Most employers to keep health benefits for workers but some may drop spouses
Originally posted June 9, 2014 by Jerry Geisel on https://www.businessinsurance.com
Most employers will continue to offer health care coverage to their employees, but some will eliminate coverage for employees' spouses, according to a survey released Monday.
Just 6% of employers surveyed by Willis Group Holdings P.L.C survey say they will not comply with a Patient Protection and Affordable Care Act mandate that requires employers with at least 50 employees to offer coverage to their full-time employees or be hit with a stiff financial penalty. Sixty-two percent said they will comply with the mandate, and 32% said they were undecided.
That requirement goes into effect in 2015 for larger employers and in 2016 for smaller firms.
“The results of the survey underscore that organizations recognize the value of offering competitive medical benefits to employees and, despite concerns over health care reform, appear poised to continue to offer employer-sponsored health plans as part of a total rewards package,” said Jay Kirschbaum, St. Louis-based practice leader of the Willis human capital practice's national legal and research group, in a statement.
On the other hand, 12% of employers already have added a special surcharge or eliminated coverage to employees' spouses if the spouse is eligible for coverage from his or her own employers, while 3% plan to take such action between 2015 and 2018, and 20% will likely do so but haven't set a date yet.
The motivation behind such action is financial. Employers can reap significant financial savings when employees' spouses are not covered or are required to pay premium surcharges when they are eligible for coverage through their own employers but don't take it.
For example, the average premium in 2013 for employee-only coverage was $5,884, according to the Kaiser Family Foundation in Washington. Adding a spouse easily will double that premium, experts say.
Other findings
The health care reform law also gives employers a further incentive to pare their health plan enrollment numbers.
In 2014, employers have to pay a $63 reinsurance fee that is imposed for every health care plan participant, while a $44 per participant fee will be assessed in 2016. The amount of the fee in 2017 — the last year such fees will be imposed — has not been set yet by federal regulators. Revenue generated by the transitional reinsurance program fee will be used to partially reimburse insurers for covering high-cost individuals through health exchanges.
The survey also found that just 37% of respondents have calculated the cost of the reform law on their health care plans.
That relatively low percentage “demonstrates that for many organizations, determining an accurate assessment of these figures is still a challenge,” the survey said.,
Among respondents that have calculated the cost impact, 54% said the law would boost costs between 0% and 5%, while 22% put the increase in the 5% to 10% range.
The survey is based on the responses of 1,033 employers, including 36% with between 100 and 499 employees and 26% with less than 100 employees.
HDHP Use Doubles for Nonprofits
Originally posted by Kathryn Mayer on https://www.benefitspro.com
For many nonprofits, just having traditional medical coverage is so 2009. Consumer-driven plans, like HDHPs, are the new rage.
According to a survey from benefits administration firm PPI Benefit Solutions, among nonprofits, the use of traditional medical plans has decreased from 96 percent in 2009 to 83.6 percent in 2013. Meanwhile, the use of high-deductible health plans has nearly doubled, increasing from 22 percent in 2009 to 43.5 percent in 2013.
PPI surveyed more than 250 small to mid-sized nonprofit organizations nationwide.
“Nonprofits are really struggling to maintain a comprehensive benefits package, and consumer-driven plans like HDHPs, health savings accounts and flexible spending accounts can be great, lower-cost options,” said Karen Greco, director of marketing for PPI Benefit Solutions. “The growth in these plan types, combined with the appeal of a predictable benefits budget, is also driving a lot of interest in alternative funding and enrollment solutions like defined contribution with an online marketplace that offers a wide array of product options.”
More nonprofits also are adding voluntary benefits, the report found. More employers, since 2012, are offering voluntary dental (offered by 20.3 percent of employers), life (49.7 percent), critical illness (9.6 percent), accident (34.5 percent) and transit reimbursements (24.3 percent) to their employees.
Other findings from the PPI report include:
Increased importance on automated benefits administration and enrollment: 77.2 percent of employers (up from 28.8 percent in 2012) consider benefits administration platforms to be very important and the 44.3 percent of employers (up from 9.6 percent in 2012) who believe employee self-service portals to be very important.
Help needed with understanding PPACA: 60.5 percent of nonprofits said they haven’t calculated the cost of compliance with regulations under the Patient Protection and Affordable Care Act.
Brokers wanted? Nearly 85 percent of nonprofit employers said they’re committed to delivering health and welfare benefits to their employees but are “seeking solutions to help manage costs and improve employee engagement.”
Protecting the next generation of workers with voluntary benefits
Originally posted May 1, 2014 by Andrea Davis on https://ebn.benefitnews.com
As the Affordable Care Act continues to make its presence felt, and as employers look for new ways to control their health care costs and shift more of the responsibility for benefit decision-making on to employees, the role of voluntary benefits is changing. Once viewed as a nice-to-have benefit, some say voluntary benefits should now be advertised and heavily promoted to employees as an important component in their overall portfolio of benefits.
“It’s part of a trend sweeping the industry,” says Chris Hill, CEO of Spotlite, an online enrollment technology company. “This level of [benefits] engagement has never really been required before.”
Rewind a few years to benefit plans with low deductibles and rich benefits and “these supplemental products [were] less relevant,” he says. “Now you’re asking employees to meet a $2,500 or $5,000 deductible and they have to understand how the [health savings account] or [flexible spending account] works with that and why an accident plan, for example, may be complementary to the high deductible plan.”
Millennials in particular can benefit from education about voluntary benefits. While they may view themselves as invincible, they actually have a lot to protect. “They’re not really thinking about all those what-ifs, but probably more than any other generation, they have something to protect,” says Alison Daily, second vice president of clinical and vocational services at The Standard. “They’re very highly educated. A third of them have four-year college degrees, but that comes with a big price tag for them. The average millennial has $29,000 in student loan debt alone.”
And yet millennials are either unaware of voluntary benefits or reluctant to purchase them. Sixty-nine percent of employees age 25-29 don’t own any voluntary benefits, while 71% of those under age 25 don’t own any voluntary products, according to statistics from Eastbridge Consulting Group. Among older age groups, 60% of 45-49-year-olds own some type of voluntary product.
Still, there’s evidence that millenials value voluntary benefits and that the availability of these products may increase employees’ loyalty to the company. According to MetLife’s 12th Annual U.S. Employee Benefit Trends Study, 86% of Generation Y value having benefits personalized to meet their individual circumstances and age.
The challenges of engaging this tech-savvy group are well-known. Millennials have high expectations when it comes to technology and the overall online purchasing process. This is a group that “sends thousands of text messages on a monthly basis,” says Hill. “You’ve got to compete for their limited attention span so those communications need to be highly relevant.”
But for all the talk about how different Millennials are from other generations, Daily believes good communication resonates with everyone, regardless of age. “I think that maybe one of the mistakes people make, or confusion they have, is that the millennials are very different from their non-millennial peers,” she says. “They’re probably not as different as we think.”
Awareness vs. purchase
Still, there are tactics employers can use to better engage millennials in their voluntary benefits, starting with separating the process in their own minds between initial education and purchase.
“You have the initial communication about benefits – what the benefits are, here’s why you should care,” says Hill. Employers should strive for “concise messaging that drives an action and the action you want to drive upfront is getting the employee to learn about what’s offered to them,” he says.
He encourages employers to actively look at email open rates to get a better understanding of subject lines that resonate with millennials. “Relevant information, relevant subject lines, relevant email layouts, relevant electronic communications are going to drive that action,” he says.
Once employers are past that initial awareness phase and on to open enrollment, “you’re adhering to those same principles – how are we going to capture the attention of the user?” says Hill. “Here we actually want to drive decision making about the products.”
It’s that second sale – the actual purchase of voluntary benefits – that gets tricky with millennials, believes Hill, because they tend to say: “I don’t want to call somebody about this product. I want all the information online so I can make a decision. I don’t want to meet with someone or fill out a piece of paper.”
But when it comes to benefits, millennials’ reliance on technology and self-service might be overstated. Face-to-face meetings are still important, even for this generation, says The Standard’s Daily. “I think sometimes [employers] may be thinking it’s got to be glitzy, that they’ve got to text [millennials] or something like that, but really just sitting down with a millennial and going over what these benefits mean … I think it’s the cornerstone to helping them make the right decision.”
The Eastbridge data appear to back up Daily’s assertion. When asked which of several ways they prefer to learn about voluntary benefits, just over half (55%) of employees representing a spectrum of ages chose “speaking with someone in person.” Twenty-one percent, meanwhile, chose “on my own.”
Daily also emphasizes employers shouldn’t feel they have to do all this communication on their own. In fact, she recommends they turn to their benefit brokers and carriers first, before starting any kind of communication program about voluntary. Another tactic, she says, is using peer-to-peer discussions.
“The millennial generation really values recommendations. If you think about looking for a new restaurant you think about Yelp, and the same thing applies to deciding to select disability coverage,” she says. “They’re going to look to their peers to help them make that decision, so having real stories about why colleagues chose to enroll in a benefit may be just what that millennial needs to make that decision to enroll.”
In addition, employers can leverage other successful communication campaigns. “Employers should really think about anything they’ve already done where they successfully communicated to employees and leverage that strategy,” says Daily. “I would look to the leaders of that event and say: ‘What did you do and why did it work?’ Employers may already have some of the skills and they just aren’t thinking about it in that way.”
And while it might seem like a no-brainer, an online enrollment system that facilitates a seamless shopping experience is important for millennials and all employees, for that matter. Not only that, but a mobile site that’s easy to navigate whether employees are using their laptop, iPhone, iPad or Android device.
“If I get an email from Amazon promoting a product I really want and I click on that email and then go on a wild goose chase to find that product, you’re going to lose users and buyers,” says Hill, who also cautions that all the benefit communication in the world is for naught if the buying experience isn’t simple. “If I do a great job communicating these benefits to millennials and then they have to go on to a system that looks like it was built in 1995, and the initial communications are very different than the actual purchase experience, we think that’s really bad. You’re going to lose millennials, who are used to things being easy.”
Among Spotlite’s clients, about 15% of employees use a mobile device to shop for benefits. As mobile devices and smartphones get more sophisticated and make inroads among older generations, Hill only expects this to grow. “Mobile is necessary. It’s something you have to have,” he says. “Enrollment needs to be easy for the end user. So you make it easy by offering it on a computer or a mobile device. It’s a necessary access point for individuals.”
DOL cracks down on employer 401(k) issues
Originally posted March 31, 2014 by Scott Wooldridge on www.benefitspro.com
The press release headlines are sobering: “U.S. Labor Department files suit to remove trustees,” “Department of Labor files suit to recover unpaid contributions to 401(k) plan,” and “Judge orders trustees to restore losses.”
The Department of Labor website is overflowing with cases of regulators taking action against employers accused of mishandling employee benefit plans.
Among the most common cases: errors in administering 401(k) plans. Although Labor Department officials and experts in the ERISA field say the majority of cases are errors in reporting and do not result in civil lawsuits, the numbers of benefit plan cases investigated (of all kinds) are still impressive: the DOL closed 3,677 investigations in 2013, with nearly 73 percent of those resulting in monetary fines or other corrective action. Lawsuits were filed in 111 of those cases.
The department says it is working to educate employers about how to avoid errors, including conducting seminars and providing information on the DOL website.
In a March 21 blog post, Phyllis Borzi, assistant secretary of Labor for employee benefits security, noted that employers could find it challenging to administer benefits such as 401(K) plans.
“Most fiduciaries — people who have key responsibilities and obligations to an employee benefit plan — and employers want to do the right thing,” she said in the piece. “However, inadvertent mistakes can create significant problems for fiduciaries and participants.”
The problems can lead to substantial monetary fines and settlements.
In January, for example, the DOL announced that a Chicago-area manufacturing firm, Hico Flex Brass, would pay $79,000 to settle a case in which the company failed to properly distribute 401(k) earnings to employees.
A Jan. 10 complaint by the DOL asked the courts to rule that a machine shop in Santa Maria, Calif., should restore $58,000 in 401(k) contributions that the company improperly mixed with other business accounts.
For large companies, the costs are even higher.
A lawsuit brought by employees of International Paper resulted in a $30 million settlement in January, although that case was litigated by a law firm and not the DOL.
Even when the dollar figures aren’t as high, cases involving 401(k) administrative errors can hit small and medium-sized employers hard.
Lawyers who work on employee benefits cases say many employers don’t pay close enough attention to the complexities of administering retirement plans.
“It’s just difficult at times for employers to keep up and attend to all the details,” said John Nichols, an employment benefits lawyer with Minneapolis-based Gray Plant Mooty. “The rules are complex, and the administration of the plans is correspondingly complex.”
Plenty of room for error
“The reality is that running a benefit plan such as a 401(k) plan has a lot of room for error built into it,” said Stephen Rosenberg, an ERISA attorney with The McCormack Firm, based in Boston. “Many of these small and medium-sized companies are focused on running their business. They need to provide a 401(k) as an employee benefit but they don’t really have the internal resources to do this.”
Rosenberg said even large businesses often stumble with retirement plan administration. “Retirement plans, including 401(k) plans, are probably more regulated than anything in American economic life short of nuclear power plants,” he said. “It’s very difficult for any company not large enough to have a dedicated legal staff to hit every hurdle correctly.”
Nichols said that the DOL tends to investigate certain areas of plan administration pretty consistently. “You see a lot of similarity” of the cases, he noted. “One exercise (employers can consider) is to go down the list of typical cases and say, ‘How are we doing in each of these areas?’”
Common pitfalls
So what are the areas the DOL tends to investigate? The experts interviewed for this story agreed that there are several areas where problems may trigger a DOL investigation of employers.
One is failing to make a timely remittance to the 401(k) plan. Under federal rules, funds from an employee’s paycheck have to be submitted to their retirement account no more than 15 days after the money is withheld from the paycheck.
A second common issue is making sure employees get their statements in a timely manner. Proper disclosure of fees owed to the plan’s fiduciaries (the company in charge of administering the funds for the plan) is another area that DOL looks at closely. And some companies have been found noncompliant for failing to maintain fidelity bonds for their plans, a safeguard against misuse of funds.
“I do see companies who are loose about when they make deposits; they just treat it like the rest of the cash flow in the company,” said Rosenberg.
Avoiding costly mistakes
Rosenberg and Nichols said there are several steps employers can take to avoid trouble with DOL regulators.
They both said companies need to take their fiduciary responsibilities seriously, and not expect that a retirement plan will run itself. An important first step is keeping good records.
“If you have a committee that is responsible for the administration of the plan or its investments, make sure that they meet regularly and that you keep a good record of committee actions, what’s discussed, and how decisions are made,” Nichols said.
Getting help
Rosenberg said companies need to be realistic about whether they have the time, resources, and knowledge to administer and monitor retirement plans themselves.
“The key in many ways for smaller and midsized companies is really to find a very good outside consultant — and I don’t mean your vendor,” he said. “If you have a huge company you have a department to do this. If you’re not, bring in a consultant and outsource that role.”
Nichols agreed that the vendor — the financial services company that provides the investment plan — has a limited role. “Vendors are pretty good at allocating accounts and providing access to account information,” he said. “That doesn’t mean that the whole job is done. You didn’t get a totally turnkey product. There are things you need to do as well.”
Failing to watch, of course, could mean triggering a DOL action.
“There’s always a monitoring responsibility,” a DOL spokesperson said. “The criteria we use is, ‘You should have known. You might not have known, but you should have known.’”
Why it's critical to monitor life insurance policy performance
Originally posted on April 11, 2014 by Henry Montag, E. Randolph Whitelaw on www.lifehealthpro.com
Have you ever discovered a bank entry error in your checking account register, resulting in $100 or $1,000 less than what it should be? Imagine how much worse it would be if your client’s $1,000,000 life insurance policy’s death benefit was suddenly unavailable to a spouse or child due to a technicality. Unfortunately, as a result of sustained low interest rates over the last twenty years, as well as policy owner and trustee inattention to performance monitoring, approximately 35 percent of existing non-guaranteed life insurance contracts are expected to expire prior to an insured’s normal life expectancy.
Very few lay people and professionals are aware that their life insurance contracts can expire prior to their lifetime. Clients and trustees often incorrectly assume that either the agent or the insurance company is monitoring their contracts to make sure they will always remain in force, but that’s not true. As a matter of fact, it would be in the insurance company’s best financial interest if, after all those years of paying the premium, it became exorbitantly expensive to maintain the contract and the death benefit had to be reduced or the policy surrendered. According to Donald Walters, General Counsel for the Insurance Marketplace Standards Association, (IMSA), “While insurers have not publicized the issue, there is a growing concern in the industry about lapsing universal life policies.” Carriers and agents have no obligation to monitor policy performance relative to original performance expectations. Carriers are merely required to send a scheduled premium billing and an annual policy value statement. It is solely the responsibility of the policy owner to review the policy value statement and determine the needed premium adjustment to achieve originally illustrated policy values.
In August 2012, the Office of the Comptroller of the Currency (OCC) issued revised guidelines, which directs financial institutions serving as trustee of an insurance trust to treat life insurance as they would any other asset. This means life insurance, just like stocks, bonds and real estate, needs to be actively managed. Providing a policy performance evaluation and then monitoring it every 1-3 years, depending upon product type, is the only way to determine whether a life insurance contract issued in the 1980s is in danger of expiring prematurely. These universal life or variable universal life insurance contracts, unlike their more expensive whole life counterparts that have lifetime guarantees, are not guaranteed for a lifetime. This is because their performance was tied to an anticipated annual interest crediting rate, or an anticipated stock index performance, neither of which was guaranteed, and neither of which were achieved.
In the mid-1980s, when prevailing interest rates were as high as 18 percent and life insurance companies were crediting guaranteed policies much lower rates, thousands of astute policyholders switched the accumulated cash value in their whole life contracts into higher yielding bank deposit instruments.
In order to stop these outflows, the life insurance industry created a new product called universal life insurance.” These policies paid an interest rate based on prevailing market interest rates instead of a fixed rate, as had been the case in their traditional whole life contracts. If interest rates increased, then the scheduled premium could be decreased or remain unchanged for policy coverage to remain in force. What was not clearly understood, however, was that, if interest rates decreased, then the length of time the coverage would remain in force would consequently be reduced, or a greater annual premium deposit would be required in order to prevent an early expiration of coverage.
When universal life was first offered, agents and brokers would ask their clients how long they wished the coverage to remain in force. Clients would typically respond that they wanted the coverage to last until age 90–95. Next an interest rate assumption was made for the time period between the insured’s current age and this age 90–95 target in order to generate a computer illustration calculating the anticipated annual premium needed to keep the policy in force. However, this scheduled premium amount was not guaranteed.
While the introduction of this interest-sensitive product solved the outflow problem for the insurance industry, it has created other problems for policy owners in the last ten years due to policy owner misunderstandings and inattention. Few policy owners or “amateur” trustees understood that they carried performance risk. Moreover, they did not know which risks to monitor or have the tools to do so. As interest rates declined, they simply paid the scheduled premium, unaware that the policy would lapse much earlier than insured age 90-95 unless the scheduled premium amount was increased. This fact has created a crisis of lapsing policies that requires corrective action.
To avoid lapse risk, a policy performance evaluation of a universal life, variable universal life or indexed universal life contract should be independently conducted to determine, at a minimum, (1) the probability the current premium will sustain the policy to the insured’s life expectancy, (2) the insured’s age at policy lapse, (3) the competitiveness of the policy charge, and (4) the needed correcting premium to sustain the policy to the insured’s life expectancy. Inforce carrier illustrations disclaim predictive value. Hence, an actuarially certified evaluation should be obtained. Also, for older insureds, a life expectancy report should be considered so that the premium payment period is based upon the insured’s medical history and current medical condition.
The more advance notice an insured or trustee has about a potential premium shortfall, the less additional monies are needed to adjust the coverage back to its originally projected level. Since cost of insurance charges increase annually, annual performance monitoring and periodic premium adjustment avoids a lapse notice ‘surprise’ that requires a significantly higher premium to maintain the policy inforce.
Whether there was transparency and full disclosure in the initial marketing and ongoing annual policy statements for these products can be debated but performance risk rests with the policy owner. The combination of low interest rates and the fact that the octogenarian demographic is the fastest growing segment of the population has created a ticking time bomb for lapse. Corrective action is needed, and it can only be taken by the policy owner.
If the policy is owned in an irrevocable life insurance trust (ILIT), the trustee has the sole duty and responsibility to manage the trust asset. Inattention poses reputation and litigation risk for corporate trustees, and reputation risk for legal and tax advisors to amateur trustees, especially family members serving as an accommodation and relying solely upon these advisors for all trust administration functions. It is estimated that 90 percent of inforce Trust-Owned Life Insurance (TOLI) policies are administered by unskilled amateur trustees, meaning that credible professional assistance is needed to create a prudent and reasoned process that maximizes the probability of a favorable outcome to the trust estate.
In regard to corporate trustee duties, the OCC offers excellent prudent process guidance. For example, policy performance evaluation should examine the financial health of the issuing insurance company, and consider whether the policy is performing as illustrated. If the policy is underperforming, or if the policy can be improved upon, the fiduciary should consider replacement or remediation. If a trustee lacks the expertise to evaluate the premium adequacy risk or the contract’s appropriateness to fulfill the beneficiary’s objectives, the trustee has a duty to delegate and engage the necessary experts to make these determinations and assist in the suggested remediation steps.
In addition to regularly evaluating and monitoring a life insurance contract, individual policyholders should also consider the availability of newer products that were not available when the contracts were initially purchased. For example, a chronic care rider, which first became available at the end of 2011, allows an individual to withdraw up to $116,000 tax free in 2013 (adjusted annually for inflation), from the death benefit of a life insurance contract to pay for qualifying long-term care expenses. There is no reason not to have this benefit available in any life insurance contract.
Finally, the need for inforce TOLI policy attention usually triggers uncertainties as to how to get started in implementing a prudent process. Establishment of an Investment Policy Statement (IPS) is just as important for life insurance as it is for fixed income and equity investments. An IPS should:
- Update death benefit requirements
- Summarize ILIT parties and their responsibilities
- Identify trustee risk management criteria
- Identify policy and product evaluation duties and how they will be provided
- Affirm beneficiary communication requirements
An Investment Policy Statement and credible inforce policy evaluation can help ensure the longer-term planning objectives of a policy owner as well as provide safeguards for the trustee. The tools for prudent and reasoned life insurance policy performance monitoring are readily available — they just need to be used.
Weighing a Rollout of Benefits for Employees? 4 Tips for Startups to Consider
Originally posted by Jennifer Fitzgerald on https://www.entrepreneur.com
Should a startup company offer employees benefits? That question cuts to the core of any entrepreneur's most significant challenges: cash burn, talent recruitment and company values.
But founders of startups might find it wise to consider offering employees certain benefits to help build the company’s culture. Here’s why:
Benefits are more valuable to employees than you think. MetLife’s annual study of employee benefits trends found that benefits can be even more important than advancement opportunities and company culture in fostering employee loyalty. That’s important for founders of startups to know, considering the fact that recruiting takes a massive investment of time.
And benefits may not be as expensive as you think. Okay, free Friday massages might be. But health insurance is certainly more affordable for small businesses now than it’s been in recent years, due to new offerings under the Affordable Care Act.
And by offering benefits, you company can stand out from the pack. Only 28 percent of businesses with fewer than 10 employees offer health insurance. If you can afford it, then your company will have a recruiting edge.
If you’re convinced that you should provide your employees benefits, here’s what you should do:
1. Start with the basics. You want a healthy team that won’t get financially rocked by a trip to the emergency room. That means you should provide health insurance and disability insurance.
Retirement contributions, gym memberships, catered lunches and the like should all wait until your business becomes financially stable. Also, they don’t deliver as much bang (in terms of employee satisfaction) for the employer's buck as good health-care coverage.
Arrange for a solid but not extravagant group health-insurance plan to keep costs in check. Many employess at startups are relatively young and healthy. For them, a bronze- or silver-level plan is appropriate. (Usually, premiums will run $200 to $300 per employee per month). Find a plan that makes people stick to a network (an HMO or EPO), which will keep your costs down.
Disability insurance is also an important but often overlooked offering. This type of coverage pays a cash benefit if an employee is unable to work as a result of injury or illness. If you can afford to pay 0.5 percent to 1 percent in compensation per employee, then you can offer short-term and long-term disability insurance.
2. Manage expectations. Consider what you can afford to spend on benefits for each new hire. Build it into your baseline hiring costs and don’t change this figure unless you’re improving it.
Avoid a reduction in benefits. Nothing will have your employees grumbling faster than that. (This is because of a human behavioral quirk called the endowment effect.) It’s better to start out conservatively with your benefits offerings and improve them over time as your budget can absorb them.
For reference, small companies that provide health insurance to employees contribute on average per employee $857 per year for individual coverage and $3,346 per year for family coverage. Contribute only what you can afford. And remember that only 28 percent of small companies offer health insurance at all. Contributing even a small amount for employee health insurance places you well ahead of the pack.
3. Take advantage of health-insurance subsidies. The Affordable Care Act offers subsidies (as much as 50 percent of the cost) to small businesses that provide health insurance to employees. To qualify, the business must have fewer than 25 full-time employees, pay on average annual wages below $50,000 and contribute 50 percent or more toward premiums.
For startups not eligible for the subsidy, taking advantage of individual health insurance is also an option. Individual health insurance costs about the same per person as small-group health insurance. So, a startup could have employees buy their own individual health-insurance plan on the relevant state marketplace and reimburse them for premiums.
4. Get a broker. Founders don’t have time to deal with the complex world of insurance benefits. Let a broker handle it for you. Best of all, there’s no extra cost. Brokers are compensated by insurance companies through commissions, which have already been built into insurance prices. They’ll run quotes, give you guidance and manage the paperwork for you.
Business owners can figure out what they want and what they're comfortable spending and let a broker manage the rest.
Financial fears have many workers planning to delay retirement
Originally posted by Melissa A. Winn on https://ebn.benefitnews.com
Although U.S. workers on a whole are more satisfied with their current financial situation than in years past, most (58%) remain concerned about financial stability in retirement and say they plan to continue working until age 70 or later, a new Towers Watson survey shows.
With many workers expecting to fall short on their retirement savings, nearly four in 10 plan on working longer, an increase of 9% since 2009. A large majority of these employees expect to delay retirement by three or more years and 44% plan on a delay of five years or more, the Global Benefit Attitudes Survey finds.
In 2009, 31% of workers planned on retiring before 65, and 41% planned on retiring after 65. According to the 2013 survey, only 25% plan on retiring before 65 and half expect to retire after 65. One in three employees either does not expect to retire until after 70 or doesn’t plan to retire at all.
The nationwide survey of 5,070 full-time employees found that nearly half of respondents (46%) are satisfied with their current finances, a sharp increase from 26% in 2009. Still, nearly six in 10 remain worried about their financial future.
Employees’ confidence in their ability to retire has also climbed steadily since the financial crisis, with nearly a quarter (23%) very confident of their income sufficiency for the first 15 years of retirement. However, only 8% are very confident they’ll have adequate income 25 years into retirement.
“Employees might be on firmer financial footing now than they were five years ago, but many remain nervous about their finances and prospects for a secure retirement,” says Shane Bartling, senior consultant at Towers Watson. “This is especially true for older workers who are likely better positioned to assess their retirement income than workers overall. The financial crisis hit workers age 50 and above particularly hard, with the stock market fall creating a huge dent in their retirement savings and their confidence levels.”
The survey also finds that employees of all ages are especially worried about health care costs and public programs. Only two in five employees believe they can afford any medical expenses that arise in the next 12 months and more than half of all employees (53%) are concerned they will not be able to afford health care in retirement. Most employees (83%) also believe Social Security will be less valuable in the future and 88% have similar fears about Medicare.
More than half of employees (56%) say they are spending less and postponing big purchases as a way to pay down debt and start saving for retirement, the study says. Just over half (51%) of employees say they review their retirement plans frequently.
Saving for retirement is cited as the No. 1 financial priority for all employees age 40 and older, the study notes.
“Employers and employees are both facing increasing retirement pressures. Employers understand that they have a role to play in helping their workers plan and save for a secure retirement. Today’s employees are considerably more engaged, and are looking to their employers for more information about health care costs and the value of their retirement programs,” says Bartling. The increased use of tools, including mobile apps, also represents an opportunity “for employers to help their employees plan for a successful retirement.”
HSA, HRA contributions reach record high in 2013
Originally posted March 14, 2014 by Melissa A. Winn on https://ebn.benefitnews.com
The number of employers contributing to health savings accounts or health reimbursement arrangements continues to grow, with 71% of employees reporting contributions from their employers in 2013, according to a new report by the Employee Benefit Research Institute.
That number represents the highest level of employers contributing since the 2005 inception of the EBRI/ Greenwald & Associates Consumer Engagement in Health Care Survey (CEHCS).
While the study found that the number of employers contributing to HSAs and HRAs has grown, it also found the amount of their contributions for some has declined. The percentage of employees with employee-only coverage reporting employee contributions of $1,000 or more slipped from 28% to 23% in 2013.
For employees with family coverage, employer contribution levels were mostly unchanged, however.
That trend held true for employee contributions, as well. EBRI found, on average, workers with employee-only coverage dropped their HSA contribution levels last year, but those with family coverage kept contribution levels relatively steady.
These findings come from the 2008–2013 EBRI/Greenwald & Associates Consumer Engagement in Health Care Surveys (CEHCS), and earlier EBRI surveys, that have tracked the growth of so-called consumer-driven health plans since 2007. CDHPs consist of HSAs, health reimbursement arrangements (HRAs), and high-deductible health plans designed to bring aspects of consumerism to health insurance plans.
According to the study, 11.8 million adults ages 21-64, 9.7% of the U.S. population, were enrolled in a plan with an HRA or HAS in 2013. Another 9.3 million reported they were covered by an HSA-eligible plan but had not yet opened the account. Overall, therefore, the study found about 21 million adults ages 21-64 with private insurance, representing 17.3% of that market, were either already in a CDHP or covered by an HSA-eligible plan. When their children were included, 26.1 million individuals with private insurance, representing 15% percent of the market, were either in a CDHP or an HSA-eligible plan.
The full report, “Employer and Worker Contributions to Health Reimbursement Arrangements and Health Savings Accounts, 2006–2013,” can be found online at ebri.org.
Are employees more satisfied than ever with their benefits?
Originally posted March 17, 2014 by Andy Stonehouse on https://ebn.benefitnews.com
Despite some sense of grumbling out in the working world about the shape of benefits in the midst of further ACA rollouts, one new study suggests employee satisfaction regarding their benefits is at an all-time high.
MetLife’s 12th annual U.S. Employee Benefit Trends Study, released Monday, shows what researchers suggest is a tremendous level of overall satisfaction with workplace benefits – with some of the highest numbers in more than a decade.
According to this year’s study, the overall satisfaction level hit 50%, the most solid self-evaluation of benefits in the MetLife research’s history.
And while voluntary benefits strategies also appear to be paying off, the company says that fewer employers report that voluntary benefits are at the forefront of their overall strategy.
“Employees who are very satisfied with their benefits are more than twice as likely to report being very satisfied with their jobs,” notes Todd Katz, executive vice president, Group, Voluntary and Worksite Benefits, with MetLife. “Because of this, offering a wider variety of benefits pays dividends for both employers and employees.”
Katz says the study indicates that benefits are a strong driver for employee loyalty, with 44% of respondents indicating that having benefits customized to meet their needs would be an even stronger pull to keep them happy and motivated on the job.
That ability to personalize their own benefits choices as part of a workplace package is taking on more appeal, the study finds. Some 78% of workers say they would like a greater variety of benefits to choose from and 80% say it would be valuable to have benefits customized to their individual circumstances, or their age.
Most importantly, 60% indicated that they would be willing to bear more of the cost involved in order to have more personal benefits choices.
Even with strong employee support and enthusiasm, Katz says the survey indicates that employers themselves are less supportive of voluntary benefits being a cornerstone of their benefits strategy, with numbers dropping almost 10% since the 2012 survey.
“This shift in employer focus is somewhat unexpected,” Katz says. “But rather than a change in strategy, this is likely a result of employers being consumed by health care reform and other cost control strategies.”
Katz suggests that employers continue to consider the long-term goodwill and retention benefits of offering a solid array of voluntary choices.
“The employee satisfaction numbers make it clear that voluntary benefit strategies are paying off for employers and that attention should not be shifted from existing plans. Changing course now may have negative effects on loyalty and productivity in the future.”
Feds release employee compensation breakdown
Private industry employers spent, on average, $29.63 per hour worked for total employee compensation in December 2013, the U.S. Bureau of Labor Statistics reported Wednesday. Wages and salaries averaged $20.76 per hour worked and accounted for 70.1% of that cost, while benefits averaged $8.87 and accounted for the remaining 29.9%.
Private industry employers paid, on average, $2.45 per hour worked for insurance benefits, including life, health and disability insurance, accounting for 8.3% of total compensation. In addition to insurance, the other benefit categories were supplemental pay(overtime and premium, shift differentials and nonproduction bonuses), which averaged 85 cents per hour worked (2.9%) and retirement savings, which averaged $1.10 per hour (3.7%).
The Bureau’s Employer Costs for Employee Compensation (ECEC), a product of the National Compensation Survey, measures employer costs for wages, salaries and employee benefits for nonfarm private and state and local government workers. ECEC news releases are published quarterly.
The average cost for legally required benefits, such as Social Security and Medicare, came to $2.43 per hour worked in the private industry, or 8.2% of total compensation in December 2013. Social Security comprises the largest legally required benefit cost component at $1.39 per hour, or 4.7% of total compensation, the Bureau said. Legally required benefits such as Social Security and Medicare are often directly linked to wages; therefore, higher paid occupations or industries will typically show higher cost estimates for this compensation component, the Bureau added.
Costs for other legally required benefits include workers’ compensation, which averaged 43 cents per hour worked (1.4% of total compensation); state unemployment insurance, which averaged 23 cents per hour worked (0.8%); and federal unemployment insurance, which averaged just 4 cents.
Private industryemployer costs for paid leave benefits averaged $2.05 per hour worked. Private
industry paid leave benefit costs were highest for management, professional and related occupations.
ECEC data on total compensation, wages and salaries, and benefits in private industry are produced annually for 15 metropolitan areas. Metropolitan area data will be included in a news release set to be issued June 11.