Cash Balance Bounce
Cash balance plans increased by 21 percent in 2010 (the latest data available), nearly doubling 2009's jump of 11 percent, according to the 2012 National Cash Balance Research Report by Kravitz. Cash balance plans are growing faster than all other retirement plans, including 401(k)s, which logged a 1 percent decline over the same period.
Health Care Reform, Costs Likely Will Alter the Nature of Wellness
In the wake of the Supreme Court's ruling on health care reform, the future of employer-sponsored health care insurance remains murky at best.
One health trend, though, looks like it's here to stay as more insurers, employers and workers buy into corporate wellness programs. Yet the makeup of such programs likely will continue to evolve, experts say.
Jane DuBose, a principal director of advisory services for HealthLeaders-InterStudy, said at a recent industry conference that she expects health plans to continue shifting focus to wellness and prevention measures in an attempt to control costs, according to a Business Finance report.
DuBose said health plans increasingly will tie plan design to lifestyle behaviors and will include more incentives, such as cash and gift cards. While many employers have already taken these steps, the impact of the initiatives would be more powerful if health plans take a more active role in the wellness promotion, DuBose said.
Yet some of those moves -- such as linking wellness goals and premiums rates -- might run into strong resistance from employees, a new study suggests.
Most employees (68 percent) don't think participation in wellness programs should be required to qualify for benefits, according to a study by the National Business Group on Heath (NBGH). In an article by Employee Benefit News, NBGH reports that 62 percent of respondents said they oppose the idea of charging workers more for health coverage if they don't join wellness initiatives.
On the other hand, more than 80 percent of workers favor financial incentives as a reward for voluntary participation, the study finds.
Those incentives may prove to be the linchpin of the wellness programs of the future, according to a recent report by Occupational Health and Safety magazine.
The publication recently reported on a paper -- backed by a group of six major health organizations -- that provides tips on how employers can build quality wellness initiatives. The paper touts the power of incentives and predicts that financial and "outcomes-based" rewards will become more common in wellness programs because of the health care reform law. The paper, however, discourages the notion of tying wellness success to health care access.
"Workplace wellness programs can provide the tools and opportunities to improve health and wellness, but they should not be used in ways that undermine an employee's ability to obtain adequate and affordable health insurance coverage," Nancy Brown, CEO of the American Heart Association, stated in the report.
Wage Fights
The number of wage-hour lawsuits filed under the Fair Labor Standards Act hit a record mark this year, according to the law firm Seyfarth Shaw LLP. A total of 7,064 cases were filed in fiscal year 2012, compared with 2,035 in fiscal year 2002. Misclassification of employees, alleged uncompensated work and issues regarding overtime were the top causes of the lawsuits.
Employers Prep for New Moves under PPACA
As the 2013 enrollment time draws near, employers are preparing to jump through a few extra hoops thanks to the recently reaffirmed health care reform law.
In addition to the usual notices and benefit communications that employers must prepare and distribute to their employees, the Patient Protection and Affordable Care Act has added a summary of benefits and coverage (SBC) to the enrollment pile for plans that begin on or after Sept. 23, 2012.
The SBC is a four-page document that provides information about a plan's health care coverage and out-of-pocket costs for employees, according to a recent online post by law firm Warner Norcross & Judd LLP. Employers with fully insured plans can expect their insurers to provide the bulk of the content for their SBCs. Self-insured companies, on the other hand, will have to craft the SBCs themselves, the law firm notes.
The rules allow for a few actions that can simplify the process for employers, Warner's post notes. For example:
- Separate tiers of coverage can be covered in a single SBC.
- The SBC can be a stand-alone document or it can be included in an enrollment booklet, provided that it isn't buried and hard to find.
- A single SBC can be used for multiple plans, assuming that the only differences are deductibles and copay/coinsurance amounts, and that the document clearly defines these differences between the plans.
- The same distribution rules apply to SBCs as to summary plan descriptions (SPDs) under ERISA.
Employers with calendar-year health flexible spending accounts also will want to inform workers about the new $2,500 annual contribution cap created by PPACA, according to Linda Rowings, compliance director for United Benefit Advisors. Prior to enrollment, companies should double-check to ensure that their FSA administrator is prepared for this change, Rowings added.
Unfortunately for employers, these changes represent only the tip of the iceberg for new PPACA notices and enrollment duties. Once the health care exchanges, "pay or play" penalties and other major provisions of the law come into effect in 2014, employers can expect even more work around enrollment time.
One thing PPACA likely won't change, though: Quality employer-sponsored health benefits, which can strengthen recruiting/retention efforts and improve a workforce's health and productivity, remain highly valued by employees.
That's the result of a new survey that shows employees' satisfaction with their employer-provided benefits either rose or remained stable in 2012 compared with 2009, despite increased cost-sharing. The poll by the National Business Group on Health found that nearly two-thirds of workers are very satisfied with their health coverage through their employer or union, according to aPLANSPONSOR report.
While the increasing compliance hassles and climbing costs may prompt some employers to dump health coverage in the future and send their employees into the health care exchanges, a separate study suggests that move won't save employers money in the short or long term.
The study by Truven Health Analytics, as reported by the Employee Benefits Counsel, found that employers that choose to drop coverage in 2014 and pay penalties under PPACA likely will feel pressure to "make employees whole" by increasing compensation (which lacks the tax shelters of providing health benefits). This, combined with the penalties, will make dropping coverage a losing proposition financially, researchers said.
In light of those facts, most employers likely will be better off suffering through the extra enrollment and compliance work and continuing to provide health benefits, the report suggests.
"Employers must provide market value -- in benefits and compensation -- to retain skilled workers and will not be able to unilaterally cut benefits and expect employees to absorb the projected inefficiency of exchange-based coverage," the Counsel study notes.
Generic Cash
Generic drugs generated nearly $193 billion in savings to the U.S. health care system in 2011, according to a report by the General Pharmaceutical Association. The group noted that the figure likely will increase in coming years because a slew of high-price brand-name drugs, such as Lipitor and Zyprexa, had their patents expire recently.
Employee Involved in Vehicle Crash--Are You Liable?
Source: Safety Daily Advisor
The issue of employer liability for motor vehicle crashes, especially in distraction-related accidents, is heating up as more of these cases make it through the legal system.
We talked about distracted driving policies. Having a policy can do more than put employees on notice that you're serious about phone use. It can even potentially protect you in a lawsuit.
The National Safety Council (NSC) emphasizes, however, that policies that only comply with relevant national or state rules can leave employers vulnerable to liability and costs.
In a white paper titled Employer Liability and the Case for Comprehensive Cell Phone Policies, NSC discusses the legal theory that an employer may be held accountable for negligent employee actions if the employee was acting within the scope of employment at the time of the crash.
The term "acting within the scope of employment" has been defined broadly in a number of cases. Consider the following examples:
· A jury found that a driver and the corporation that owned the vehicle were liable for $21.6 million because testimony revealed that the driver might have been talking with her husband on a cell phone at the time of the fatal crash.
· An off-duty police officer was texting moments before a deadly crash. Because he was driving a police cruiser, his employer was held liable for $4 million.
· An employee was involved in a fatal crash as he drove to a non-business-related event on a Saturday night to make cold calls. The company did not own the car or the phone, but the plaintiff claimed that the business was liable because it encouraged employees to use their "car phones" and lacked a policy governing safe cell phone use. The employer settled the suit for $500,000.
The NSC white paper stresses that to help protect against employer liability a cell phone policy has to be more than words on paper. Employers should be careful not to promote a workplace culture in which employees feel they need to use cell phones while driving.
It's important to point out that employers can never be completely protected in the event of a lawsuit. But Dallas-based attorney Todd Clement argues that they stand a better chance if they can show that they implemented a total-ban policy, enforced the policy, educated employees, and monitored compliance.
Train Today with TrainingToday
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Unlike many training solutions available on the market today, BLR’s TrainingToday courses are routinely reviewed and updated to reflect changes in federal regulations or best practices. Each training course is developed by BLR lawyers, industry experts, and instructional designers who have experience across a wealth of industries, topics, and compliance areas.
Courses keep participants interested with engaging audio, built-in exercises, and key points to remember. At the completion of every course, individuals take a quiz designed to test for competency in all the course material presented. Quiz results and course completion times are automatically recorded.
Every course can be tailored with supporting and custom documents. BLR provides supporting documents for courses that include complete slide show notes and the answer key for the included quiz. As the administrator, you have the option of displaying uploaded documents and requiring review before the session begins. This is especially useful for company policies or worksite-specific information. Supporting materials can be added, edited, or removed at any time.
With only a few minutes' setup, you company will have a complete Web-based training program with professionally developed courses, employee testing capabilities, and systematic documentation of employee training sessions and scores. And remember, BLR®TrainingToday courses can be delivered at individual employee desks, in computer centers, at training kiosks, or even in a classroom.
No wonder BLR®TrainingToday was named "Best Workforce Training Solution" by the Software Information Industry Association. It can help you launch a cost-effective and successful employee training program.
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Distractology 101: A Quick Course in Deadly Driving Distractions and What to Do about Them
Source: Safety Daily Advisor
The battle against driving distractions is being fought in state houses, on highways, and in corporate offices, where employee driving policies are being revised to help stem the surge of distracted driving accidents on the job.
Consider the facts about work-related road accidents:
- Motor vehicle crashes account for nearly one-quarter of all fatal occupational injuries and remain the leading cause of work-related deaths.
- On average, an injury-related crash costs an employer $150,000 and a property damage incident costs $24,500.
- The National Safety Council estimates that at least 24 percent of crashes in 2010 involved drivers using cell phones. More than 1 million involved talking, and at least 160,000 involved drivers texting.
- Over all, distracted-driver accidents resulted in 3.092 deaths in 2010 and 416,000 injuries.
The National Highway Traffic Safety Administration (NHTSA) defines distracted driving as "any activity that could divert a person's attention away from the primary task of driving."
All distractions endanger driver, passenger, and bystander safety.
A number of studies have found that the risk of a crash is four times as likely when someone is using a phone. Hands-free devices do not appear to eliminate the cognitive distraction of conversation.
And its not just phones that are the problem. Among other common driving distractions:
- Eating and drinking
- Talking to passengers
- Grooming
- Reading, including maps
- Using a navigation system
- Watching a video
- Adjusting a radio, CD player, or MP3 player
Because text messaging requires visual, manual, and cognitive attention from the driver, NHTSA says that it is "by far the most alarming distraction." Sending or receiving a text takes a driver's eyes away from the road for an average of 4.6 seconds. At 55 miles per hour, that's equivalent to driving the length of an entire football field without looking.
Get It in Writing
One way you can make a difference is by establishing a cell phone policy for employees who drive on the job. NHTSA offers the following sample policy, which you can adapt by including specific consequences of noncompliance:
In order to increase employee safety and eliminate unnecessary risks behind the wheel, [Company Name] has enacted a Distracted Driving Policy, effective [Date]. We are committed to ending the epidemic of distracted driving and have created the following rules, which apply to any employee operating a company vehicle or using a company-issued cell phone while operating a personal vehicle:
Company employees may not use a hand-held cell phone while operating a vehicle—whether the vehicle is in motion or stopped at a traffic light. This includes, but is not limited to, answering or making phone calls, engaging in phone conversations, and reading or responding to e-mails, instant messages, and text messages.
If company employees need to use their phones, they must pull over safely to the side of the road or another safe location.
Additionally, company employees are required to:
- Turn cell phones off or put them on silent or vibrate before starting the car.
- Consider modifying voice mail greetings to indicate that you are unavailable to answer calls or return messages while driving.
- Inform clients, associates, and business partners of this policy as an explanation why call may not be returned immediately.
Secretary of Transportation Ray LaHood also recommends that employees take a pledge to never text or talk on the phone while driving and to encourage others to do the same.
HIGHLIGHTS OF THE PATIENT-CENTERED OUTCOMES / COMPARATIVE EFFECTIVENESS FEE
Important: these highlights describe the rules based on the actual law and proposed regulations. Most likely, therefore, the rules will take effect largely as described here, but some of the details may change.
- The fee applies from 2012 to 2019, based on plan/policy years ending on or after Oct. 1, 2012, and before Oct. 1, 2019
- The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended
- The first fee is due July 31, 2013, for calendar year plans and for those on October, November and December plan years
- The first fee is not due until July 31, 2014, for those with plan years that start February through September.
- The fee will be calculated and paid by:
- The insurer for fully insured plans (although the fee likely will be passed on to the plan)
- The plan sponsor of self-funded plans
- This includes health reimbursement arrangements (HRAs)
- Third-party administrator (TPA) may assist with calculation, but plan sponsor must file
- If multiple employers participate in the plan, each must file separately unless the plan document designates one as the plan sponsor
- The fee is based on covered lives (i.e., employees, retirees and dependent spouses and children)
- May exclude employees/dependents residing outside U.S.
- May exclude dependents, and only count the employee/retiree, when counting for an HRA
- For the first year, the fee is $1 per covered life during the plan/policy year
- For the second year, the fee is $2 per covered life during the year
- For the third through seventh years, the fee is $2, adjusted for medical inflation, per covered life during the year
- Applies to private, government, not-for-profit and church employers
- Applies to grandfathered plans
- "Group health coverage" includes:
- Medical plans
- Retiree only plans
- HRAs
- "Group health coverage" does not include:
- Stand-alone dental and vision (stand-alone means these benefits are elected separately from medical and have discrete premiums)
- Life insurance
- Short- and long-term disability and accident insurance
- Long-term care
- Health flexible spending accounts to which only employee contributions are made
- Health savings accounts
- Hospital indemnity or specified illness coverage
- Employee assistance programs and wellness programs that do not provide significant medical care or treatment
- Stop loss coverage
- Several options have been proposed for calculating the fee:
- Actual count method -- count the covered lives on each day of the year, and average the result
- Snapshot method -- determine the number of covered lives on the same day of each quarter or month, and average the result
- Could multiply the employee/retiree count by 2.35 to approximate the number of covered dependents rather than actually counting them
- 5500 method - determine the number of participants at the beginning and end of year as reported on the 5500
- If dependents are covered, add the participant count for the start and the end of the plan year
- If dependents are not covered, add the participant count for the start and the end of the plan year and average the result (this method cannot be used by insurers)
- If there are multiple self-funded plans (e.g., self-funded medical and HRA) with the same plan year, only one fee would apply to a covered life
- If there are both fully insured and self-funded plans (e.g. insured medical and a self-funded HRA), a fee would apply to each plan -- the insurer would pay the fee on the insured coverage and the plan sponsor would pay the fee on the HRA
- Plan sponsor reporting and paying the fee would be done electronically on IRS Form 720 each July 31
- This would be an annual filing, even though form 720 is generally filed quarterly
Action Steps:
- Insured plans may want to:
- Ask their carrier if/when this fee will be reflected in rates
- Include the anticipated fee in their budget
- Self-funded plans may want to:
- Include the anticipated fee in their budget
- Review the likely calculation methods, determine which is best for their situation and close any data gaps
- Verify there is a named plan sponsor if more than one employer participates in the plan, and if a plan sponsor has not been named, amend the plan to name a plan sponsor before the first fee is due
Note: PPACA created a private, non-profit corporation called the Patient-Centered Outcomes Research Institute. The Institute's job is to research the comparative effectiveness of different types of treatment for certain diseases, and to share its findings with the public and the medical community. The goal is to improve quality of treatment and reduce unnecessary spending. This fee is to support this research.
Reminder: These highlights describe the rules based on proposed regulations. Some of this may change.
401(k) participants don't try to understand disclosures
By Paula Aven Gladych
Source: Benefits Pro
Although defined contribution plan participants should receive fee disclosures from their plan sponsors by Aug. 30, a new study by LIMRA shows that the vast majority of those people only spend about five minutes looking at them and most just skim them to “see if they reveal something ‘important.’”
One in five people said they rarely or never read disclosures that are sent to them.
In “Consumers’ Retirement Perspectives” for the third quarter of 2012, LIMRA found that men are more likely than women to read disclosures and younger participants are slightly more likely than older participants to read them.
The length and technical nature of disclosures are the most frequently cited reasons for not reading them, the report found. When participants want plan information, they have better luck going to their provider’s website. Younger participants are more likely to go to their employer for more information.
While 51 percent of plan participants said they have not taken action as a result of a disclosure, almost one in five reported that they changed contribution allocation or increased their contribution level. Seventeen percent said they contacted their account provider.
Participants had the highest levels of understanding of their contribution limits when it came to retirement account features. Companies took the opportunity to educate participants on investment options, fees and the taxation of withdrawals. Twenty-four percent said they did not understand these features very well or not at all.
Men were most likely to indicate they understand their account features “very well,” the report found.
Employers Stressing Health Incentives for Employees
Source: Insurance Journal and Aon Hewitt
U.S. employers are increasingly utilizing monetary and other incentives to encourage employees and their families to become active in health and fitness programs and take better care of themselves, according to new survey findings from Aon Hewitt.
Aon Hewitt’s survey of nearly 2,000 U.S. employers representing over 20 million U.S. employees and their dependents found that 84 percent now offer employees incentives for participating in a health risk questionnaire (HRQ) and almost two-thirds (64 percent) offer an incentive for participation in biometric screenings. Just over half (51 percent) provide incentives to employees who participate in health improvement and wellness programs.
The use of monetary incentives, in particular, has increased over the past year. In 2012, 59 percent of employers used monetary incentives to promote participation in wellness and health improvement programs, up from 37 percent in 2011. The use of monetary incentives for participating in disease/condition management programs almost tripled in 2012, from 17 percent in 2011 to 54 percent
A growing number of employers are beginning to link incentives to a result, as opposed to simply participating in a program. Of companies that offer incentives, 58 percent offer some form of incentive for completing lifestyle modification programs, such as quitting smoking or losing weight. About one-quarter offer incentives for progress or attainment made towards meeting acceptable ranges for biometric measures such as blood pressure, body mass index, blood sugar and cholesterol.
“Programs and tools like HRQs and biometric screenings can make employees more aware of their health status and of the opportunities to improve their health, but alone they won’t move the needle when it comes to health improvement and mitigating cost,” said Jim Winkler, chief innovation officer for Health & Benefits at Aon Hewitt. “Incentives solely tied to participation tend to become entitlement programs, with employees expecting to be rewarded without any sense of accountability for better health. To truly impact employee behavior change, more and more organizations realize they need to closely tie rewards to outcomes and better results rather than just enrollment.”
Employers also are requiring more of participants in order for them to be eligible for enhanced benefits, such as value-based insurance designs (VBID). Of the 46 percent of organizations that incorporate some type of VBID approach in their health plans, almost one in three require completion of a HRQ or require participation in a program such as disease management or smoking cessation programs to receive the enhanced benefits. This is a 33 percentage point increase from 2011, where nine out of 10 employers did not impose any requirements.
Despite the evidence of increased employer interest in tying incentives to results, Winkler said Aon Hewitt’s survey shows room for improvement. More than 80 percent of employers provide an incentive to complete a health questionnaire, yet less than 10 percent provide an incentive to address the results of the questionnaire. Additionally, more than 60 percent of employers provide an incentive to complete biometric screening, but less than 10 percent provide an incentive to take any action.
“Employers know that eight health behaviors, including risks such as lack of physical activity and failure to complete recommended preventive screenings, drive 15 chronic conditions that lead to higher medical costs and increased absence from work. An effective incentive strategy rewarding those who take action to improve their health is fundamental for improving health and reducing cost,” said Stephanie Pronk, clinical health improvement leader for Health & Benefits at Aon Hewitt.