U.S. Adds 661,000 Jobs; Unemployment Rate Drops
According to recent studies, the job-loss numbers that businesses saw at the beginning of the coronavirus pandemic has begun to shrink. The unemployment rate fell from 8.4 percent to 7.9 percent in August. Read this blog post to learn more.
U.S. payrolls increased by 661,000 in September, according to the latest report from the Bureau of Labor Statistics (BLS)—falling below what economists expected. The report is more evidence that the pace of hiring has slowed, as more layoffs loom.
The unemployment rate fell to 7.9 percent from 8.4 percent in August. Economists had been expecting an employment gain of 800,000 and the unemployment rate to fall to 8.2 percent.
The economy has now recovered 11.4 million of the 22 million jobs lost in March in April at the beginning of the pandemic, but job growth is stalling—September was the first month since April that net hiring was below 1 million.
This slowdown is occurring as large corporate layoffs not reflected in the report are imminent: Walt Disney Co. announced 28,000 permanent layoffs and U.S. airlines are proceeding with tens of thousands of job cuts.
"The economy may have added jobs, but at a pace way too slow considering how many jobs were lost earlier this year," said Nick Bunker, an economist at the Indeed Hiring Lab. "The unemployment rate may have dropped, but the share of people with a job only moved up slightly. This report is an illusion of progress at a time when we needed accelerating gains in the labor market. We are not where we need to be, nor are we moving fast enough in the right direction as we head into fall."
The BLS report is the last one before the presidential election on Nov. 3.
"The report shows we are still clearly in the snap-back phase of the recovery, as jobs that were switched off because of COVID are blinking back online," said Andrew Challenger, senior vice president of global outplacement and executive coaching firm Challenger, Gray & Christmas, based in Chicago. "While we're seeing jobs come back, there is concurrent destruction occurring in the labor market as companies right-size their organizations to meet the decidedly lower demand they expect to face over the next two or three years," he said.
Employers continue to bring back workers—about half of the workers furloughed or laid off at the onset of the pandemic have now been rehired—but the pace of recovery is slowing while there is still a long way to go, said Julia Pollak, a labor economist at ZipRecruiter, an online employment marketplace in Santa Monica, Calif. "Even after the recent gains, we still have nearly 11 million fewer jobs than before the pandemic," she said. "By comparison, we lost 8.7 million jobs in the Great Recession."
Becky Frankiewicz, president of ManpowerGroup North America, said that the BLS report shows steady improvement, especially hiring in leisure and hospitality and operations and logistics.
Job gains were broad-based, with most sectors of the economy adding to payrolls in September, said Andrew Chamberlain, chief economist at Glassdoor.
Employment in leisure and hospitality increased by 318,000, with almost two-thirds of the gain occurring in restaurants and bars. Despite job growth totaling 3.8 million over the last five months, employment in this sector is still down by millions since the onset of the coronavirus.
Retailers added 142,000 jobs, with most of those coming in clothing stores.
"The recovery is primarily being driven by continued rehiring in the hardest-hit industries including leisure and hospitality, retail and health care," Chamberlain said.
"Many service-sector industries are continuing to recover briskly as many states and cities eased coronavirus restrictions and increased capacity limits on restaurants, gyms and stores," Pollak said. "As restrictions are lifted in the largest cities, we can expect to see a rapid bounce back."
She added that some industries haven't yet begun to recover. "The education sector is still shedding jobs, as are the performing arts and spectator sports, hospitals, coal mines, facilities support services and travel agencies."
Professional and business services contributed 89,000 jobs and the transportation and warehousing sector was up 74,000 jobs. Manufacturing grew by 66,000, financial activities added 37,000 and construction employment grew by 26,000 jobs last month, mostly in residential building. By comparison, nonresidential building gained 5,300 jobs and infrastructure work lost 3,400 positions.
Public-sector employment declined by 216,000 jobs in September, mainly due to state and local public schools failing to reopen due to the national health crisis. "Another deeply concerning thing is that we are down 1.2 million state and local government jobs over the last seven months, more than two-thirds of them in education," said Heidi Shierholz, senior economist at the Economic Policy Institute in Washington, D.C. This will only get worse without aid from Congress, she added.
A decrease of 34,000 jobs in the federal government was driven by a decline in the number of temporary Census 2020 workers. "Nearly a quarter of a million jobs are temporary jobs related to the decennial census that will disappear in the next few months," Shierholz said.
Unemployment Concerning
The official unemployment rate is now in line with previous recessions.
Chamberlain pointed out that the number of workers on temporary layoff declined sharply from 6.2 million in August to 4.6 million in September, "a reminder that the nation's impressive job growth in September is still largely driven by rehiring of furloughed workers as a patchwork of state and local government health restrictions are gradually lifted throughout the country."
But the number of workers whose layoffs became permanent rose in September, a sign that joblessness will become longer lasting. "There was a surge of 351,000 workers who have been permanently laid off," Shierholz said. "This does not bode well at all for the pace of the recovery."
Shierholz argued that the unemployment picture is much worse than the headline number of 12.6 million workers officially counted as unemployed. She said that there were an additional 800,000 workers temporarily unemployed but misclassified as employed and another 5 million workers out of work as a result of the virus but being counted as having dropped out of the labor force because they weren't actively seeking work.
"If all these workers were taken into account, the unemployment rate would have been 12.5 percent in September," she said. "There are also 9 million workers who are employed but have seen a drop in hours and pay as a result of the virus."
Another concern is that the decline in the unemployment rate came along with a 0.3 percentage point drop in the labor force participation rate to 61.4 percent. That's nearly 700,000 people.
"The decline in the unemployment rate in September was mostly for bad reasons—people dropping out of the labor force, not people getting jobs," Shierholz said.
The prime-age employment rate also decreased and long-term unemployment (unemployment lasting more than six months) increased by 781,000 to 2.4 million workers.
However, a measure that counts discouraged workers and those working part-time for economic reasons also declined, falling from 14.2 percent to 12.8 percent.
The unemployment rate fell for all demographic groups. The rate declined for Asian workers from 10.7 percent to 8.9 percent; for Black workers from 13 percent to 12.1; for Hispanic workers from 10.5 percent to 10.3 percent; and for white workers from 7.3 percent to 7.0 percent.
"One surprising thing about the job loss of March and April is that it was fairly racially equitable—the black and white unemployment rates both rose by about 11 percentage points," Shierholz said. "But the period since then has been a totally different story. Since the peak, the white unemployment rate has come down more than 50 percent faster than the Black unemployment rate."
Pollak said that women also continue to bear the brunt of the economic pain. "This is the first recession where the percentage decline in service-sector employment has exceeded that in the goods-producing sector," she said. "The industry distribution of job losses has been unfavorable to women, who are heavily concentrated in face-to-face services. School closures have also had a larger effect on female labor force participation. Since February, the labor force participation rate for men aged 25 to 54 has fallen by 1.6 percentage points, while that for women in the same age group has fallen by 2.8 percentage points.
The unemployment rate for men fell from 8.0 percent in August to 7.4 percent in September. The rate for women dropped from 8.4 percent to 7.7 percent during that time.
Declining female workforce participation is an area to watch and take action to address, Frankiewicz said. "We're advising clients to focus on offering flexible work options, autonomy for people to choose schedules that work best, and to think about the skills that are needed vs. desired for new roles."
SOURCE: Maurer, R. (02 October 2020) "U.S. Adds 661,000 Jobs; Unemployment Rate Drops" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/bls-hr-jobs-unemployment-october-2020-covid19-coronavirus.aspx
Working from home in a pandemic is not shirking it
Juggling work and personal lives was a challenge before the coronavirus pandemic, but now as many are still continuing to work from home, employes are beginning to become worn down from having to manage their home life and work-life all at once. Read this blog post to learn more.
Working from home, once jokingly dismissed as “shirking” from home, is back as a pandemic lifeline for economies amid a resurgence of COVID-19 cases in Europe. Governments in Britain and France, having goaded workers back to the office after lockdown, are now urging them home again. The sound of frustrated bosses gritting their teeth can be heard across the City of London, as big firms from Goldman Sachs Group to Citigroup pause the back-to-work push while keeping the office open.
There’s a sense of whiplash among white-collar workers, who just weeks ago were told that it was time to put the economy first and get back to their cubicles and open-plan desks. There should also be palpable relief. Being able to pull in a salary while safe at home is a privilege hospital staff, care workers and supermarket cashiers can’t have.
Still, we know from the first wave of lockdowns that those stock images of remote workers logging on from bed with a smile and tousled hair, or of barefoot parents deftly bouncing toddlers on their knee while firing off an email, are a fantasy. While surveys suggest working from home is popular among employees crushed by the grind of the daily commute, the grumbling of CEOs that productivity and company culture are vulnerable isn’t entirely wrong.
The mass push to work from home earlier this year was unprecedented. It represented an estimated 42% of the U.S. labor force (or more than two-thirds of economic activity when weighted by contribution to GDP), but it had drawbacks. The apparent productivity gains of being at home instead of on the subway began to look more like the result of a steadily lengthening work day, according to multiple network operators, rather than supercharged efficiency.
Juggling Zoom calls and childcare made matters far worse, one reason governments in Europe put so much emphasis on reopening schools this fall. “We are home working alongside our kids, in unsuitable spaces, with no choice and no in-office days,” Stanford economist Nicholas Bloom said in March as he warned of a looming “productivity disaster.” He’s usually much more positive: His past research has linked working from home to a 13% rise in performance and a 50% drop in employee departure rates.
While corporate bean counters dream of one day dumping costly commercial real estate for digital offices in the cloud, the reality of the cost of living in big cities means home offices aren’t up to scratch.
More than half of Americans working from home do so from shared rooms or bedrooms; more than one-third have poor internet connections or none at all. A June survey of Japanese workers found that even among early adopters of remote work, only a third found it more productive than working in the office, citing poor equipment. Deutsche Bank AG’s monthly survey of financial-market professionals found their assessment of whether they were on balance more productive or less productive at home declined from 20% in June to 11% in September. (It had plunged to -13% in April as everyone was forced home full-time all at once.)
That’s the short-term assessment. We don’t yet have evidence of mass remote work’s impact of longer term on company productivity, but the current outlook is mixed at best. It’s hard to see how the field of research and development — already being thinned out by recession-related cuts — is going to win out in this environment.
Given there’s little freedom right now to create a hybrid model combining office and home — the preferred option for the majority of workers surveyed at French carmaker PSA Group, for example — bosses should do more to make the work-from-home experiment palatable and safe for all involved. Subsidizing utility bills, workspace equipment like ergonomic chairs, and even expenses such as rent (as one Swiss firm was ordered to do in May) would increase satisfaction. Managerial habits should also change, with more trust given to employees, if companies are serious about attachment to “culture.”
The right to disconnect, which had begun to spread worldwide before the pandemic, is critical. The output gains of remote work come from contented and engaged workers, not the cheaper transaction cost of being able to hire, fire and manage via the Internet.
None of this is to idealize the world of physical offices, so easily skewered by the likes of Scott Adams’s Dilbert. And complaining about neck pain, or bosses constantly “checking in” online, might ring hollow to medical staff and delivery drivers who are on the frontlines. But given remote work is now such a critical lifeline for the economy, it would be a shame to let the current experiment fail as others have before. Choosing between your job and your health is a grim trade-off, and one that really shouldn’t exist in a pandemic like this one.
SOURCE: Laurent, L. (25 September 2020) "Working from home in a pandemic is not shirking it" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/articles/working-from-home-in-a-pandemic-is-not-shirking-it
HR Professionals Struggle over FMLA Compliance, SHRM Tells the DOL
In addition to the daily struggles that HR Professionals have to resolve, they are faced with many frustrations that have stemmed from the federal Family and Medical Leave Act (FMLA). Read this blog post to learn more.
In a Sept. 15 letter to the U.S. Department of Labor (DOL), the Society for Human Resource Management (SHRM) highlighted many of the challenges and frustrations that confront HR professionals as they comply with the federal Family and Medical Leave Act (FMLA).
"SHRM supports the spirit and intent of the FMLA, and our members are committed to ensuring employees receive the benefits and job security afforded by the act," wrote Emily M. Dickens, SHRM's corporate secretary, chief of staff and head of Government Affairs. "While it has been more than 25 years since FMLA was enacted, SHRM members continue to report challenges in interpreting and administering the FMLA."
The letter, developed with input from SHRM members, was in response to a request for information issued by the DOL's Wage and Hour Division on July 17. The DOL solicited comments and data "to provide a foundation for examining the effectiveness of the current regulations in meeting the statutory objectives of the FMLA."
According to Ada W. Dolph, a partner at Seyfarth Shaw who practices labor and employment law in Chicago, “SHRM’s comments echo what we are hearing from clients in terms of their challenges in implementing FMLA leave, particularly now with the patchwork of additional state and local leave requirements that have emerged as a response to COVID-19."
She added, "Our experience shows that regulatory gray areas add significant costs to the administration of the FMLA and impact the consistency with which the FMLA is applied to employees. We are hopeful that [the DOL] will implement SHRM’s proposed revisions, which provide much-needed clarity for both employers and employees."
Wide-Ranging Challenges
In its comment letter, SHRM addressed several issues its members have reported:
CHALLENGES WITH CONSISTENTLY APPLYING THE REGULATORY DEFINITION OF A SERIOUS HEALTH CONDITION
"Continuing treatment by a health care provider" as currently defined in federal regulations creates uncertainty for SHRM members on how to treat an absence of more than three consecutive days, according to SHRM's letter. "If there is not 'continuing treatment,' then it does not constitute a 'serious health condition' under the regulations," the letter explained. "However, if the employee does receive additional treatment, it's not clear whether these initial three absences are related to a serious health condition."
SHRM pointed out that several members "have suggested increasing the time period of incapacity, indicating they spend a lot of time processing employee certifications for missing four days that they believe more readily falls under sick time or paid time off."
Further guidance, including criteria and examples of when employers may obtain second and third medical opinions, "would be helpful, as many SHRM members reported declining to challenge an employee's certification at all because the conditions under which they may challenge those certifications are unclear or cumbersome," SHRM said.
Members also reported that obtaining documentation from health care providers on the need for employees to take leave to care for a family member with a serious health condition was difficult, and that doctors were often vague about identifying how the employee fits into the caregiving equation.
CHALLENGES WITH INTERMITTENT LEAVE
SHRM members reported that intermittent leave-taking is the most likely FMLA leave to be abused by employees.
"Employees are permitted to take incremental leave in the smallest increment of time the employer pays, as little as .10 of an hour, which members reported allowed employees to use the time to shield tardiness or other attendance issues," the letter read. "SHRM strongly urges [the DOL] to increase the minimum increment of intermittent or reduced schedule leave that is unforeseeable or unscheduled, or for which an employee provides no advance notice." SHRM suggested several alternative approaches.
For instance, the DOL could:
- Require that employees take unforeseeable or unscheduled intermittent or reduced schedule leave in half-day increments, at a minimum.
- Establish a smaller increment, such as two hours, that automatically applies in any instance in which an employee takes unscheduled or unforeseeable intermittent or reduced schedule leave.
Additionally, when an employee takes intermittent or reduced FMLA leave, an employer may transfer an employee to an alternative position. However, under current regulations, employers may only require such a transfer when the leave taken is for "a planned medical treatment for the employee, a family member, or a covered servicemember, including during a period of recovery…."
"Given the potential burden and hardship that intermittent and reduced-schedule leave have on employers, SHRM believes that an employer should be permitted to temporarily transfer an employee on intermittent or reduced-schedule leave to an alternative position, regardless of whether the leave is foreseeable or unforeseeable or whether it is scheduled or unscheduled," SHRM told the DOL.
CHALLENGES REGARDING EMPLOYEES WHO ARE CERTIFIED FOR INTERMITTENT LEAVE FOR CONSECUTIVE YEARS
Employees continue to regularly exhaust and replenish their 12-week FMLA entitlement, based on the rolling 12-month entitlement period, SHRM members reported.
"Combined with the Americans with Disabilities Act Amendments Act requirements to accommodate absences under some circumstances, these unrelenting absences become unreasonable and unduly burdensome to employers," SHRM commented.
Similarly, many SHRM members reported being frustrated that there weren't more mechanisms to challenge potential abuses of intermittent leave (e.g., when employees take every Friday or Monday off).
FRUSTRATION WITH EMPLOYEES NOT PROVIDING SUFFICIENT NOTICE OF THE NEED FOR LEAVE
Many employees provide notice of even foreseeable leaves after the leave has begun, noted SHRM, which recommended that notice of foreseeable leave be required prior to the commencement of leave and not "as soon as practicable."
SHRM also suggested that "a more definitive requirement be imposed so that employees understand clearly that they must provide notice of leave prior to beginning leave," and that "if an employee does not give advance notice, it should be the employee's burden to articulate why it was not practicable to provide such notice prior to the start of the leave. If they are unable to meet this burden, the regulation should permit and specify the consequences."
DIFFICULTIES OBTAINING TIMELY RESPONSES FROM EMPLOYEES AND THEIR PHYSICIANS TO SUPPORT THE REQUESTED LEAVE
If an employee fails to provide sufficient information to demonstrate that he or she may seek FMLA leave, then the employee can be required to provide additional information "to determine whether an absence is potentially FMLA-qualifying," SHRM explained. "However, there is no deadline by which the employee must provide this clarifying information, resulting in extensive, continued delays and continued administrative burdens."
SHRM recommended tightening this time frame to seven days and that the DOL "endeavor to provide firmer and clearer deadlines and notice requirements throughout the regulations."
SHRM members also reported that health-provider fees for completing paperwork often slowed or halted the certification process and asked whether providers' ability to impose these fees could be limited.
New FMLA Forms
Overall, SHRM members expressed satisfaction with recently updated FMLA forms. However, members continue to report that the information received from medical providers is often unclear and that they struggle to determine whether the reported condition constitutes a serious health condition.
The new forms do not account for the possibility that an employee does not qualify for FMLA because the employee doesn't meet the requirement of being unable to perform the functions of his or her job. "As such, we suggest that the medical provider be given the option to indicate that an employee does not meet this requirement," SHRM wrote.
Many members suggested that the DOL allow completion of online forms to speed processing times and reduce the administrative burdens of processing FMLA leave.
Among other issues, SHRM members also reported struggling with how to effectively reconcile FMLA with other leave laws enacted in the wake of the COVID-19 pandemic.
SOURCE: Miller, S. (21 September 2020) "HR Professionals Struggle over FMLA Compliance, SHRM Tells the DOL" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/hr-professionals-struggle-over-fmla-compliance-shrm-tells-the-dol.aspx
Pandemic Forces Organizations to Get Creative in Prepping Young Employees for the Workplace
Many are still having to work remotely, and become introduced to a company while not in an office setting. This may be hard for many entry-level beginners, interns, and recent college graduates. Employers are now trying to find ways to creatively prepare young employees for a non-traditional workplace. Read this blog post to learn more.
Pairing remote "buddies" with interns, creating leadership boot camps and hosting virtual presentations with college students are a few of the ways employers are preparing young employees for the workforce at a time when the pandemic has forced many employers to adopt a work-from-home culture.
"This pandemic has necessitated all employers to be agile and adapt to a 'new age' workforce and workplace—namely, a decentralization of employees and ability to work remotely," pointed out David Owens, director of campus recruiting at Addison Group, a national staffing and recruiting firm based in Chicago.
"Prepandemic, the majority of internships and entry-level employment opportunities were in-office or involved a majority of in-person daily responsibilities and tasks. Thankfully, in today's climate, we have the capability and technology to shift these in-person or in-office duties virtually. Leading organizations were already transitioning to a more modern concept of work," he said.
"This has been a hot-button inquiry from new graduates and this incoming generation of talent, many of whom are looking for their future workplace to be flexible and agile. More and more organizations will be tested on their adaptability to offer similar work options."
The pandemic has created a need for more in-depth and strategic partnerships with colleges and universities for recruiting students, Owens noted. Hosting a virtual panel or presentation for students is a better option right now than setting up a booth at a widely attended career fair, he said.
"I also recommend forming strategic partnerships with related student organizations and clubs that have a strong presence on campus. Additionally, be an ally to students, many of whom are stressed-out enough adapting to a hybrid or entirely virtual school year. Offer resume reviews, mock interviews, short-stint internships and networking events. Even if they don't apply for a full-time position, it helps to build brand recognition, and they could even end up applying to work at your organization down the road."
Online Networking
"We've been hosting online network events for individuals who are looking to come into the industry," said Carla Diaz, co-founder of BroadbandSearch, a company with 15 employees who all work remotely. Her company helps clients find the best Internet and TV service.
"Since we have connections within the world of ISPs [Internet service providers] and the like, we thought it would be a great idea to give up-and-coming professionals the chance to meet people within the industry—especially since many networking events were canceled as a result of COVID-19."
The events are not large, she said, but they can help young adults make important connections. Some, for example, have led to internships at Broadband.
'Firsthand Exposure'
Synoptek, a global systems integrator and managed information technology (IT) services provider headquartered in Irvine, Calif., designed DiscoverIT for recent college graduates in the U.S. It is a six-month, highly intensive training in technology, project management, the Information Technology Infrastructure Library, security and leadership. The program includes mentorship and technical and leadership boot camps, according to Danielle Andersen, vice president of global human resources at Synoptek.
The company continued its college recruitment program during the pandemic, hiring six employees during the summer.
"The program gives fresh college graduates firsthand exposure to IT consulting," she said.
And its 12-month mentorship, which pairs mentees with a company business leader at its various sites, has been using Microsoft Teams during the pandemic to meet semimonthly. It's a chance, Andersen said, for mentees "to gain more in-depth knowledge about our business model, polishing their professional image and building overall leadership skills."
The coronavirus outbreak should not be a hindrance for young professionals, said Sonya Schwartz, managing editor at Her Aspiration in the Jackson, Miss., area and founder of Her Norm, a relationship website. Her fully remote company, which employs six workers, hires at least one new graduate per department annually and plans to continue to do so, she said.
"I make sure to expose them to the ins and outs of the company to make them more familiar with the whole working process. There is a specific employee assigned for their virtual training, and chatrooms designated for them are made to ensure that all of their questions or clarifications are answered," Schwartz said.
A senior employee assigned to train a new employee also serves as the new hire's guide for daily tasks.
"Initially, we ask the new grad which part of their career they want to focus on and enhance so that they could undergo training, and, once they have decided, we will assign them to the person who we believe can contribute and can train them well in that field and will also serve as their immediate superior," she said.
Trainees attend meetings with potential clients to learn the importance of effective communication and are assigned minor projects, such as conducting research and minor layout of content. They also are given social media management tasks to develop industry-related skills.
Buddy System
The Expense Reduction Group in Baltimore stresses role modeling as a way to prepare and transition emerging professionals, according to founder and CEO Michael Hammelburger. The company, which opened in 2019, employs four staffers.
"Each new hire is unique; that's why I have implemented a buddy system for them," said Hammelburger, financial consultant for small and midsize businesses.
"We assign each of our newbies a tenured employee they can ask any question about the company to make them feel more comfortable as they adjust to their new workplace." During the first six months of hire, each buddy does a daily Zoom meeting, and there are weekly team meetings that include the buddy's new-hire cohort.
"It also breaks away from the formal onboarding seminars that are dull and boring. During our feedback process, our new hires always mention how easy it became for them to adjust."
SOURCE: Gurchiek, K. (23 September 2020) "Pandemic Forces Organizations to Get Creative in Prepping Young Employees for the Workplace" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/organizational-and-employee-development/pages/pandemic-forces-organizations-to-get-creative-in-prepping-young-employees-for-the-workplace-.aspx
Retirement accounts at ‘serious risk’ as COVID-19 spurs bankruptcies
The coronavirus pandemic has disrupted many things around the world, let it be the workplace, schools, everyday life habits, and it has even disrupted retirement accounts. In the nine months of COVID-19 hitting businesses, bankruptcies and lawsuits have risen and caused many questions. Read this blog post to learn more.
If there’s one thing clients have always relied on in troubled times, it’s that last bastion of savings, the retirement account — whether it be a 401(k) or an IRA.
But we’re now into the ninth month since COVID-19 hit our shores and nothing can be taken for granted. Business closures, bankruptcies and lawsuits from creditors have soared, calling into question even that formerly unassailable bulwark. That’s why it’s crucial that advisors know which accounts can be protected in bankruptcy and in non-bankruptcy lawsuits — and which cannot.
Make no mistake: Not all possess the same safeguards. Retirement accounts carry a number of different protections. These layers of defense shield IRA owners and company plan participants from bankruptcy and general (non-bankruptcy) creditors. In addition, levels of protection vary widely from state to state. In the current environment with so many small businesses on the brink of closing and struggling employees in limbo, increased bankruptcy filings are placing retirement savings at serious risk, especially when these might be the only funds available for a personal bailout.
That’s why it is imperative to understand which accounts hold what protections, and how retirement assets are shielded from those anxious to get a piece of their nest egg.
ERISA plans: The gold standard
Most employer-sponsored retirement plans, such as 401(k)s, fall under the Employee Retirement Income Security Act of 1974 guidelines and receive creditor protection at the federal level. ERISA offers the gold standard of protection up to an unlimited amount against both bankruptcy and non-bankruptcy general creditor claims.
To illustrate, let’s take the hypothetical example of “Mark,” a successful contractor who flips houses. He has a 401(k) plan set up for himself and the employees of his sole proprietorship. Mark’s current plan balance is $1,500,000.
Recently, however, there was an accident at one of his construction sites, and Mark is being sued personally. Even if Mark loses the lawsuit, the assets in his 401(k) remain protected by ERISA up to an unlimited amount. Additionally, if Mark were to declare bankruptcy, his 401(k) would be off limits to bankruptcy creditors.
Going solo = greater exposure
The same protections do not, however, hold for solo 401(k) plans.
Often, business owners worried about potential lawsuits keep their retirement funds in their so-called solo-K because they believe it to be fully creditor proof, as opposed to an IRA.
Butsolo 401(k) plans are not covered by ERISAand have no creditor (non-bankruptcy) protection under that law. Plan balances will only receive non-bankruptcy creditor protection available under applicable state law.
These plans do, however, receive full bankruptcy protection under the bankruptcy code. This is also the case with other non-ERISA company plans such as SEP and SIMPLE IRAs, non-ERISA 403(b) plans and 457(b) governmental plans.
Bankruptcy and IRAs
Traditional and Roth IRA contributions and earnings are protected from bankruptcy under federal law up to an inflation-adjusted cap — currently $1,362,800.
Is this a sufficient limit?
If the maximum amount was contributed to an IRA each year from 1975 to 2020, there would be $141,500 in contributions — $158,500 if the IRA owner qualified for age 50 catch-up contributions available beginning in 2002. It is unlikely that the earnings, even for those who contributed the maximum each year, would push an IRA balance over $1,362,800.
But what about rollovers from plans to IRAs? Do these dollars count against the $1,362,800 cap?
They do not. Former company plan assets (previously protected by ERISA while in the plan) rolled to an IRA will obtain unlimited bankruptcy protection under the bankruptcy code. As an added bonus, rollovers from SEP and SIMPLE plans also do not count against the $1,362,800 cap.
As an example, let’s conjure up “Sheila,” an attorney with a $2,000,000 balance in her company’s ERISA 401(k) plan and a $700,000 balance in her IRA, which is composed entirely of contributions and earnings.
In April, Sheila retired from her law firm and in May rolled her 401(k) into her IRA. Sheila’s IRA is completely shielded from bankruptcy. The bankruptcy code protects her $2 million 401(k) rollover up to an unlimited amount, and the $1,362,800 cap is enough to cover her original IRA balance.
Note that in this example, Sheila did not need to keep her 401(k) and IRA dollars separate to retain the maximum bankruptcy protections. However, from an administrative standpoint, it could make sense for some individuals to keep rollover assets separate via a conduit IRA to avoid confusion.
Lawsuits and IRAs (non-bankruptcy)
General creditor protection (e.g., when a person wins a judgment in court against the account owner) for IRAs, Roth IRAs and IRA-based company plans like SEPs and SIMPLEs is based on individual state law — and these state-level, non-bankruptcy protections vary widely.
As such, it is important to understand your client’s state coverage, especially before advising the client to roll over ERISA plan dollars into an IRA.
As mentioned, ERISA-covered plans enjoy full bankruptcy and general creditor protection. While all former plan dollars remain protected in bankruptcy by the bankruptcy code after a rollover to an IRA, these same dollars do not retain unlimited general creditor (non-bankruptcy) protection. Assets rolled from an ERISA plan to an IRA will now fall under the applicable state-level protections. These state safeguards may be comparable to ERISA levels, or they may be significantly less so.
For instance, the hypothetical“Dr. Kapp” changed employers and is deciding what to do with his $400,000 401(k) plan. His profession exposes him to malpractice lawsuits. If Dr. Kapp rolls the assets from his work plan to an IRA, the $400,000 will be fully protected in bankruptcy. However, he will be limited to the general creditor (non-bankruptcy) protections offered under state law.
Instead, Dr. Kapp elects to roll his former plan assets into the 401(k) plan offered by his new employer. That way, he ensures the $400,000 will retain 100% ERISA protection from both bankruptcy claims and any malpractice judgments against him.
Inherited IRAs and bankruptcy
In a landmark decision released in 2014,Clark v. Rameker, the U.S. Supreme Courtruled unanimously that inherited IRAs are not protected in bankruptcy under federal law.
Since only "retirement funds" are protected under the bankruptcy code, the primary issue before the court was whether an inherited IRA is, in fact, a retirement account. The Supreme Court decided that inherited IRAs do not contain “retirement funds” because:
1. Beneficiaries cannot add money to inherited IRAs;
2. Beneficiaries of inherited IRAs must generally begin to take RMDs, regardless of how far away they are from retirement; and
3. Beneficiaries can take total distributions of their inherited accounts at any time and use the funds for any purpose without a 10% early distribution penalty.
As a result, the favorable bankruptcy protection afforded to such funds under the bankruptcy code does not extend to inherited RIAs.
Bankruptcy timing and rollovers in transit
IRAs and retirement accounts protected under the bankruptcy law are generally shielded only as long as the funds remain qualified. Creditors will sit patiently until retirement dollars are withdrawn to snatch them as unprotected assets.
IRAs and the LLC shield
IRAs enjoy specific levels of protection against “outside” claims, i.e., claims brought personally against the IRA owner.
But what happens when a claim is brought against an investment within the IRA? The answer is that such “inside” claims may not only devastate the IRA but could also put an IRA owner’s personal non-qualified assets at risk. Inside claims can be mitigated with the use of a limited liability company (LLC).
The imaginary “Blake” owns a self-directed IRA worth $500,000 that invests entirely in a local Jet Ski rental and watersports company. He did not use an LLC within the IRA to acquire the rental business. Blake has other personal assets worth $1.5 million.
Last summer, a Jet Ski renter had an accident and suffered a catastrophic injury. After almost a year of litigation, the renter won a $2 million judgment against the IRA.
All of Blake’s IRA assets could be reached because the claim arose from activities of the IRA investment. His personal assets could also be at risk. But if Blake’s IRA had been invested in an LLC that subsequently purchased the water sports company within the IRA, the LLC structure would have protected both the IRA assets and Blake’s personal assets against the $2 million judgment.
Be keenly aware of outside vs. inside claims and how to mitigate certain risks with an LLC.
Clear and present danger
Add the ongoing COVID-19 outbreak to our litigious society with the increasingly looming possibility of bankruptcies, all under the watchful eye of SEC Reg BI, and educating clients on available safeguards becomes increasingly vital.
That education holds even more true for financial advisors in whom clients have placed their trust and financial futures. Understanding the levels of bankruptcy and non-bankruptcy protections afforded to both workplace retirement plans and IRAs is now a must to safeguard the dreams of post-work life clients have worked so hard to achieve.
SOURCE: Slott, E. (10 September 2020) "Retirement accounts at ‘serious risk’ as COVID-19 spurs bankruptcies" (Web Blog Post). Retrieved from https://www.financial-planning.com/news/retirement-accounts-at-risk-as-coronavirus-spurs-bankruptcies
Strategies for maintaining employee trust during executive turnovers
While being in the midst of the COVID-19 pandemic, it's important to keep employee trust and confidence intact. As there may be turnovers and layoffs happening with executives, it's key to communicate with employees that their employers are listening. Read this blog post to learn more.
As businesses struggle with the obstacles of maintaining a new workplace normal in the midst of the coronavirus crisis, ambiguity and unpredictability can threaten employee trust and confidence.
Sweeping layoffs across all industries are putting more pressure on that delicate relationship between employers and employees. Employers increasingly must reassure employees about their job security and the stability of the company, and how they respond will have long-term ripple effects on loyalty and potential turnover, experts say.
“A CEO’s exit or a round of layoffs can have a detrimental effect on employee retention and well-being if not addressed properly,” says Laura Hamill, chief science officer and chief people officer at Limeade, an employee experience company. “It’s important to show employees as soon as possible that you are listening, that you understand their concerns, and that you are working to address them.”
Just before the virus took root in the U.S., former Walt Disney CEO Bob Iger unexpectedly stepped down at the end of February. Around the same time, Expedia laid off 12% of its global workforce, which came on the heels of Wayfair’s January layoffs. Online travel agency Booking announced in early April that CEO Glenn Fogel has tested positive for coronavirus but still plans to continue with his responsibilities.
These major changes can create a lot of uncertainty within an organization, leaving HR and senior leadership in charge of keeping the business on track and reducing employee turnover.
“CEO shake ups [and layoffs] can create two disharmonies,” says Dania Shaheen, vice president of people operations at Kazoo, an employee experience platform. “There is always a lot of noise created with things like this, gossip about why someone stepped down. This tends to be very distracting from what the business is actually doing.”
The often abrupt departure of a CEO can also lead to a shift in strategy, Shaheen says. While a CEO’s vision for a company can be a rallying cry within the organization when that changes, it can upset the company culture. But there are steps employers can take to get out ahead of this.
In the case of Disney, Iger has remained on board to insure the strategy he has established remains in place. This can help ensure a smoother transition of power.
“The more transparent [a company is] and the more open they are internally about what’s going on is going to be key,” Shaheen says.
Frequent and open communication is another necessity for employers during times of business tumult, Hamill says. By planning for the worst-case scenario and having a clear communication policy, organizations can address employee concerns, collect feedback, gauge sentiments, and implement change quickly. Employers shouldn’t wait until they have all of the answers buttoned up.
“When a major change occurs, organizations need to put employees first,” Hamill says. “Be transparent with employees and offer two-way communication – ensure that people feel supported. This needs to come from all angles — from leaders, managers, and internal teams like human resources.”
An organization’s culture is only as strong as the example being set by its senior leadership. In response to mass layoffs and financial losses, many CEOs and other executives have decided to take pay cuts or forego their salaries. New Disney CEO Bob Chapek will take a 50% pay cut, while Iger — who remains with the company as executive chairman — will forgo his entire salary.
Dick's Sporting Goods announced that CEO Ed Stack and President Lauren Hobart will forgo their salaries and Marriott CEO Arne Sorenson will not take home any salary for the rest of the year. The rest of the executive team will take a 50% pay cut.
When organizations set an example that you’re focused on protecting your employees, it will instill trust and create a more loyal workforce.
“Culture is absolutely critical for growth and success and you want to make sure that the culture stays steady,” Shaheen says. “You have to make sure you’re continuing to build a very purpose driven culture.”
SOURCE: Schiavo, A. (06 April 2020) "Strategies for maintaining employee trust during executive turnovers" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/strategies-for-maintaining-employee-trust-during-executive-turnovers
Employers Still Hiring During Coronavirus Pandemic
As many companies begin to temporarily close their doors due to the COVID-19 pandemic, there are several companies that are beginning to hire mass amounts of employees. Although employers run the risk of hiring effectively, they are in need of employees. Read this blog post to learn more.
When one door closes, even temporarily, another often opens. As people practice social distancing to avoid contracting COVID-19—the disease caused by the coronavirus—restaurants, bars and retailers across the U.S. are closing their doors and laying off tens of thousands of workers. But needs must be met, so online sellers and a host of other businesses are mass hiring for delivery, security, warehousing and distribution personnel.
Amazon announced a push to add 100,000 workers to address customer need. National grocery chains are ramping up hiring for delivery staff, Walmart is looking for more than 1,000 distribution-center workers, and health care providers are ramping up hiring to address the expected surge in patients. Retailers and pizza chains are boosting their payrolls to meet takeout and delivery demand, even as their locations are closed to guests. A security company just announced mass hiring to fill full- and part-time security vacancies to help provide public-safety services.
The challenge for these organizations will be to hire quickly and effectively at scale, without putting recruitment professionals and the public at risk. Technology is driving the effort. Online applications, video interviewing, online onboarding and more are being leveraged to enable fast, effective hiring.
Meeting the Need—Safely
Josh Tolan, CEO of video-interviewing company Spark Hire, said, "Technology gives hiring pros a huge leg up in their processes. Especially during this pandemic, tools like video interviews and online applications achieve the goals of continuing recruitment efforts, learning more about applicants and speeding up the hiring process—all from an appropriate social distance."
Amy Champigny, senior product marketing manager at Deltek, a software provider for project-based work, said that competition for workers may require employers to actively self-promote. "Organizations should focus on posting job requisitions online and focus on boosting their LinkedIn branding, as well as employer presence, during this time," she said. She recommended that employers, along with making sure their brand is visible, move candidates through the hiring process as quickly as possible. "Businesses should consider candidate pools to speed up recruiting cycles for all roles and especially critical, hard-to-fill positions."
Many companies are practiced in mass hiring, said Peter Baskin, chief product officer at recruitment software company Modern Hire. "Similar to mass hiring for seasonal positions, companies should adopt purpose-built, on-demand text and video interviewing tools," he said. "This will allow them to reach a larger audience of candidates, provide candidates with the information needed about the open jobs, allow for both parties to complete the interviewing process quicker, and, in return, roles can be filled at a faster rate."
From Start to Finish
Effectively employing technology in hiring begins with an online application process that's seamless and at scale. Baskin suggested that recruiters work from home whenever possible, utilizing on-demand text and video technology instead of scheduling in-person interviews.
"HR teams must ensure any technology they use—whether for recruitment, prehire assessments or video interviewing—is purpose-built, not only for the task at hand, but also for the specific company and industry in which they operate," he said.
"From home," Tolan said, "candidates can conduct one-way video interviews that they record on their own time and the hiring team can review at their convenience, as well." Further along in the process, he added, "live video interviews allow the hiring team to connect with the candidate face to face without the handshake and any potential exposure to the [coronavirus]."
Good Hires vs. Fast Hires
Even when time is of the essence, quality can't be ignored. Many organizations use prehire assessment questions, which a candidate can answer during the video application process. These allow recruiters to quickly make a determination on moving the job seeker through to the next step.
For some organizations, artificial intelligence is being leveraged to boost hiring metrics. "Data-driven insights can predict hiring success by measuring personality traits and problem-solving skills," Tolan said, "and compare candidates to job benchmarks customized for your company."
Onboarding at Scale
When candidates are selected, onboarding at scale is the next hurdle for organizations. "Onboarding needs to be standardized and repeatable to help organizations onboard a greater number of candidates during periods of growth or at scale," Champigny said. "Comprehensive [applicant tracking system (ATS)] solutions include onboarding portals to help companies provide a consistent experience for new hires, while ensuring that those new hires have a good experience as they come through the door."
SOURCE: O'Donnell, R. (29 March 2020) "Employers Still Hiring During Coronavirus Pandemic" (Web Blog Post). Retrieved from https://www.shrm.org/ResourcesAndTools/hr-topics/talent-acquisition/Pages/Employers-Still-Hiring-During-Coronavirus-Pandemic.aspx
Labor Department Is Now Enforcing Coronavirus Paid-Leave Rules
As the U.S. Department of Labor gave employers sufficient time to comply with paid-leave through the Families First Coronavirus Response Act, many businesses can provide paid-sick-leave for employees if it is needed. Read this blog post to learn more.
The U.S. Department of Labor (DOL) initially gave employers time to comply with coronavirus-related paid-sick-leave and paid-family-leave mandates and correct mistakes without facing scrutiny, but the department has officially ramped up its enforcement efforts.
Under the Families First Coronavirus Response Act (FFCRA), many businesses with fewer than 500 employees must provide up to 80 hours of paid-sick-leave benefits if employees need leave to comply with a self-quarantine order or care for their own or someone else's coronavirus-related issues. The act also provides emergency paid family leave for parents who can't work because their children's schools or child care services are closed due to the pandemic.
The FFCRA's paid-leave provisions took effect April 1 and expire on Dec. 31. The DOL announced on April 20 that the nonenforcement period had officially ended, and the department issued its first enforcement order shortly thereafter. An electrical company based in Tucson, Ariz., was ordered to compensate an employee who was denied paid sick leave after he showed coronavirus symptoms and was told by a doctor to self-quarantine. The employer was ordered to pay the worker $1,600, which covered his full wages ($20 an hour) for 80 hours of leave.
"This case should serve as a signal to others that the U.S. Department of Labor is working to protect employee rights during the coronavirus pandemic," said Wage and Hour District Director Eric Murray in Phoenix. "We encourage employers and employees to call us for assistance to improve their understanding of new labor standards under the [FFCRA] and use our educational online tools to avoid violations like those found in this investigation."
We've rounded up articles and resources from SHRM Online on the FFCRA.
Paid-Sick-Leave Details
Under the FFCRA, covered employers will have to provide up to 80 hours of paid-sick-leave benefits if an employee:
- Has been ordered by the government to quarantine or isolate because of COVID-19.
- Has been advised by a health care provider to self-quarantine because of COVID-19.
- Has symptoms of COVID-19 and is seeking a medical diagnosis.
- Is caring for someone who is subject to a government quarantine or isolation order or has been advised by a health care provider to quarantine or self-isolate.
- Needs to care for a son or daughter whose school or child care service is closed due to COVID-19 precautions. (This leave can be combined with emergency paid family leave.)
- Is experiencing substantially similar conditions as specified by the secretary of health and human services, in consultation with the secretaries of labor and treasury.
Paid sick leave must be paid at the employee's regular rate of pay, or minimum wage, whichever is greater, for leave taken for reasons 1-3 above. Employees taking leave for reasons 4-6 may be compensated at two-thirds their regular rate of pay, or minimum wage, whichever is greater. Part-time employees are eligible to take the number of hours they would normally work during a two-week period. Under the legislation, paid sick leave is limited to $511 a day (and $5,110 total) for a worker's own care and $200 a day (and $2,000 total) when the employee is caring for someone else.
Family Leave and Sick Leave Work Together
The Emergency Family and Medical Leave Expansion Act (EFMLEA), which is part of the FFCRA, provides paid leave to parents who can't work because their children's schools or child care services are closed due to the pandemic. An employee may take paid sick leave for the first 10 days of leave or substitute any accrued vacation, personal leave or sick leave under an employer's policy. For the following 10 weeks, the individual will be paid at an amount no less than two-thirds of the regular rate of pay for normally scheduled hours. The individual will not receive more than $200 per day or $12,000 for 12 weeks that include paid sick leave and EFMLEA leave, the DOL stated. As of April 1, workers who have been on the payroll for at least 30 calendar days are eligible for paid family leave benefits.
More Guidance
Many employers and workers have been confused about how to apply the law or access its benefits, so the DOL has been regularly releasing compliance information and updating its Q&A document. In addition to temporary regulations, the DOL released a fact sheet for employees and a fact sheet for employers. The department also provided model workplace posters for nonfederal employers and federal employers that are covered by the mandate. The DOL will continue to add resources to its website, so employers should keep checking for updates. "Please continue to use our website as a primary source of information," said DOL Wage and Hour Division Administrator Cheryl Stanton.
Answers to the Most Common Coronavirus Questions
Would an employee who is afraid of coming to work and contracting COVID-19 be eligible for paid sick leave? Are nonprofit organizations required to comply with the FFCRA? How do the new requirements interact with collective bargaining agreements? Here are some answers to FFCRA and other common coronavirus questions.
SOURCE: SHRM. (28 April 2020) "Labor Department Is Now Enforcing Coronavirus Paid-Leave Rules" (Web Blog Post). Retrieved from https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/Pages/Labor-Department-Is-Now-Enforcing-Coronavirus-Paid-Leave-Rules.aspx
What employers are missing in their workforce data
If employers don't analyze their data thoroughly, they may be missing valuable information that could save their establishment of many costs. Read this blog post to learn more.
Employers are missing out on valuable healthcare information and cost-saving opportunities if they don’t analyze their data thoroughly, panelists at the annual Disability Management Employer Coalition digital conference said.
According to professionals from an insurance company in Portland, Ore., many employers have access to three types of data: healthcare, absence and productivity. HR departments are typically tasked with collecting and analyzing this data, but rarely do they use all three together. But maximizing these findings can help employers better inform their benefit decisions, the panelists said.
“Most employers want to know how much they’re spending on healthcare, but they can learn so much more than that,” said Case Escher, managing partner of the insurance company in Portland, “Very few [employers] use it to explore how health of the workforce is affecting productivity.”
“By comparing health data and absence, you can see if a health condition is causing an employee to miss more work than usual,” said Brycie Repphun, account executive at the insurance company in Portland. “You can use this information to help better inform that person about the services available to them to help them be successful at work.”
Employers can also use their productivity data to help determine if individual employees, or an entire team, are struggling, Escher said. Since productivity is measured differently at every company, and in various positions, employers have to exercise their own judgement about how to interpret it, he said.
“Obviously, if it’s a sales position, and one of your top performers is out because of medical issues, or another personal reason, the productivity of that team is going to suffer,” Escher said. “And if that person is going to be out for a while, the data will likely show that the rest of the team is getting burned out faster to compensate for being understaffed.”
Since the majority of the nonessential workforce is working from home due to the pandemic, Repphun recommends that employers start looking at their data to see how employees are coping.
“Health conditions can definitely impact work performance, but we’re finding that this is happening because of the current work from home situation,” Repphun said. “People aren’t working in ideal conditions, and many have children learning at home as well.”
Escher said self-funded employers are better positioned to make use of their workforce data because they don’t have to go through multiple third-party providers to access all of it. But other employers can still benefit from the information if they’re willing to put in the time and effort to retrieve the reports. While employers can certainly survey their workforce to gauge how working remotely is affecting their productivity, Escher and Repphun said they can get a clear answer by looking at all three data points.
“There’s an indisputable link between health and productivity,” Escher said. “As an employer, you can take this information and use it to make smart decisions to help your employees continue to be successful.”
SOURCE: Webster, K. (31 August 2020) "What employers are missing in their workforce data" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/what-employers-are-missing-in-their-workforce-data
5 ways to prepare for open enrollment during COVID-19
As open enrollment draws near, it's time to critically prepare for it especially during the crazy time that the coronavirus pandemic has brought to many families. Read this blog post to learn more.
The COVID-19 pandemic has focused consumer attention on health care, germs and the impact a single illness can have on their lives, livelihoods and loved ones. With the fall open enrollment season just months away, you have the opportunity to think more critically about the specific plans you choose for yourself and your family, as well as any voluntary benefits that may be available to you, including childcare, elder care and critical illness. In a world where it feels like health is out of the individual’s control, we all want, at the very least, to feel control over our coverage.
As we know all too well, there’s a lot to consider when it comes to choosing and using health care benefits. The most important piece of becoming an informed health care consumer is ensuring you have access to — and understand — the benefits information you need to make smart health care choices. Here are five tips to keep in mind as you prepare for and participate in open enrollment.
1. Prepare for COVID-19 aftermath
As if dealing with the threat of the virus (or actually contracting it) wasn’t enough, consumers must consider the unexpected consequences. Quarantines, stay-at-home orders and business shutdowns have resulted in missed preventive care visits — including annual immunizations. For instance, many children will have missed their preschool vaccinations, which could result in an uptick in measles, mumps and rubella. If school is conducted virtually, the risk of catching one of these highly contagious diseases is somewhat reduced, though consumers should still proceed with caution as states reopen. In fact, with continued waves of COVID-19 expected well into the school season, you and your children may have to wait even longer to get vaccinations due to pent up demand and possible shortages.
Don’t forget that preventive care is covered by most plans at 100% in-network regardless of where that care is received. Schedule your appointments as soon as possible (and permissible in their area), and research other venues for receiving care, such as pharmacies, retail clinics and urgent care facilities. Most are equipped to provide standard vaccinations and/or routine physicals.
Unfortunately, there are also the long-term implications of COVID-19 to consider. Research suggests that there are serious health impacts that emerge in survivors of COVID-19, such as the onset of diabetes and liver, heart and lung problems. And many who were able to ride out the virus at home are finding it’s taking months, not weeks, to fully recover. As a result, you should prepare for the possibility that you, or a loved one, may be ill and possibly out of work for an extended period of time. Be sure to evaluate all of the plans and programs your employer offers to ensure your family has the financial protections you need. For some, a richer health plan with a lower deductible, voluntary plans such as critical illness or hospital indemnity insurance, and buy-up life and disability insurance may be worth investigating for the first time.
2. Re-evaluate postponed elective procedures
Many employees or their family members have postponed or skipped elective procedures — either from fear of exposure to COVID-19 at hospitals and outpatient facilities, or because their hospitals and providers cancelled such procedures to conserve resources to treat COVID-19 patients. As a result, an estimated 28.4 million elective surgeries worldwide could be canceled or postponed in 2020 due to the virus.
As hospitals reopen, it may be difficult to schedule a procedure due to scheduling requirements and pent up demand. A second opinion may be in order if your condition stabilized, improved or worsened during the delay; there may be other treatment options available.
A delay in scheduling also provides an opportunity to “shop around” for a facility that will provide needed care at an appropriate price — especially if you are choosing to go out-of-network or have a plan without a network. Researching cost is the best way to find the most affordable providers and facilities with the best quality, based on your specific needs.
Many medical plans offer second opinion and transparency services, and there are independent organizations who provide “white glove,” personalized support in these areas. Read over your enrollment materials carefully, or check your plan’s summary plan description, to see what your employer offers. If nothing is available, ask your employer to look into it, and don’t hesitate to do some research on your own. Doing so can often result in substantial cost savings, without compromising on quality of care.
3. Confirm your caregivers
Because so few elective procedures were performed during the initial phases of the pandemic, many hospitals sustained huge financial losses. As a result, many small hospitals are closing, and large hospitals are using this opportunity to purchase smaller, independent medical practices that became more financially vulnerable during the pandemic. Further, many physicians have opted to retire or close their practices in light of the drastic reductions to their income during local shutdowns.
Be sure to check up on your preferred health care providers — especially those you might not see regularly — to confirm they are still in business and still in network (if applicable). If you live in a rural area, you may have to travel farther to reach in-network facilities. If you’re currently covered by an HMO or EPO, you may want to evaluate whether that option still makes sense, if your preferred in-network providers are no longer available.
4. Look at ALL the options
Voluntary coverages — such as critical illness, hospital indemnity, buy-up disability, and supplemental life insurance — may help ease your concerns about how you will protect your and your family’s finances if you become ill. Pandemic aside, these benefits can provide a substantial safety net at a relatively low cost. Investigate your employer’s offerings — many employers are offering virtual benefit fairs where vendors can provide more information about these benefits while remaining safe from large social gatherings.
When was the last time you changed your medical plan? If you’ve been keeping the same coverage for years, it might be time to look at what else is available. Your employer may have introduced new plans, or you may find that a different plan makes more sense financially based on how often you need health care. Don’t forget — the cheapest plan isn’t always the one with the lowest premiums.
5. Uncover every resource available
Besides your health coverage (medical, dental and vision), many employers offer other plans and programs to support your health. While you’re already focused on benefits, take the time to learn about what else is available to you. These offerings may range from the previously mentioned advocacy and transparency services and voluntary benefits, to personalized, one-on-one enrollment support, to telemedicine services and an Employee Assistance Program (EAP). Also, many employers made temporary or permanent plan changes to address COVID-19 regulations and concerns. Be sure to familiarize yourself with these changes — and when they might expire.
You may also want to consider setting aside funds in a health savings account or health care flexible spending account (if available). If your employer offers a wellness program, this might be an opportunity to start adopting better health habits to ensure you’re better equipped physically and mentally to deal with whatever lies ahead.
While open enrollment may seem daunting, devoting an hour or two to reviewing your plan options, the programs available to support you and your family physically, mentally and financially, and how to get the most from the coverages you do elect, can go a long way towards providing peace of mind as we face the unknowns of 2021.
SOURCE: Buckey, K. (17 August 2020) "5 ways to prepare for open enrollment during COVID-19" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/list/5-ways-to-prepare-for-open-enrollment-during-covid-19