OUTMATCHED
Fewer employers are offering a company match to their retirement benefits, a new study by the Society for Human Resource Management finds. About two-thirds of companies currently match their employees' contributions today, compared with 75 percent in 2008.
WORK/LIFE SURGE
Technology has spawned an increase in work/life balance among U.S. workers over the past three decades, according to a Workplace Options study. Forty-three percent of respondents said they've seen an increase in work/life benefits and access to professional development in their current job compared with their first-time job. Also, 28 percent said their current company has increased work/life benefits in the past five years despite the rough economy.
Failing to See
By Marli D. Riggs
Source: eba.benefitnews.com
Baby boomers are not taking advantage of available eye care benefits, leading to lost productivity
Despite employees reporting a strong interest in their company vision program, today's workforce isn't taking full advantage of the coverage — especially baby boomers.
Baby boomers (age 45-64) are only slightly more likely than younger employees to enroll in their vision benefit (79% vs. 75%), according to Transitions Optical's Employee Perceptions of Vision Benefits survey.
"1-out-of-4 employees that have an opportunity to enroll in the program do not," says Pat Huot, director of managed vision care and online retail for Transitions Optical.
"Of those that do enroll, 1-out-of-3 employees in the baby-boomer age range and 1-out-of-4 in the 65-plus range have not used their vision plan at all in the last year."
Huot believes the industry is trying to make it easier for employers to help employees become connected with the importance of the annual exam and all of the other touch points associated with it, "but if employees don't use the benefit, there's no opportunity there for them to realize that benefit."
The consequences
Studies by The Vision Council, an Alexandria, Va.-based nonprofit optical trade group, show about $8 billion is lost by employers every year due to lost productivity that stems from employee vision issues.
"This is mainly because employees' eyes are either not in focus or they have debilitating eye conditions that aren't managed well, so they just aren't as productive as they could be," says Dr. John Lahr, the medical director at Cincinnati-based EyeMed Vision Care.
Dr. Lahr, who has been in the field for nearly four decades, talks about the need for correction, which becomes more prevalent as employees age. The crystal lens of the eye where cataracts form, he says, is very elastic and loses that elasticity as people age.
"Usually, those between 40 and 45 cannot focus optimally for close vision and require reading glasses, or if they already have glasses they might need a multi-focal application to be able to read," he says.
"This factor really hits the worker that's in their 40's, 50's and 60's and is looking at a computer screen daily," adds Dr. Lahr. "If you measure that distance in which they are viewing it's usually 22 to 24 inches, where the normal reading distance is 16 to 18 inches."
He adds that the focus of glasses or contacts for everyday use is not optimal for the computer screen.
"In turn, employees lose a lot of productivity because they get eye strain, headaches, and they're also leaning forward in unnatural positions."
"In 2006, the very first baby boomer turned 60," says Transitions Optical's Huot. "As a snapshot of where we are as a country in terms of an aging workforce, it amazes me that every 10 seconds from that point in 2006 until 2023 someone in the U.S. will turn 60."
At age 40 employees should start protecting their eyes against serious diseases such as cataracts and macular degeneration - neither of which has symptoms in the early stages, says Dr. Lahr.
He adds that these diseases are much more prevalent in blacks and Hispanics.
"We find there are profiles where we can draw to try to assess risks and try to be more cautious with those individuals."
The obstacles
According to the Employee Perceptions of Vision Benefits survey, not having vision or eye health problems is the most commonly cited reason for not enrolling in a vision plan. This shows a lack of understanding of the importance of preventative eye care, says Transitions Optical's Huot.
He and his team encourage brokers to motivate their clients by giving them an interactive set of tools.
For example, his company's Healthy Sight Calculator helps clients educate their employees, calculate costs and learn about potential ROI with their vision plan.
"High profile tools, such as an online calculator, are designed to help the employees become more engaged around how a vision benefit connects to total health care versus" mentioning it as an afterthought in a larger presentation about health benefits, he says.
"We have yet to meet that broker that says, 'My clients can't wait to talk about vision!,'" adds Huot with a laugh.
EyeMed Vision Care tries to create an awareness of routine eye care and the associated benefits by providing an identification card that plan participants can put in their wallet to serve as a reminder during the year, says Dr. Lahr.
A personal experience
A decade ago Patrick Tibbs of Everence Financial Advisors in Indiana began to experience pressure in his eyes. He went in for a routine eye exam where the ophthalmologist determined his symptoms could be a cause of glaucoma.
Tibbs now goes once a year to have his eyes checked and glasses dispensed. He says by taking preventative steps for his own vision he feels a personal satisfaction knowing that employees are doing the same.
Vision care benefits are "near and dear to my heart," he says.
Vision benefits play a key part in motivating employees to see an eye doctor for a comprehensive exam.
EyeMed Vision Care's Dr. Lahr has seen in studies that those who have vision care coverage are more likely to get preventive eye exams even if they don't have symptoms.
"Our average utilization of a voluntary benefit where an employee defers money out of their paycheck we see about 35%," he says.
One factor keeping that utilization rate from rising is a misguided assumption that "if I see well [then] there's nothing wrong with my eyes."
Tibbs says baby boomers who are paying higher premiums for health insurance at the same time they're seeing their 401(k) values drop, yet still having to cover dependents with out-of-pocket costs, could be avoiding routine eye care "because they can't afford to pay $75 to $100 for an eye exam, then pay $300 for a pair of glasses."
Vision care is the summer
In the summer months employees' calendars are filled with vacations, parties and other outdoor festivities. Protecting eyes from ultraviolet rays is a must - but that is not the only one to be careful of, says Dr. John Lahr, medical director at Cincinnati-based EyeMed Vision Care.
In ophthalmology there is a new acronym to account for as a contributor to the development of cataracts and macular degeneration: high-energy visible light.
"This is the blue spectrum which we would see longer wavelength that is closer to the UV spectrum," says Dr. Lahr. "It has been studied through longitudinal studies which measured people's development of the two key eye diseases," cataracts and macular degeneration. "Since both of these eye diseases are much more prevalent in individuals that have high exposures to UV light, now they're starting to break down where they are when they're exposed," he adds.
As employees age, they have a heightened risk for cataracts that can impair performance at work," says Indiana broker Patrick Tibbs. "Out of 20 million people with cataracts it's estimated that 20% of those are caused by ultraviolet rays. Having proper eye wear is important and it will help with productivity." -Marli D. Riggs
How to Take Advantage of New 401(k) Fee Disclosures
By Emily Brandon
Source: money.usnews.com
Employees will be armed with new information about the fees they're being charged in their 401(k)s in 2012. Beginning after May 31, 2012, 401(k) participants will receive quarterly statements showing the dollar amount of fees and expenses deducted from their account and a description of what each charge is for.
[See 401(k) and IRA Changes Coming in 2012.]
The fee disclosures are required by new Department of Labor rules and could provide shocking new information to 401(k) participants. A recent AARP survey found that 71 percent of 401(k) participants think they don't pay any 401(k) fees at all. "I think some people will be surprised about how much some of the investment options charge," says Mary Ellen Signorille, an employee benefits attorney for AARP. "Some plans charge each individual basically an account maintenance fee. The changes are perfectly legal, but some people may not have known they were being charged the fee." Among survey respondents who know how much they pay in fees, the most common fee range is between 1.1 percent and 5 percent of their account balance annually.
With this new information about the 401(k) fees you are paying, you will have an opportunity to reduce the costs of your retirement investments. Here's how to take advantage of the new 401(k) fee disclosures:
Switch to lower-cost investments. Use the new fee information to help select lower-cost investments that still meet your needs for growth. The savings could allow you to accumulate a dramatically bigger retirement account balance over the course of your career. A 30-year-old employee making $50,000 per year who saves 6 percent of annual pay, gets a 50 percent 401(k) match, and earns 3 percent annual pay raises would have $115,000 more in savings at retirement if his or her 401(k) plan had fees of 0.6 percent instead of 0.9 percent, assuming an 8 percent annual return, according to Aon Hewitt calculations. Dave Loeper, CEO of Wealthcare Capital Management and author of Stop the Retirement Rip-off: How to Avoid Hidden Fees and Keep More of Your Money, says you should aim for expenses of 0.5 percent or less per year.
[See 4 Hidden Costs of Investing.]
Boost your returns. Extremely high fees are generally associated with lower returns. A 2010 Morningstar study found that funds with low expense ratios consistently deliver higher returns than their more-expensive counterparts. Between 2005 and 2010, the cheapest domestic equity funds produced an annualized return of 3.35 percent, versus 2.02 percent for the most expensive funds in the same category. For taxable bonds, the cheapest funds produced a 5.11 percent annualized return, compared to 3.82 percent for pricey funds. "Investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance," writes Russel Kinnel, Morningstar's director of mutual fund research, in the report. "Start by focusing on funds in the cheapest or two cheapest quintiles, and you'll be on the path to success."
Get the services you are paying for. In addition to disclosing the dollar amount of the fees deducted from your account, plan sponsors must also provide information about the services provided in exchange for each charge. If you find out that you are paying for services through your 401(k) plan, make sure that you take advantage of them. "If you are paying more than half of 1 percent a year, you should be getting some additional services like personal consultations about your particular goals," says Loeper.
Ask for better options. If all the investment options in your 401(k) plan charge high fees, consider asking your employer (nicely) to add some more affordable investment choices. It might be helpful to suggest similar funds with lower expense ratios, or that the 401(k) plan offer at least one passively managed index fund. "Inquire about why lower-cost options aren't available and if there might be something that could be added," says Loeper. "If you make an inquiry about whether it is possible to add this lower-cost index fund that is similar to what we've got, that might be enough to motivate your employer to get the problem solved."
[See 7 Signs of a Good 401(k) Plan.]
Recruit help. At a time when layoffs are common, it's wise to not be the only employee criticizing the 401(k) plan. "Particularly in today's economy, you don't want to sound like a complainer," says Loeper. "If you are the only person that brings it up, your employer probably isn't going to act on it." It could be more effective to approach your employer with several other colleagues who also want to save money on their retirement investments.
New funds may be coming soon. The Department of Labor's rules were first published in 2010, and many companies have already begun looking for lower-cost investments and recordkeeping services in preparation for the required disclosures to employees. "A lot of 401(k) plans have renegotiated with their supplier and a lot of fees have come down somewhat," says Signorille.
Retire sooner. The expense ratios on your investments can affect how soon you are able to retire. A Towers Watson analysis of target-date funds, the most common default 401(k) investment, found that most target-date fund owners lose 30 percent or more of their potential retirement income to fees. That works out to be between five and 15 years' worth of retirement income that is deducted from a 401(k) account over a worker's lifetime.
[See How to Maximize the Higher 401(k) Contribution Limit.]
Switching to investments with lower expense ratios could allow you to retire years earlier. Consider an employee with a starting salary of $45,000 who contributes 8 percent of his pay to a 401(k) each year between ages 25 and 62. If he invests his retirement savings in a target-date fund charging 1 percent annually, he will lose 13.9 years' worth of retirement income to fees, Towers Watson found. If he instead chooses a target-date fund charging 0.5 percent in annual fees, he will spend 7.7 years' worth of retirement income on fees. An even more affordable target-date fund charging 0.2 percent in fees would deplete his savings by just 3.2 years' worth of retirement income.
TDF TANGLE
Employees fail to fully grasp the details of target-date funds (TDFs) in their retirement accounts, according to a recent report by the Securities and Exchange Commission. More than half (54 percent) of polled investors don't understand that different funds with the same target date may hold vastly different investments, the study found. Also, only 36 percent realized that TDFs do not provide guaranteed income in retirement.
Benefit Aspects of Employee Leaves of Absence
Employee leaves of absence raise a number of difficult questions under federal employment laws. Must a requested leave be granted? Under what conditions? Must the employee's position be held open so that the employee may return to it after the leave?
In addition to those questions, employers often must address the benefits-related aspects of any leave of absence. Complicating a benefits manager's task are a host of federal laws, including the Family and Medical Leave Act, COBRA and more.
Learn what you need to know to cope with leave-related challenges from your workforce. Please contact us for more information.
White House Tells States to Get On Board with Healthcare Reform
By Sam Baker
Source: thehill.com
The Obama administration is aggressively pushing states to implement the healthcare reform law now that the Supreme Court has upheld it.
In the two weeks since the court issued its decision, the Health and Human Services Department has pushed out new grants, new policies and a new rhetorical standby: It’s time to get onboard.
“The volume of activity has certainly gone up,” said Alan Weil, executive director of the National Academy for State Health Policy.
HHS has been steadfastly implementing the Affordable Care Act since President Obama signed it in 2010, and state outreach has always been part of that effort — the department has awarded hundreds of millions of dollars in implementation grants.
But some Republican governors dug in their heels against implementing at least the biggest pieces of a law they thought the Supreme Court might strike down. With that possibility out of the way, HHS is making another big push to bring states onboard.
"Now that the Supreme Court has issued a decision, we want to work with you to achieve our ultimate shared goal of ensuring that every American has access to affordable, quality healthcare," HHS Secretary Kathleen Sebelius wrote in a letter to governors this past Tuesday.
She has echoed that message several times since the court issued its historic 5-4 decision upholding most of the Affordable Care Act, and Obama sounded a similar theme when the ruling was announced.
The administration has matched it’s “let’s move on” rhetoric with policy.
The day after the Supreme Court announced its decision, HHS unveiled new funding opportunities designed to help states plan for their insurance exchanges. HHS officials said they expected to receive funding requests from states that had previously resisted the idea of an exchange.
“I think there will be some renewed, ‘Let’s at least figure out what this will look like,’” Weil said.
Exchanges are new, centralized marketplaces where individuals and small businesses will buy private insurance. The ACA calls on each state to set up its own exchange and authorizes a federally run fallback in any state that doesn’t act. Exchanges have to be up and running by 2014, so HHS has to certify in 2013 whether each state will be able to build its own.
Some Republican governors who said they were waiting for the Supreme Court are now saying they won’t implement the law until they see how November’s elections shake out and whether Republicans pick up enough seats to try to repeal the law.
“Saying you’re going to wait is, in effect, making a decision,” Weil said. “If the calendar has made up your mind, then you have made up your mind.”
Although some red-state delays are pure politics, Weil said many states were legitimately leery of stepping up to such a massive undertaking when there seemed to be a good chance the Supreme Court would render all of that effort moot.
Waiting for the court “wasn’t a crazy thing to do,” he said. He expects some of those states to apply for new grant money and look more seriously at what a state-run exchange would entail.
“Gambling on the outcome of an election is a real gamble,” he said. “And so I think there are a lot of states that are realizing that with only one hurdle left, there’s a very real chance this law is going to be around. They are renewing their efforts to figure out what it means for them.”
HHS is trying to make that process easy. Federal officials made it abundantly clear at the outset that they want each state to set up its own exchange, which most policy experts agree would be better than a federal exchange.
The department said last year, in its first proposed rules on exchanges, that it would certify state-based exchanges after 2014, in case states weren’t ready on time but could get there eventually.
Weil was surprised by that policy at the time. But it’s consistent, he said, with HHS’s announcement after the Supreme Court ruling that states could receive exchange planning grants through the end of 2014. Many observers assumed planning grants would be cut off at the beginning of the year.
HHS also made a point last week to explicitly remind states that planning grants are for planning — states don’t have to set up an exchange just because they took federal planning money, and they don’t have to pay the money back if they ultimately decide to let the federal government handle their exchanges.
“We expect that, as states study their options, they will recognize that this is a good deal,” Medicare Administrator Marilyn Tavenner said in a letter to Republican governors.
While the Supreme Court cleared away one major area of uncertainty, it also raised a new question for states to answer: Do they want to participate in the healthcare law’s Medicaid expansion?
As written, states would have had to participate or give up all of their federal Medicaid funding. But the Supreme Court said that setup was unconstitutional and states must have the right to opt out of the expansion while keeping the rest of their programs intact.
The quickest decisions came from Republican governors with an eye for the national stage, including Texas’s Rick Perry and Louisiana’s Bobby Jindal, who lumped Medicaid and the exchanges together and said they wouldn’t do anything to implement “ObamaCare.”
The practical considerations between the two programs, though, are very different. (For example, there is no federal fallback for states that don’t accept the Medicaid expansion.) And though states had time to at least think about exchanges while they waited for the Supreme Court, the Medicaid decision is altogether new.
“On exchanges, states have been thinking about it and following this whole discussion. (Medicaid) was like dropped out of the sky,” Weil said. “No one has spent the last year thinking about whether or not they wanted to do the Medicaid expansion.”
IS IT WORKING?
Having trouble figuring the return on investment (ROI) from your wellness program? A report by HRmorning suggests examining these five factors:
- Sick days
- Stress
- Presenteeism
- Health care utilization
- Employee satisfaction
A solid program will decrease the first four of the above items and bump up the last, the report noted. The report noted that a $3 to $4 return for every $1 spent on wellness is a common benchmark for wellness ROI.
CHANGING TIMES
Companies are seeking alternate health coverage offerings in the face of a shaky economy and the potential impact of the health care reform law, according to a new report by J.D. Power and Associates. The study found that employers are considering such options as defined contributions, vouchers and exchange purchasing in an effort to control spiraling health care costs. Employers, however, seem committed overall to continuing to offer health benefits. The study found that only 13 percent of fully insured employers and 14 percent of self-insured companies said they probably or definitely will not offer employer-sponsored benefits in the future.
PPACA Ruling Answers Some Questions, Leaves Others Hanging
The wait is over -- sort of.
Companies that had been delaying action on the Patient Protection and Affordable Care Act (PPACA) should now start making plans to comply, experts say. Yet while the Supreme Court's 5-4 ruling in June preserved the law, the full impact of PPACA's regulations remains to be seen.
For now, employers should prepare to meet the most immediate requirements, according to the law firm Morgan Lewis. In a recent web posting, the firm notes that companies should pay attention to the provisions that apply in 2012 and 2013, including:
- Reporting medical coverage value on 2012 W-2s
- Preparing to receive and properly distribute any medical loss ratio rebates
- Preparing to provide a summary of benefits and coverage in their 2013 enrollment packet
- Finishing updates to their summary plan description for any plan design changes from PPACA in 2011 and 2012
- Implementing an annual $2,500 cap on health care spending account contributions (beginning with 2013 plan years)
- Preparing for the patient-centered outcomes fee due in July 2013 ($1 per covered life for 2012. Insurers will remit the fee for fully insured plans; self-insured plans will pay it directly.)
Some other requirements, however, are far from crystal clear, according to a report in Business Insurance. For instance, the "pay or play" provision in the law requires employers with 50 or more workers that don't offer coverage to full-time employees to pay a penalty of $2,000 per worker. But the government has yet to clarify if the full fee would apply if employers mistakenly misclassify employees. Current regulations also fail to explain how the law applies to employees whose hours fluctuate weekly or monthly.
The IRS and other agencies are expected to release more guidance in the coming months, which should clear up some questions for employers. Yet the federal government itself and many states likely won't be able to meet all the deadlines on actions required to actually implement many of the major provisions, which start in 2014, according to Kaiser Health News.
The biggest stumbling block will be setting up the health care exchanges -- online marketplaces where some businesses and consumers will shop for coverage.
"Except in a few states, it's impossible to do this in the time allowed -- it's going to have to slip," said Joseph Antos of the American Enterprise Institute in the KHN report.
Even if some states are able to establish exchanges on time, the federal government's exchange -- which states can opt to use instead of creating their own -- likely won't be up and running anytime soon, said Cheryl Smith of Leavitt Partners.
"The 2014 start is untenable for federally compliant exchanges," Smith told KHN. "They have to verify income, they have to verify residency, they have to verify citizenship, and do all that through different federal agencies. Before [federal subsidies] can flow, every one of those things has to be done."
Some experts say that, barring a major political change in Washington, employers will be coping with PPACA in the years to come. Still, nothing can be ruled out until after the November elections, others note.
"Other chapters in the political front [regarding PPACA] have yet to be written," Dave Guilmette of Cigna Corp. told Business Insurance.