IRS Provides Guidance on Health FSA $2,500 Limits
In a recent Notice, the IRS provided guidance on the effective date of the $2,500 limit on salary reduction contributions to health flexible spending arrangements (“Health FSAs”) and on when plans should be amended to comply with the limit
Background. Under the Patient Protection and Affordable Care Act (“PPACA” or “Health Care Reform”), the annual contributions permitted for an employee under the Health FSA component of a Cafeteria Plan will be capped at $2,500. This is effective for “taxable years” beginning after Dec. 31, 2012.
New guidance. Notice 2012-40 provides the following guidance and clarifications regarding the $2,500 limit.
- The $2,500 limit does not apply for plan years that begin before 2013.
- The term “taxable year” refers to the plan year of the cafeteria plan (and not the tax year of the employee or employer). This means the period for which salary reduction elections are made.
- If a cafeteria plan has a short plan year beginning after 2012, the $2,500 limit must be prorated accordingly.
- The $2,500 Health FSA cap does not apply to any other “flex credit” offered under a Cafeteria Plan (such as dependent care assistance).
- Plans may adopt the required amendments to reflect the $2,500 limit at any time through the end of calendar year 2014, provided that they otherwise operate in accordance with the new limit requirements.
- In the case of a plan providing the optional grace period, unused salary reduction contributions to the health FSA for plan years beginning in 2012 or later that are carried over into the grace period for that plan year will not count against the $2,500 limit for the subsequent plan year.
- If one or more employees are erroneously allowed to elect a salary reduction exceeding the Health FSA limit, the Cafeteria Plan will not lose its qualified status if: (1) the terms of the Plan apply uniformly to all participants, (2) the error was a reasonable mistake and not due to willful neglect, and (3) the excess amount is paid to the employee and treated as taxable wages.
How Supreme Court Could Rule on ACA
The Supreme Court is expected to hand down a decision this month on Preisdent Obama's health reform law, which is called the Affordable Care Act by Democrats and Obamacare by Republicans. There are several different questions before the court, including when to decide, whether an individual mandate is constitutional, and whether the Congress can force states to expand Medicaid by placeing restrictions on federal funds.
A Good Place to Promote Workplace Wellness
Source: Safety Daily Advisor
If you've been thinking about holding a health fair to promote workplace wellness, here's some information that can help you get started.
Businesses across the country and across industries are embracing the idea that a healthier workforce is more productive and more profitable. They are also taking diverse pathways to encourage their workers to become more aware and more active in their own health.
On-site health fairs can be an excellent way to raise awareness about job-based risks and individual health status. Increasingly, fairs are seen as part of a larger effort to get employees to take responsibility for their own health.
Start with a Theme
Consider building your event around a theme, suggests Dr. Carol Rice, author ofWellness and Health Fair Planning (Texas AgriLife Extension Service, Texas A&M University). "Review your organization's goals, corporate philosophy, and culture to determine an appropriate theme for your health fair. Is your organization competitive, conservative, formal, or fun? What are your organizational demographics?" The answers can help lead to a theme and tone for the event.
Another consideration is time of year and other concurrent events. You may choose to piggyback on a holiday, season, or national observance like American Heart Month in February or Employee Health and Fitness Month in May.
Choice of Content
Options for booths, demonstrations, and information sharing are vast. Possibilities include:
· Self-care
· Back care
· Office safety
· Family fitness
· Using social media to improve health
· Ergonomics
· Alternative treatments (chiropractic, massage, acupuncture)
· Healthy eating and healthy weight loss
· Healthy aging
· Cancer prevention
· Women's/men's health issues
· Substance abuse
· First aid and emergency preparedness
· Stress reduction
· Screenings for blood pressure, blood glucose, cholesterol, etc.
You can also use a health fair to showcase in-house resources and opportunities as well as those provided by outside vendors. Examples of in-house programs include your EAP, safety and health department and committee, workplace wellness program, health insurance plans and related offerings, and recreational activities sponsored by your company.
Other Considerations
"Raffles, prizes, and giveaways can be fun at a health fair," says Rice. "They help build anticipation, participation, and excitement."
Another traditional incentive is a "wellness passport," which gets stamped at each booth or display an employee visits. Participants who collect a certain number of stamps receive a prize.
Other options include tokens, cash incentives, and time off for employees participating in a screening. Some employers whose health fairs are part of a workplace wellness program offer discounts on insurance premiums for completing a health risk assessment. Based on the results of the assessment, employees may be recommended for additional testing, disease management programs, and/or health coaching.
Employers Confident Affordable Care Act Will Continue
JUNE 14, 2012
85 Percent of Employers Surveyed Are Continuing with Compliance Plans, Including SBC Deadline, Confident ACA Regs for the Most Part Will Continue.
BOSTON--(BUSINESS WIRE)--As the Supreme Court decides the fate of the Affordable Care Act, employers surveyed by HighRoads, the industry leader in employer health care compliance and benefits management, appear confident ACA will continue, and some 85 percent are moving forward to meet compliance deadlines, including the September 23, 2012, deadline for enactment of the new Summary of Benefits Coverage (SBC) regulation. The exception is the mandate for individual coverage—slightly more than half of the respondents said the ACA will be upheld but the individual mandate is likely to be struck down when the Supreme Court rules in late June.
“They will most certainly want to know the rationale behind any changes to their benefits, especially since so many of the ACA’s changes to date have been perceived by employees as positive, including extending coverage to adult children, 100 percent coverage of preventive care and the elimination of lifetime limits.”
In other findings, 32 percent of respondents think the law will stand as is, and the remaining 14 percent felt the Court would strike down the entire law. Respondents ranged in size from fewer than 5,000 employees to more than 100,000 employees. The majority of respondents have more than 5,000 employees.
“Employers know there is no time to play catch up in order to meet SBC requirements for September. They are strategically planning and executing on compliance regulations, realizing the complexity of meeting ACA regulations, if the law remains partially, or even entirely intact,” said Kim Buckey, Principal, HighRoads Compliance Communications Practice.
While the vast majority is moving forward with their planning and compliance initiatives, five percent of respondents reported that they were waiting to make a decision about how to handle SBCs until after the Supreme Court has ruled. Not surprisingly, these respondents tended to have fewer employees—and fewer plan options—than the rest of the responding organizations. The remaining ten percent were evenly split between postponing finalization of their plan designs for 2013 and postponing their pay or play analysis (which would have more impact in 2014—but would certainly require laying the groundwork with employees over the course of the next 12-18 months).
“It’s prudent for employers to plan for continued enactment of the ACA since it is likely that at least some of the key provisions of the law will be upheld. Planning will ensure that employers remain in compliance with the regulations that are already in effect during 2012, and lay a more solid groundwork for any regulations that will come into effect, in full force, by 2014,” said Thomas Barker, partner in the Foley Hoag law firm.
Distressingly, 55 percent of respondents had no plans to communicate anything to employees about the company’s position on the ACA, or the company’s plans if the ACA is overturned. Thirty nine percent had not yet communicated but did plan to do so, and 6 percent had already communicated to employees.
“We would encourage employers to take another look at their ACA communication plans and where it fits within their overall HR and benefits communication strategy. The ACA remains a rather large question mark in employees’ minds, and they will naturally look to their employers—who provide their benefits—for information about how the Act and any changes to it, will affect them. As we look ahead to the fall open enrollment season providing employees a status check on where the company stands in relation to the ACA will give employees a better foundation from which to choose or revise their individual plans,” said Buckey. “They will most certainly want to know the rationale behind any changes to their benefits, especially since so many of the ACA’s changes to date have been perceived by employees as positive, including extending coverage to adult children, 100 percent coverage of preventive care and the elimination of lifetime limits.”
Hotter Economy can Spark Retention Challenges
Although a recent report on U.S. job growth has left many observers disappointed, other economic signs are prompting employers to re-evaluate their benefits and retention strategies to avoid a potential talent exodus.
The Department of Labor reported that the nation added 120,000 jobs in March, down from the previous three months that saw 200,000 or more new jobs. Still, the stock market is up for the year, and U.S. employees appear to be more secure in their jobs. The Randstad employee confidence index -- which measures how confident workers feel about their job security and the economy -- rose in March to the highest level since October 2007, according to Workforce magazine.
An improving economy, however, has a dark side: Talented but unhappy employees will seek better opportunities elsewhere, experts say.
"There is a storm brewing," said Lynne Sarikas, executive director of the MBA Career Center at Northeastern University, in a recent Human Resource Executive online report. "Many people will be looking to make a change once they perceive improvement and stability in the job market. This will have a significant impact on their employers."
More movement in the job market can spur hotter competition among employers for good talent. In addition to competitive wages, robust employee benefits can help employers keep their best workers happy and productive -- and employers are taking notice. A recent study by MetLife found that 90 percent of companies say they don't plan to cut employee benefits in the near future, according to a report by CCH. A large majority (91 percent) of those polled expressed confidence that benefits work as retention tools.
While health, dental, vision and other stalwarts in the retention toolbox remain central to many companies' overall offerings, employers may want to consider additional choices to sweeten the benefits pot.
For instance, companies that want to pull in younger workers may want to investigate defined benefit (DB) retirement plans, according to new research. A recent study by Towers Watson, reported in PLANSPONSOR, noted that 63 percent of workers younger than 40 said in 2011 that they chose their current employer because it offered a DB plan, compared with only 28 percent in 2009.
Education benefits are paying off for some companies, as well. United Parcel Service is sponsoring a program that pays up to $3,000 per year in tuition reimbursement for part-time employees. Executives say the program has spawned talented leaders who have stuck with the company.
"Enhancing the skills and knowledge base for our employees is a fundamental element of our success, and correlates directly with our policy to promote from within," Susan Rosenberg, UPS public relations manager, told the Atlanta Journal-Constitution.
Nearly Half of Critical Illness Insurance Claims begin prior to Age 55
Just under half (47%) of new critical illness insurance claims in 2011 began prior to age 55 according to the 2012 Buyer & Claimant Study conducted by the American Association for Critical Illness Insurance (AACII) and General Re Life Corporation. This marks a significant increase in claims by younger policyholders compared to the prior year’s analysis.
The percentage of claims that occurred before age 45 grew compared to 2010. Some 13 percent of male policyholders and 12 percent of female policyholders who received benefits were younger than 45 according to the data from 10 leading critical illness insurers. “The increase in younger claimants is likely due to an increase in younger buyers of this relatively new form of insurance coverage,” explains Jesse Slome, executive director of the recently formed critical illness insurance trade group. “With higher health insurance deductibles and more restrictive plans, critical illness insurance is starting to gain traction among buyers in their 30s and 40s.”
The study found a pronounced year-to-year increase in the number of claims paid to policyholders between ages 35 and 44. Some 8 percent of new claims by men and 10 percent women occurred at these ages in 2011, versus four percent reported by the prior year’s study. The greatest decline in claims occurred after age 55.
The study revealed that cancer remains the leading cause for new individual claims accounting for 61 percent of new claims. Heart attacks accounted for 11 percent and stroke for 18 percent of new claims.
Researchers analyzed data for over 57,000 purchasers of individual critical illness insurance policies as well as claims reported by leading insurers for the time period January 1 to December 31, 2011. The American Association for Critical Illness Insurance is the national trade association providing information to consumers and insurance professionals. Free access to the organization's online learning, marketing and sales center is offered to insurance and financial professionals. For further information, visit the Website: www.aacii.org/ or call (818) 597-3205.
American Association for Critical Illness Insurance study conducted by General Re Life Corporation, 2012
We are too fat! Now what??
BY JENNY IVY
May 14, 2012 •
Source: Benefitspro
The nation's obesity epidemic is literally too big to ignore. And now the most respected names in medicine are hoping to galvanize citizens and employers to confront the problem.
Tonight, HBO will premiere "The Weight of the Nation," a four-part documentary series that examines the risks and consequences of obesity—everything from childhood prevention to community involvement.
The impact is certainly not out of reach for employers and HR professionals. They know obesity impacts business. Companies lose $4.3 billion annually due to obesity-related absenteeism, according to the Institute of Medicine. And for firms with offices around the country, it's obvious the costliest health plan claims are coming out of places in which obesity - and poverty - is rampant. [See 10 fattest states in America]
As a nation, we know it's a problem. We've already been told we're too fat. But why, after decades of increasing waistlines, would we expect a national campaign to suddenly change things?
It probably won't. But, in speaking with a Kaiser Permanente spokesperson just today, it seems the medical organizations and experts behind the documentary understand that. "This is only the beginning," she said. Campaign collaborators, including Kaiser, are hoping to start a movement, not just increase awareness.
With that said, as an employer or benefits manager, it wouldn't be a bad idea to check out the free resources available through this campaign. After all, this isn't just another wellness program promo. These are established research institutions that are serving up more innovative tools to get Americans to at least think about how to become healthier.
"We're going to have to think our way out of this in creative ways," Executive Producer John Hoffman told NPR on Friday. "We have got to really renovate tremendous aspects of our culture, and it's going to take a tremendous amount of invention and tremendous amount of intervention to really re-engineer our lives."
If you don't have HBO, don't worry. The movies aren't restricted to the cable network. Filmmakers are allowing the series to be broadcast on the campaign's website at https://theweightofthenation.hbo.com/.
Overcoming Financial Illiteracy
May 9, 2012
Source: Benefitspro.com
We’ve all too often heard these assertions: Insurance is not bought, it’s sold. People don’t plan to fail, they fail to plan. We have a financially illiterate society.
The upshot of these familiar sayings is that in the financial services world, individuals need to be practically forced into understanding even simple concepts. This is an implicit put down of consumers, and in reality, it’s an explicit indictment of us.
We know consumers will go to great lengths to research buying a cell phone, a coffee pot or a microwave oven, but they avoid researching financial products like the plague. Imagine how few consumers spend time researching a critical illness product, a health insurance plan, disability plan or life plan. And yet the coffee pot or cell phone costs a fraction of the amount entrusted to the financial products we sell.
Perhaps it all starts with our desire to be entertained and pampered. Financial products don’t offer instant gratification. In fact, they generally only deliver value in situations that are either boring or disturbing. Who wants to think about disturbing events such as poor health, critical illnesses, disabilities and premature death? And saving money for the future is boring—you have to save for years and years to have enough to live on comfortably.
Additionally, when a television personality or politician happens to address any of these financial items, it seems to be their mission to make the financial services business look bad. Often, they cast us in the light of our failure to provide benefits to everyone—even those who sat in multiple employee meetings and failed to purchase the voluntary benefits that could have replaced the missing income, paid the uncovered bills and so on.
It’s frustrating, but what do we see when we look in the mirror? In the voluntary benefits arena, we have choices of methods to use in the enrollment process: group meetings, one-on-one sessions, computer systems and IVR systems. We pay a lot of attention to choice of enrollment methods.
But one area we haven’t adequately addressed is helping employees understand the risk/reward of the various products. This is especially true when it comes to disability (income protection) insurance.
I have tried using many variations of this theme: How long can you maintain your standard living without a paycheck? For most, the answer is “not long.” This is an essential message. Yet in study after study, when employees are asked to rank benefit products, they consistently rank dental (low risk/low reward) and vision (low risk, low reward) over disability protection (high risk/high reward).
Since most of us also sell dental and vision coverage, we’re understandably hesitant to challenge employees to understand this risk/reward relationship. But is this hesitancy in the best interest of our clients? Shouldn’t we point out that you can skip dental coverage and still pay your bills, including the dentist, but if you decline disability coverage you can’t pay your bills at all—at least not for long.
Overcoming illiteracy requires engaging employees in understanding the risks and rewards of various benefit plan options. As in the dental/disability example above, it needs to go beyond “here’s a product to consider” into better understanding—and less illiteracy.
Working after age 62?
BY RICH WHITE
May 3, 2012
Source: Benefitspro.com
Social Security retirement benefits may begin at age 62 (at the earliest) and some pre-retirees believe they will face a dilemma over whether to keep working or start their benefits at 62. If your clients are concerned over this choice, tell them to relax.
Any benefits Social Security withholds (because of work income) from ages 62 through 66 will be credited back at the full retirement age of 66. The “earnings limit” for 2011, for people age 62-65, is $14,160. For every dollar earned through work above this limit, Social Security withholds 50 cents. This continues until Jan. 1 of the year in which reach full retirement age (currently 66) is attained, when the limit increases to $37,680 and withholding reduces to 33.3 cents per dollar over the limit. After the 66th birthday, there is no earnings limit.
Most people who think they will earn over the limit should simply delay the start of benefits until their 66th birthdays. In addition to permanently increasing monthly benefits (compared to starting at 62), this also preserves the ability to earn Delayed Retirement Credits for deferring the start date past the 66th birthday.
How do you size a 401(k)?
BY DAN COLE
April 30, 2012
Source: Benefitspro.com
In 2010 there were 362,757 401(k) plans with more than zero dollars in reported assets. All told, they added up to around $2.8 trillion.
But how do you slice up that market? And which end do you try to eat?
There are the outliers. More than 7,000 401(k)s held more than $30 million in assets. On the opposite end of the scale, the same number held less than $15,000. I don’t care how many participants you have, $15,000 is not a good amount to have saved for retirement.
But more likely you’re right in the middle: $698,971 is the median (i.e. 50th percentile) 401(k) asset value, with more than 132,000 plans falling within one standard deviation (ooh – statistics!).
It’s a good bet that you’re not farming plans at all ranges of the curve. As in all things, there are fewer of the best than there are of the rest: that’s what makes them the best.
There are only 719 “mega” 401(k)s: those with more than $500 million in assets. However, that handful accounts for more than half of every single dollar invested by a 401(k). Plans with under $1 million in assets account for 60 percent of all 401(k)s, but only 3 percent of the assets.
Micro, small, mid, large, mega… Sure you’re more likely to snag a minnow, but your family will eat better if you manage to take down a megashark.