EBN. He says that demographic shifts are one of the biggest challenges for employers to deal with.
“The baby boomers [are] kind of hanging around, and the millenials looking for a place to come in,” he notes. “The benefit package and how it’s put together really will make a difference.”
Hottest Retirement Plan Improvement in 2013?
Source: https://ebn.benefitnews.com
By Robert C. Lawton
Many employer plan sponsors are expressing a high level of interest in adding Roth 401(k) in-plan conversions as an option to their 401(k) plans in 2013. The recently passed Taxpayer Relief Act of 2012 made it possible for retirement plan participants to convert existing 401(k) plan balances to Roth 401(k) balances, whether or not the participant is distribution eligible.
The benefits? All contributions and earnings that have been in the plan five years after the Roth clock starts are distributable tax free (assuming they are distributed due to an eligible event).
The cost? It is necessary to pay taxes on any 401(k) balances converted into Roth 401(k) balances in the year of conversion.
The logic of executing a Roth 401(k) in-plan conversion lies in a belief that tax rates are low now and will be higher in the future. If a participant believes that is true, it may make sense to pay taxes now on retirement plan balances.
Younger individuals just starting their careers may find this option valuable. Imagine building a nest egg over a 40-year career and having your entire 401(k) account balance available tax-free at your retirement! This option may also appeal to higher balance, older individuals who may be involved in tax planning, or individuals who are looking for additional taxable income in a particular year (e.g.: due to the realization of a loss).
There appears to be no downside associated with adding this option to a 401(k) plan. It will not cost anything additional to administer each year and is a nice option to have available for employees to elect.
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Commitment to employer-sponsored health plans on the rise
Source: https://www.benefitspro.com
By Kathryn Mayer
What a difference a year can make. A new industry report finds that significantly more employers than last year say they will “definitely” continue to provide health care coverage when health exchanges come online next year.
According to preliminary survey results from the International Foundation of Employee Benefit Plans, 69 percent of employers said they will definitely continue to provide employer-sponsored health care in 2014, while another 25 percent said they are very likely to continue employer-sponsored health care.
That’s a 23 point increase from 2012, when 46 percent reported being certain that they would continue employer-sponsored health care.
Opponents of President Obama’s Patient Protection and Affordable Care Act have argued that employers are likely to drop health coverage as an unintended consequence of the law that will negatively affect employees who want to stick with the coverage they know and like.
Estimates have varied widely on just what reform will do to employer-based health coverage. A Deloitte report last summer estimated that one in 10 employers will drop coverage for their employees, while consulting firm McKinsey & Co. drew fire when it stated 30 percent of respondents will “definitely” or “probably” stop offering employer-sponsored health insurance after 2014.
The IFEBP survey found the vast majority of employers (90 percent) have moved beyond a “wait and see” mode, and more than half are developing tactics to deal with the implications of reform. Organizations maintaining a wait-and-see mode decreased from 31 percent in 2012 to less than 10 percent in 2013.
Since the foundation’s first survey regarding reform’s impact on employer-sponsored coverage in 2010, employers have most commonly said keeping compliant was their top focus. In 2013, for the first time, most employers said their top focus is developing tactics to deal with implications of the law.
Still, the survey found estimates of cost increases directly associated with the PPACA have increased from 2012 to 2013. Employers with 50 or fewer employees are reporting the largest anticipated cost increase. Conversely, larger employers are the least likely to see significant cost increases.
Reform is expected to have a bigger impact on smaller employers than larger ones. Small businesses are making more employment-based decisions with hiring, firing and reallocating hours than larger employers, and they are more likely to drop coverage due to PPACA.
Despite employers' commitment to employer-sponsored health coverage, Gallup reported earlier this year that 44.5 percent of Americans got employer-based coverage in 2012, the lowest percentage since President Obama took office.
Results are based on survey responses submitted by more than 950 employee benefit professionals and practitioners through March 26.
Top 5 issues facing physicians, patients in 2013
Source: https://www.benefitspro.com
By Kathryn Mayer
As health reform continues to changes the landscape of our country’s health system, what’s to watch in this new year? A lot, industry insiders say.
Lou Goodman, president of The Physicians Foundation and CEO of the Texas Medical Association, says 2013 will be “a watershed year” for the U.S. health care system. Most of those changes will have a big impact on both patients and the physicians caring for them.
“It’s clear that lawmakers need to work closely with physicians to ensure we're well prepared to meet the demands of 30 million new patients in the health care system and to effectively address the impending doctor shortage and growing patient access crisis.”
The Physicians Foundation identified five issues that are likely to have a significant impact on patients and physicians in 2013.
1. Ongoing uncertainty over PPACA
Despite the Supreme Court decision upholding most of the provisions in the Patient Protection and Affordable Care Act and the re-election of President Obama, considerable uncertainty persists among patients and physicians regarding actual implementation of the act. Much of the law has yet to be fully defined and a number of key areas within PPACA—including accountable care organizations, health insurance exchanges, Medicare physician fee schedule and the independent payment advisory board—remain nebulous, the foundation says. Their research found that uncertainty surrounding health reform was among the key factors contributing to 77 percent of physicians being pessimistic about the future of medicine. In 2013, physicians will need to closely monitor developments around the implementation of these critical provisions, to understand how they will directly affect their patients and ability to practice medicine.
2. More consolidation
Consolidation means bigger, but is bigger better? Large hospital systems and medical groups continue to acquire smaller/solo private practices at a steady rate. According to the foundation's report pertaining to the future of U.S. medical practices, many physicians are seeking employment with hospital systems for income security and relief from administrative burdens. But increased consolidation may potentially lead to monopolistic concerns, raise cost of care, and reduce the viability and competitiveness of solo/private practice. As the trend toward greater medical consolidation continues across 2013, it will be vital to monitor for possible unintended consequences related to patient access and overall cost of care.
3. A scramble to fix the doctor shortage
In 2014, PPACA will introduce more than 30 million new patients to the U.S. health care system, a provision that has considerable implications relative to patient access to care and physician shortages. According to the Foundation’s Biennial Physician Survey, Americans are likely to experience significant challenges in accessing care if current physician practice patterns continue. If physicians continue to work fewer hours, more than 47,000 full-time-equivalent physicians will be lost from the workforce in the next four years. Moreover, 52 percent of physicians have limited the access of Medicare patients to their practices or are planning to do so. As the 12-month countdown to 30 million continues across 2013, physicians and policy makers will need to identify measures to help ensure a sufficient number of doctors are available to treat these millions of new patients – while also ensuring the quality of care provided to all patients is in no way compromised.
4. Erosion of physician autonomy
The Physicians Foundation believes that physician autonomy – particularly related to a doctor’s ability to exercise independent medical judgments without non-clinical personnel interfering with these decisions – is markedly deteriorating. Many of the factors contributing to a loss of physician autonomy include problematic and decreasing reimbursements, liability/defensive medicine pressures and an increasingly burdensome regulatory environment. In 2013, physicians will need to identify ways to streamline these processes and challenges, to help maintain the autonomy required to make the clinical decisions that are best for their patients.
5. Growing administrative burdens
Increasing administrative and government regulations were cited as one of the chief factors contributing to pervasive physician discontentment, according to the Foundation’s 2012 Biennial Physician Survey. Excessive “red tape” regulations are forcing many physicians to decrease their time spent with patients in order to deal with non-clinical paper work and other administrative burdens. In 2013, physicians and policy makers will need to work closely together to determine steps that will effectively reduce gratuitous regulations that negatively affect physician–patient relationships. According to a recent Foundation report, the creation of a Federal Commission for Administrative Simplification in Medicine could help reduce these regulations by evaluating and reducing cumbersome physician reporting requirements that do not result in cost savings or measurable reductions in patient risk.