Great article from our partner, United Benefit Advisors (UBA) by Bill Olson
With apologies to the band R.E.M., this article is not about their music, nor their album, but about how automatic enrollment has significantly helped people. Think of all the payments you currently have automated. You probably have automatic deposit of your paycheck, automatic bill pay for your utilities and other monthly bills, and maybe even a recurring automatic payment and delivery of pet food from Amazon. Now, think of something that’s important that you wish you could automate. This is not the time to mention your daily fix of Starbucks, but about saving enough money for retirement.
There are families that have a similar system where they placed a large jar in the kitchen. Everyone, kids included, would put their spare change in the jar every day. At the end of the month, the family would use that accumulated money in a fun way. An article titled, “Automation Making Huge Retirement Plan Impact,” in Employee Benefit News references how a defined contribution plan provides an excellent way for employees to seamlessly save money for retirement. As employees started joining the plan, with a typical contribution of 10 percent or higher, including employer matching, participation increased nearly 20 percent in the company’s retirement benefit according to the article. This was up more than seven percent from just five years ago. Looking at this by generation, millennials are used to automation and, consequently, are reaping huge rewards from this type of plan.
However, all age groups benefit and a company can modify the plan to increase participation. For example, if a company has a matching rate of 50 cents on the first three percent to 25 cents on the first six percent, it automatically gets employees saving an additional three percent they wouldn’t normally save. Another way is to have annual automatic increases in contributions. A bump of a percentage point every year up to a maximum rate will help employees the earlier they start.
Of course, there should always be an opt-out option for people who don’t want to have the contribution rate increased, have a separate retirement plan, or simply don’t want to save using the company plan.
See the original article Here.
Olson B. (2017 March 28). Automatic for the people [Web blog post]. Retrieved from address http://blog.ubabenefits.com/automatic-for-the-people
“My advice is to do all you can from a risk management standpoint but you also need insurance because you never know what can happen.” – Cathleen Christensen, Vice President of Property and Casualty
In today’s world, a day does not pass without a large company being featured on the news because they are suffering from a data breach or hacking incident that has threatened personal information.
Cyber security is a concept that has become a high priority in the past five years. Since this issue is fairly new, demand for cyber insurance is emerging, since most cyber related claims are currently not covered under a standard insurance program. The questions that arise the most regarding cyber security and liability are about understanding the level of exposure a company’s data faces and knowing what cyber coverage encompasses.
Large companies are not the only ones at risk, it is often small businesses that are most vulnerable simply because they are not prepared. Most small (under 250 employees) businesses do not have the IT staff necessary to help protect a business. Even manufacturing companies are at risk because while credit card information is a large component, it is not the only type of attack. Can you afford the risk of not protecting your employee, client and company data?
With 10+ years of experience addressing cyber risks, Hierl’s process of approaching cyber security begins with an assessment of a client’s risk and exposure. This involves knowing what data a client has, who has access to it, how it’s stored and how they are backing it up. Hierl can expertly evaluate the coverage that is necessary to keep an organization secure.
Because it is an emerging coverage, cyber insurance plans are not standard. Hierl advises a three-fold type of coverage including:
The best policies offer assistance to help you to work through things if something was to ever happen, as well as forensic and technical assistance to determine how the breach occurred.
“Many organizations that have suffered cyber-crime are sophisticated, big businesses. If they can’t stop these attacks from happening, most other businesses can’t either.”
If it is determined quickly that a breach has happened and a good backup exists a company can recover quickly and the attack is much less damaging. However, when a company’s data gets out in the wild is when attacks become most expensive.
The 2016 Ponemon Institute Cost of Data Breach study reported that the average cost of a lost record rose from $154 in 2015 to $158 in 2016. Even if, you only have 20 employees now and that doesn’t seem all that bad…you need to think about how many employee records do you have from the past 10 years? Cyber-attacks don’t just affect current records nor do they only target employee data but client and company data too. This type of insurance is becoming a must have coverage for businesses because of how sophisticated these attacks have become
Three reasons to explore cyber coverage for your business:
To download the full article click Here.
Do you know everything you need to know about your 401(k)? Check out this great article from Employee Benefit News about the top 10 misconceptions people have about their 401(k)s by Robert C. Lawton.
Unfortunately for plan sponsors, 401(k) plan participants have some big misconceptions about their retirement plan.
Having worked as a 401(k) plan consultant for more than 30 years with some of the most prestigious companies in the world — including Apple, AT&T, IBM, John Deere, Northern Trust, Northwestern Mutual — I’m always surprised by the simple but significant 401(k) plan misconceptions many plan participants have. Following are the most common and noteworthy —all of which employers need to help employees address.
1. I only need to contribute up to the maximum company match
Many participants believe that their company is sending them a message on how much they should contribute. As a result, they only contribute up to the maximum matched contribution percentage. In most plans, that works out to be only 6% in employee contributions. Many studies have indicated that participants need to average at least 15% in contributions each year. To dispel this misperception, and motivate participants to contribute something closer to what they should, plan sponsors should consider stretching their matching contribution.
2. It’s OK to take a participant loan
I have had many participants tell me, “If this were a bad thing why would the company let me do it?” Account leakage via defaulted loans is one of the reasons why some participants never save enough for retirement. In addition, taking a participant loan is a horribleinvestment strategy. Plan participants should first explore taking a home equity loan, where the interest is tax deductible. Plan sponsors should consider curtailing or eliminating their loan provisions.
3. Rolling a 401(k) account into an IRA is a good idea
There are many investment advisers working hard to convince participants this is a good thing to do. However, higher fees, lack of free investment advice, use of higher-cost investment options, lack of availability of stable value and guaranteed fund investment options and many other factors make this a bad idea for most participants.
4. My 401(k) account is a good way to save for college, a first home, etc.
When 401(k) plans were first rolled out to employees decades ago, human resources staff helped persuade skeptical employees to contribute by saying the plans could be used for saving for many different things. They shouldn’t be. It is a bad idea to use a 401(k) plan to save for an initial down payment on a home or to finance a home. Similarly, a 401(k) plan is not the best place to save for a child’s education — 529 plans work much better. Try to eliminate the language in your communication materials that promotes your 401(k) plan as a place to do anything other than save for retirement.
5. I should stop making 401(k) contributions when the stock market crashes
This is a more prevalent feeling among plan participants than you might think. I have had many participants say to me, “Bob, why should I invest my money in the stock market when it is going down. I’m just going to lose money!” These are the same individuals who will be rushing into the stock market at market tops. This logic is important to unravel with participants and something plan sponsors should emphasize in their employee education sessions.
6. Actively trading my 401(k) account will help me maximize my account balance
Trying to time the market, or following newsletters or a trader’s advice, is rarely a winning strategy. Consistently adhering to an asset allocation strategy that is appropriate to a participant’s age and ability to bear risk is the best approach for most plan participants.
7. Indexing is always superior to active management
Although index investing ensures a low-cost portfolio, it doesn’t guarantee superior performance or proper diversification. Access to commodity, real estate and international funds is often sacrificed by many pure indexing strategies. A blend of active and passive investments often proves to be the best investment strategy for plan participants.
8. Target date funds are not good investments
Most experts who say that target date funds are not good investments are not comparing them to a participant’s allocations prior to investing in target date funds. Target date funds offer proper age-based diversification. Many participants, before investing in target date funds, may have invested in only one fund or a few funds that were inappropriate risk-wise for their age.
9. Money market funds are good investments
These funds have been guaranteed money losers for a number of years because they have not kept pace with inflation. Unless a participant is five years or less away from retirement or has difficulty taking on even a small amount of risk, these funds are below-average investments. As a result of the new money market fund rules, plan sponsors should offer guaranteed or stable value investment options instead.
10. I can contribute less because I will make my investments will work harder
Many participants have said to me, “Bob, I don’t have to contribute as much as others because I am going to make my investments do more of the work.” Most participants feel that the majority of their final account balance will come from earnings in their 401(k) account. However, studies have shown that the major determinant of how much participants end up with at retirement is the amount of contributions they make, not the amount of earnings. This is another misconception that plan sponsors should work hard to unwind in their employee education sessions.
Make sure you address all of these misconceptions in your next employee education sessions.
Lawton R. (2017 April 4). The 10 biggest 401(k) plan misconceptions[Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/the-10-biggest-401-k-plan-misperceptions?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
Did you know that now more than ever Americans are giving up on their dreams of retirement? Find out about the somber facts facing the older generation of workers in the great article from Benefits Pro by Marlene Y. Satter.
It’s a grim picture for older workers: half either plan to postpone retirement till at least age 70, or else to forego retirement altogether.
That’s the depressing conclusion of a recent CareerBuilder survey, which finds that 30 percent of U.S. workers aged 60 or older don’t plan to retire until at least age 70—and possibly not then, either.
Another 20 percent don’t believe they will ever be able to retire.
Why? Well, money—or, rather, the lack of it—is the main reason for all these delays and postponements.
But that doesn’t mean that workers actually have a set financial goal in mind; they just have this sinking feeling that there’s not enough set aside to support them.
Thirty-four percent of survey respondents aged 60 and older say they aren’t sure how much they’ll need to save in order to retire.
And a stunning 24 percent think they’ll be able to get through retirement (and the potential for high medical expenses) on less than $500,000.
Others are estimating higher—some a lot higher—but that probably makes the goal of retirement seem even farther out of reach, with 25 percent believing that the magic number lies somewhere between $500,000–$1,000,000, 13 percent shooting for a figure between $1–2 million, 3 percent looking at $2 million to less than $3 million and (the) 1 percent aiming at $3 million or more.
And if that’s not bad enough, 26 percent of workers 55 and older say they don’t even participate in a 401(k), IRA or other retirement plan.
With 74 percent of respondents 55 and older saying they aren’t making their desired salary, that could play a pretty big part in lack of participation—but that doesn’t mean they’re standing still. Eight percent took on a second job in 2016, and 12 percent plan to change jobs this year.
Predictably, the situation is worse for women. While 54.8 percent of male respondents aged 60+ say they’re postponing retirement, 58.7 percent of women say so.
Asked at which age they think they can retire, the largest groups of both men and women say 65–69, but while 44.9 percent of men say so, just 39.6 percent of women say so.
In addition, 24.4 percent of women peg the 70–74 age range, compared with 21.1 percent of men, and 23.2 percent of women agree with the gloomy statement, “I don’t think I’ll be able to retire”—compared with 18 percent of men.
And no wonder, since while 21.7 percent of men say they’re “not sure” how much they’ll need to retire, 49.3 percent of women are in that category.
Women also don’t participate in retirement plans at the rate that men do, either; 28.3 percent of male respondents say they don’t participate in a 401(k), IRA or other retirement plan, but 35.4 percent of female respondents say they aren’t participating.
For workers in the Midwest, a shocking percentage say they’re delaying retirement: 61.6 percent overall, both men and women, of 60+ workers saying they’re doing so.
Those in the fields of transportation, retail, sales, leisure and hospitality make up the largest percentages of those putting off retirement, at 70.4 percent, 62.5 percent, 62.8 percent and 61.3 percent, respectively. And 46.7 percent overall agree with the statement, “I don’t think I’ll be able to retire.”
Incidentally, 53.2 percent of those in financial services—the largest professional industry group to say so—are not postponing retirement.
They’re followed closely by those in health care, at 50.9 percent—the only other field in which more than half of its workers are planning on retiring on schedule.
And when it comes to participating in retirement plans, some industries see some really outsized participation rates that other industries could only dream of. Among those who work in financial services, for instance, 96.5 percent of respondents say they participate in a 401(k), IRA or comparable retirement plan.
That’s followed by information technology (88.2 percent), energy (87.5 percent), large health care institutions (85.8 percent—smaller health care institutions participate at a rate of 51 percent, while overall in the industry the rate comes to 75.5 percent), government employees (83.6 percent) and manufacturing (80.2 percent).
After that it drops off pretty sharply, and the industry with the lowest participation rate is the leisure and hospitality industry, at just 43.4 percent.
Satter M. (2017 March 31). Half of mature workers delaying or giving up on retirement [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/03/31/half-of-mature-workers-delaying-or-giving-up-on-re?ref=mostpopular&page_all=1
Are you trying to help your employees increase their financial well-being? Check out these 5 great tips from Employee Benefits Adviser on how to help increase your employees’ investment into their financial wellness by Joe Desilva.
Now more than ever, employers offer a wide array of benefits to build engagement and culture within their walls. Healthy snack options adorning the kitchen? Check. Fitness stipends? Check. Competitive work-from-home policies? Check. These are all nice-to-have extras, but employees are increasingly concerned about a more fundamental concern: retirement planning. And it’s here where employers are not providing enough enticing options as they are with the other, flashier perks.
One of the biggest issues employees face as they plan for retirement is economic uncertainty. Only 21% of workers are very confident that they will have enough money for a comfortable retirement, according to the 2016 Employee Benefit Research Institute Retirement Confidence Survey. This should matter to employers because financial uncertainty can have a negative effect on work performance, according to a study by Lockton Retirement Services. The study found that one in five workers reported feeling extremely stressed, mostly because of their job or finances, and those reporting high stress were twice as likely to report poor health overall, leading to more sick days and decreased productivity.
Boosting financial wellness programs not only can help employees’ finances in the long term, it can possibly help employees manage stress and increase productivity in the short term. Employers seem to understand this. In fact, 92% of employer-respondents in a study commissioned by ADP titled Winning with Wellness confirmed interest in providing their workforce with information about retirement planning basics, and 84% said the same of retirement income planning.
Yet, even though many employers appreciate the value of these programs, 32% are not considering implementation. The appetite exists for retirement planning, but the prospects of starting a program appear to be daunting. The truth is, it can be easier than you think.
Here are five simple steps an employer can take to start helping employees find tools and information to help them better manage their finances and grow more confident in their financial futures.
At a time when employee retention is crucial, it’s important to create a support system for employees as they plan their financial futures. With so many workers concerned about retirement security, employers have a clear opportunity to step in and help. Whether it’s enabling employees to save more for retirement or learn about budgeting, financial planning can potentially serve as another popular perk among that list of nice-to-haves.
Desilva J. (2017 March 16). 5 simple steps clients can take to boost workers’ financial wellness[Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/5-simple-steps-clients-can-take-to-boost-workers-financial-wellness
Take a look at the great article from Employee Benefits Advisor on what employers need to know about healthcare with the collapse of the AHCA by Alden J. Bianchi and Edward A. Lenz.
The stunning failure of the U.S. House of Representatives to pass the American Health Care Act has political and policy implications that cannot be forecasted. Nor is it clear whether or when the Trump administration and Congress will make another effort to repeal and replace, or whether Republicans will seek Democratic support in an effort to “repair,” the Affordable Care Act. Similarly, we were unable to predict whether and to what extent the AHCA’s provisions can be achieved through executive rulemaking or policy guidance.
Here are some ways the AHCA’s failure could impact employers in the near term.
Immediate impact on employers
Employers were not a major focus of the architects of the ACA, nor were they a major focus of those who crafted the AHCA. This is not surprising. These laws address healthcare systems and structures, especially healthcare financing. Rightly or wrongly, employers have not been viewed by policymakers as major stakeholders on those issues.
In a blog post published at the end of 2014, we made the following observations:
The ACA sits atop a major tectonic plate of the U.S. economy, nearly 18% of which is healthcare-related. Healthcare providers, commercial insurance carriers, and the vast Medicare/Medicaid complex are the law’s primary stakeholders. They, and their local communities, have much to lose or gain depending on how healthcare financing is regulated. The ACA is the way it is largely because of them. Far more than any other circumstance, including which political party controls which branch of government, it is the interests of the ACA’s major stakeholders that determine the law’s future. And there is no indication whatsoever that, from the perspective of these entities, the calculus that drove the ACA’s enactment has changed. U.S. employers, even the largest employers among them, are bit players in this drama. They have little leverage, so they are relegated to complying and grumbling (not necessarily in that order).
With the AHCA’s collapse, the ACA remains the law of the land for the foreseeable future. The AHCA would have zeroed out the penalties on “applicable large” employers that fail to make qualified offers of health coverage, but the bill’s failure leaves the ACA’s “play or pay” rules in full force and effect. The ACA’s reporting rules, which the AHCA would not have changed, also remain in effect. This means, among other things, that many employers, especially those with large numbers of part-time, seasonal, and temporary workers that face unique compliance challenges, will continue to be in the position of “complying and grumbling.”
This does not mean that nothing has changed. The leadership of the Departments of Health and Human Services, Labor and Treasury has changed, and these agencies are now likely to be more employer-friendly. Thus, even though the ACA is still the law, the regulatory tone and tenor may well be different. For example, although the current complex employer reporting rules will remain in effect, the Treasury and IRS might find administrative ways to simplify them. Similarly, any regulations issued under the ACA’s non-discrimination provisions applicable to insured health plans (assuming they are issued at all) likely will be more favorable to employers than those issued under the previous administration.
There are also unanticipated consequences of the AHCA’s failure that employers might applaud. We can think of at least two.
1. Stemming the anticipated tide of new state “play or pay” laws
The continuation of the ACA’s employer mandate likely will put on hold consideration by state and local governments of their own “play or pay” laws.
In anticipation of the repeal of the ACA’s employer mandate, the Governor of Massachusetts recently introduced a budget proposal that would reinstate mandated employer contributions to help cover the costs of increased enrollment in the Medicaid and Children’s Health Insurance Program, known as MassHealth. Under the proposal, employers with 11 or more full-time equivalent employees would have to offer full-time employees a minimum of $4,950 toward the cost of an employer group health plan, or make an annual contribution in lieu of coverage of $2,000 per full-time equivalent employee. While the Governor’s proposal is not explicitly conditioned on repeal of the ACA’s employer mandate, the ACA’s survival may prompt a reconsideration of that approach.
California lawmakers were also considering ACA replacement proposals, including a single-payer bill introduced last month by Democratic state senators Ricardo Lara and Toni Atkins. Had the ACA’s employer mandate been repealed, those proposals were likely just the tip of an iceberg. When the ACA was enacted in 2010, Hawaii, Massachusetts, and San Francisco were the only jurisdictions with their own healthcare mandates on the books. But in the prior two-year period, before President Obama was elected and made healthcare reform his top domestic priority, more than two dozen states had introduced various “fair share” health care reform bills aimed at employers.
Most of the state and local “play or pay” proposals would have required employers to pay a specified percentage of their payroll, or a specified dollar amount, for health care coverage. Some required employers to pay employees a supplemental hourly “health care” wage in addition to their regular wages or provide health benefits of at least equal value. California, Illinois, Pennsylvania, and Wisconsin considered single-payer proposals.
To be sure, any state or local “play or pay” mandates would be subject to challenge based on Federal preemption under the Employee Retirement Income Security Act (ERISA). While some previous “play or pay” laws were invalidated under ERISA (e.g., Maryland), others (i.e., San Francisco) were not. In sum, given the failure of the AHCA, there would appear to be no rationale, at least for now, for any new state or local “play or pay” laws to go forward.
2. Avoiding upward pressure on employer premiums as a result of Medicaid reforms
The AHCA proposed to reform Medicaid by giving greater power to the states to administer the Medicaid program. Under an approach that caps Medicaid spending, the law would have provided for “per capita allotments” and “block grants.” Under either approach, the Congressional Budget Office, in its scoring of the AHCA, predicted that far fewer individuals would be eligible for Medicaid.
According to the CBO: CBO and JCT estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017 to 2026 periods. That total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion. The largest savings would come from reductions in outlays for Medicaid and from the elimination of the ACA’s subsidies for non-group health insurance.
While employers rarely pay attention to Medicaid, the AHCA gave them a reason to do so. Fewer Medicaid-eligible individuals would mean more uncompensated care — a significant portion of the costs of which would likely be passed on to employers in the form of higher premiums. As long as the ACA’s expanded Medicaid coverage provisions remain in place, premium pressure on employers will to that extent be avoided.
Long-term impact on employers
As we conceded at the beginning, it’s not clear how the Republican Congress and the Administration will react to the AHCA’s failure. If the elected representatives of both political parties are inclined to try to make the current system work, however, we can think of no better place that the prescriptions contained in a report by the American Academy of Actuaries, entitled “An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes.”
The actuaries’ report does not address, much less resolve, the major policy differences between the ACA and the AHCA over the role of government — in particular, the extent to which taxpayers should be called on to fund the health care costs of low-and moderate-income individuals, and whether U.S. citizens should be required to maintain health coverage or pay a penalty. And even if lawmakers can reach consensus on those contentious issues, they still would have to agree on the proper implementing mechanisms.
But whatever the outcome, employers are unlikely to play a major role.
Bianchi A. & Lenz E. (2017 April 6). How employers should proceed after the AHCA’s collapse [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/how-employers-should-proceed-after-the-ahcas-collapse
Is your health starting to suffer from sitting down at work all day? Take a look at this interesting piece from Employee Benefits Advisor about the effects that sitting down all day can have on your health by Betsy Banker.
In the continuing conversation about employee health, there’s a workplace component that isn’t getting the attention it should— and it’s something that workers do the majority of every workday.
Sitting has become the most common posture in today’s workplace, and computer workers spend more than 12 hours doing it each day. Science tells us that the consequences are great, but our shared cultural bias toward sitting has stifled change. Many employees and company leaders struggle to balance well-being and doing their work. And it’s time for employers to do something about it.
Rather than accept the consequences that come as a result of the sedentary jobs employees (hopefully) love, it’s time to elevate the office experience to one that embraces movement as a natural part of the culture. Such a program will address multiple priorities at once: satisfaction, engagement, health and productivity. Organizations of every size and structure should embrace a “Movement Mindset” and say goodbye to stale, sedentary work environments.
There are many benefits to incorporating the Movement Mindset:
· Encourages face time. As millennials and Generation Z take over the office, attracting and retaining top talent is a key initiative for companies. Especially in light of the Society for Human Resource Management findings that 45% of employees are likely to look for jobs outside their current organization within the next year. Research has shown that Gen Z and millennials crave in-person collaboration, and users of movement-friendly workstations (particularly those ages 20 to 30) report being more likely to engage in face time with coworkers than those using traditional sit-only workstations.
Standing meetings tend to stay on task and move more quickly. Their informal nature means they can also be impromptu. Face time has the added benefit of building culture and social relationships, increasing brainstorming and collaboration, and creating a more inclusive work environment.
· Keeps you focused. For those who sit behind a desk day in and day out — which, according to our research, about 68% of workers do — it can be a feat to remain focused and productive. More than half of those employees admit to taking two to five breaks a day, and another 25% take more than six breaks per day to relieve the discomfort and restlessness caused by prolonged sitting. It may not seem like much, but considering that studies have shown it can take a worker up to 20 minutes to re-focus once interrupted, this could significantly impact the productivity of today’s office workers.
It’s time to connect the dots between extended sitting, the ability to remain focused and the corresponding effect these things have on the overall health of an organization. Standing up increases blood flow and heart rate, burns more calories and improves insulin effectiveness. Individuals who use sit-stand workstations report improved mood states and reduced stress. Offering options for employees to alternate between sitting and standing during the day could be the key to effectively addressing restlessness while improving focus and productivity.
· Addresses sitting disease. The average worker spends more than 12 hours in a given day sitting down. In the last few years, the health implications surrounding a sedentary lifestyle are starting to come to light (like the increased risk of heart disease, diabetes and early mortality). It’s a vicious cycle where work is negatively affecting health, and poor health is negatively impacting engagement and productivity. Not to mention, the benefits span long and short term, with impacts on employee absenteeism and presenteeism, as well as health and healthcare costs. Offering sit-stand options to incorporate movement back into a worker’s daily regimen is a great way to offset those implications, while showing employees that their health, comfort and satisfaction are important to the company. Plus, a recent study found that if a person stood for just an extra three hours a day, they could burn up to 30,000 calories over the course of a year — that’s the same as running 10 marathons or burning off eight pounds of fat.
Our sit-biased lifestyles are beginning to be seen as an epidemic; it’s the new smoking, and office workers who spend their days behind a desk are at great risk. Providing a sit-stand workstation is more than just a wellness initiative. It offers significant opportunities for companies to retain and attract talent, improve a company’s bottom line, and offer employees a workspace that gives them the ability to move in a way that can actually improve productivity.
Embracing the Movement Mindset can turn the tables on the trends, going beyond satisfaction to create a cycle where work can positively impact health and good health can improve engagement and productivity.
Banker B. (2017 March 27). Why sitting is the new office health epidemic [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/why-sitting-is-the-new-office-health-epidemic?feed=00000152-1387-d1cc-a5fa-7fffaf8f0000
Are you using HSAs to help save money on your healthcare cost? Find out from this article by Employee Benefit News on how the market for HSAs is set to grow exponentially over the next few years by Kathryn Mayer.
It’s about time for health savings accounts to take the spotlight. And that’s going to be a good thing for employees, industry experts say: Not only will HSAs help workers with their healthcare expenses, but the savings vehicles also will put them on a better track for retirement planning.
“The market is going to blow up,” American Retirement Association CEO Brian Graff said this week during the NAPA 401k Summit in Las Vegas, citing new healthcare reform proposals — including the GOP’s American Health Care Act — as well as a better understand of HSAs as reasons for the predicted growth.
The ACHA, which doubles HSA contributions, “dramatically increases the incentive for employers to offer high-deductible health plans,” he said. The GOP plan expands the allowable size of healthcare savings accounts that can be coupled with high-deductible insurance plans, up to $6,550 for an individual or $13,100 for a family. It also expands qualifying expenses to include health insurance premiums, over-the-counter medications and preventive health costs.
By 2018, there will be 27 million HSA accounts and more than $50 billion in HSA assets, according to estimates from the Kaiser Family Foundation cited by Graff. Currently, there are 18 million accounts and $34.7 billion in assets.
Those statistics — and proposed healthcare reforms — are catching the eye of the retirement industry: The accounts have the potential to become “more compelling than a 401(k),” due to tax-deductible and tax-deferred incentives, Graff said.
“We have to think about what this means for our industry,” he said.
In a live poll during a conference keynote, three-quarters of retirement advisers noted they do not offer HSA advisory services. That number, Graff predicts, will change radically over the next two years.
Current proposals are positioning HSAs a hybrid of medical and retirement savings, Graff said. “It’s not just a health account, it’s a savings account.” Healthcare expenses are a major concern for retirees and often cause employees to push back plans for retirement. If HSA funds are not needed for medical expenses, the money can be withdrawn after age 65 and taxed as ordinary income.
Graff says plan sponsors and retirement advisers should encourage employees to first max out their HSAs and then match their 401(k)s.
The HSA is “the nexus between healthcare and retirement,” Daniel Bryant, an advisor with Sheridan Road, said during a standing-room only panel on HSAs Monday.
Meanwhile, added panelist Ryan Tiernan, a national accounts manager with American Funds, “it’s the biggest jump ball no one has cared to jump to. HSAs are probably the most efficient way to save and invest for your biggest expense in retirement.”
Mayer K. (2017 March 22). HSAs to see explosive growth [Web blog post]. Retrieved from address https://www.benefitnews.com/news/hsa-market-going-to-blow-up?tag=00000151-16d0-def7-a1db-97f024b50000
Have your millennial workers started saving for retirement? If not take a look at this great article from HR Morning about the amount of money millennials need to save for retirement by Christian Schappel.
Want to jolt your younger workers into contributing more to your company-sponsored retirement plans? Just show them this figure.
After looking at several studies, estimates and financial experts’ opinions, Robert Powell, USA Today’s retirement planning expert and editor of Retirement Weekly, is predicting that millennials will need upwards of $2.5 million saved to comfortably retire.
That estimate is for the youngest millennials — those born in the late 1990s.
The news isn’t quite as bleak for those born in the 1980s. Their retirement savings goal, according to Powell: $1.8M.
Here are the numbers behind the estimates.
Powell’s assuming millennials will need to live on between $30K and $40K annually in retirement (in today’s dollars).
Plus, a modest rate of inflation (2%) will make $1M of today’s dollars worth about $530K in 32 years, and roughly just $386K in 48 years.
You can see Powell’s breakdown in more detail here.
The bottom line is this: For today’s millennials to hit that $2.5M number in 48 years, Powell said they’d need to save about $1,000 per month — and that’s assuming there’s 5% growth on their investments annually. That’s a staggering amount that, most likely, your employees aren’t coming close to hitting.
Still, every little bit helps. And if these figures can encourage employees to increase their savings even a little, they’ve done their job.
Schappel C. (2017 February 23). Expert: the staggering new retirement savings number millennials have to hit [Web blog post]. Retrieved from address http://www.hrmorning.com/expert-the-staggering-new-retirement-savings-number-millennials-have-to-hit/
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On April 18, 2017, the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) published its final rule regarding Patient Protection and Affordable Care Act (ACA) market stabilization.
The rule amends standards relating to special enrollment periods, guaranteed availability, and the timing of the annual open enrollment period in the individual market for the 2018 plan year, standards related to network adequacy and essential community providers for qualified health plans, and the rules around actuarial value requirements.
The proposed changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the proposed changes will affect those employers’ plans because the changes affect standards that apply to issuers.
The regulations are effective on June 17, 2017.
Guaranteed Availability of Coverage
The guaranteed availability provisions require health insurance issuers offering non-grandfathered coverage in the individual or group market to offer coverage to and accept every individual and employer that applies for such coverage unless an exception applies. Individuals and employers must usually pay the first month’s premium to activate coverage.
CMS previously interpreted the guaranteed availability provisions so that a consumer would be allowed to purchase coverage under a different product without having to pay past due premiums. Further, if an individual tried to renew coverage in the same product with the same issuer, then the issuer could apply the enrollee’s upcoming premium payments to prior non-payments.
Under the final rule and as permitted by state law, an issuer may apply the initial premium payment to any past-due premium amounts owed to that issuer. If the issuer is part of a controlled group, the issuer may apply the initial premium payment to any past-due premium amounts owed to any other issuer that is a member of that controlled group, for coverage in the 12-month period preceding the effective date of the new coverage.
Practically speaking, when an individual or employer makes payment in the amount required to trigger coverage and the issuer lawfully credits all or part of that amount to past-due premiums, the issuer will determine that the consumer made insufficient initial payment for new coverage.
This policy applies both inside and outside of the Exchanges in the individual, small group, and large group markets, and during applicable open enrollment or special enrollment periods.
This policy does not permit a different issuer (other than one in the same controlled group as the issuer to which past-due premiums are owed) to condition new coverage on payment of past-due premiums or permit any issuer to condition new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premiums.
Issuers adopting this premium payment policy, as well as any issuers that do not adopt the policy but are within an adopting issuer’s controlled group, must clearly describe the consequences of non-payment on future enrollment in all paper and electronic forms of their enrollment application materials and any notice that is provided regarding premium non-payment.
Annual Open Enrollment Periods
Currently, annual Exchange open enrollment for plan year 2018 begins on November 1, 2017, and ends on January 31, 2018. Under the final rule, the open enrollment period will shorten; it will begin on November 1, 2017, and end on December 15, 2017. This open enrollment period will be consistent with the month-and-a-half open enrollment period beginning with and after the open enrollment for the 2019 benefit year.
Special Enrollment Periods
Starting in June 2017, all new consumers who seek to enroll in Exchange coverage through applicable special enrollment periods will be subject to pre-enrollment eligibility verification. This will include all states served by HealthCare.gov. This pre-enrollment verification will apply to the individual market only, not to special enrollment periods under the Small Business Health Options Program (SHOP).
New dependents can enroll in a new qualified health plan (QHP) at any metal level if they enroll in a separate QHP from other existing enrollees; however, if the new dependent is enrolling in the same QHP as those who are already QHP enrollees, then the dependent and existing QHP enrollees are restricted from changing plans or metal levels. This does not apply to the small group market or SHOP.
Consumers who were terminated from coverage due to premium nonpayment will not be allowed to enroll in coverage mid-year through a special enrollment period due to loss of minimum essential coverage.
For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for marriage, at least one spouse must have had minimum essential coverage for one or more days during the 60 days preceding the marriage date, or must have lived in a foreign country or a U.S. territory for one or more days during the 60 days preceding the marriage date. This applies to the individual market only. This does not apply to the small group market or SHOP.
For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for a permanent move, the consumer will need to provide documentation of the move and evidence of prior coverage for one or more days in the 60 days preceding the move, unless the consumer is moving to the U.S. from a foreign country or a U.S. territory. This applies to the individual market. The requirement to show prior coverage for the permanent move special enrollment period is applicable to the SHOP. Further, CMS intends to release guidance on documentation that will be acceptable for this special enrollment period.
For the remainder of 2017 and for future plan years, CMS will significantly limit the use of the exceptional circumstances special enrollment period by using a more rigorous test that will require consumers to provide supporting documentation. CMS intends to provide guidance on situations that will meet the more rigorous test and on documentation that consumers will be required to provide. This applies to the individual market only.
A consumer may request and the Exchange must provide for a coverage effective date that is no more than one month later than the consumer’s effective date would ordinarily have been, if the special enrollment period verification process delays the enrollment so that the consumer would be required to pay two or more months of retroactive premium to effectuate coverage or avoid cancellation. This applies to the individual market and SHOP.
The final rule indicates that the following special enrollment periods are no longer available:
CMS solicited and received comments on policies that would promote continuous coverage; however, CMS did not take any action in this final rule regarding such policies.
Health Insurance Issuer Standards under the ACA, Including Standards Related to Exchanges
Under the ACA, issuers of non-grandfathered individual and small group health insurance plans, including QHPs, must ensure that the plans adhere to certain levels of coverage.
A plan’s coverage level, or actuarial value (AV), is determined based on its coverage of the essential health benefits (EHBs) for a standard population. The ACA requires a bronze plan to have an AV of 60 percent, a silver plan to have an AV of 70 percent, a gold plan to have an AV of 80 percent, and a platinum plan to have an AV of 90 percent. The HHS Secretary issues regulations on the calculation of AV and its application to coverage levels; the ACA authorizes the Secretary to develop guidelines to provide for de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates.
The final rule amends the definition of de minimis to a variation of -4/+2 percentage points, rather than +/-2 percentage points for all non-grandfathered individual and small group market plans (other than bronze plans meeting certain conditions) that are required to comply with AV. For example, a silver plan could have an AV between 66 and 72 percent. For bronze plans that either cover and pay for at least one major service, other than preventive services, before the deductible or meet the requirements to be a high deductible health plan, the allowable variation in AV will be -4/+5 percentage points. This applies to plans beginning on or after January 1, 2018. CMS’ revised 2018 AV Calculator (scroll to Plan Management, Guidance) reflects the amended AV de minimis range.
CMS will rely on state reviews for network adequacy in states where a federally facilitated exchange (FFE) is operating as long as the state has a sufficient network adequacy review process. In states that do not have the authority and means to conduct sufficient network adequacy reviews, CMS will rely on an issuer’s accreditation (commercial, Medicaid, or Exchange) from an HHS-recognized accrediting entity. CMS will use the following three accrediting entities for 2018 plan year network adequacy reviews: the National Committee for Quality Assurance, URAC, and the Accreditation Association for Ambulatory Health (these accrediting entities were previously recognized by HHS for QHP accreditation).
Unaccredited issuers are required to submit an access plan as part of the QHP application; the access plan must demonstrate that an issuer has standards and procedures in place to maintain an adequate network consistent with the National Association of Insurance Commissioners’ (NAIC’s) Health Benefit Plan Network Access and Adequacy Model Act.
Essential Community Providers
Essential community providers (ECPs) include providers that serve predominantly low-income and medically underserved individuals; issuers must meet requirements for ECPs’ inclusion in QHP provider networks.
CMS will lower the minimum percentage of network participating practitioners; an issuer will satisfy the regulatory standard if the issuer contracts with at least 20 percent of available ECPs in each plan’s service area to participate in the plan’s provider network. Also, CMS will continue to allow an issuer’s ECP write-ins to count toward the satisfaction of the ECP standard, if the written-in provider has submitted an ECP petition to HHS no later than the issuer submission deadline for QHP application changes.
The final rule adopts almost all the proposed rule’s provisions. The primary changes from the proposed rule to the final rule are: clarifications to the scope of the guaranteed availability policy regarding unpaid premiums, changes to special enrollment period provisions, updates to the definitions and general standards for eligibility determinations, and clarification regarding states’ roles.
CMS acknowledges that these provisions’ net effect on enrollment, premiums and total premium tax credit payments is uncertain. However, CMS determined that these regulations are urgently needed to stabilize markets, incentivize issuers to enter or remain in the market, and ensure premium stability and consumer choice.
To download the full compliance alert click Here.