Construction Risk Advisor: September 2018

Industry Overspending $177 Billion Per Year

The average time construction professionals in the U.S. spend on avoidable issues like conflict resolution, rework and looking for project data costs the industry over $177 billion annually, according to a new report.

The participants surveyed for the report said they spend 65 percent of their time on “optimal” activities like communicating with stakeholders and optimizing resources that keep projects on track. They spend the remaining 35 percent of their time on “nonoptimal” tasks like hunting down project information, resolving conflicts and dealing with mistakes that require rework. That amounts to almost two full working days lost per person each week.

Some of the reasons for the nonoptimal costs include poor communication, constrained access to data, incorrect data and the lack of an easy way to share data with stakeholders. Another possible reason is that more than 80 percent of the survey’s respondents said they don’t use mobile devices to collaborate and access project data, despite the fact that mobile devices could help them work more efficiently.

Newsletter Provided by: Hierl's Property & Casualty Experts

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States Say Contractors Must Guarantee Wages

Maryland’s General Contractor Liability for Unpaid Wages Act becomes effective on Oct. 1, making private contractors for prime construction projects in the state financially responsible for unpaid wages of subcontractor employees. And unless the reason for nonpayment is related to a legitimate dispute, general contractors could be held responsible for up to three times the amount owed, plus attorney fees.

California and Oregon also enacted similar laws earlier this year. In California, general contractors are now liable for the unpaid wages of any employee who furnishes labor to or through them, plus unpaid benefits and interest.

Oregon’s wage protection law creates liability for the general contractor only if the worker’s subcontractor employer has not yet been paid in full.

Mitigating The Risk

In order to reduce the risk of general contractors having to pay their subcontractors’ employee wages, some industry experts are recommending that subcontractors provide their own payment bonds.

Opponents of the recent laws argue that it could be difficult for subcontractors on rocky financial ground to meet bond underwriting requirements. And since large projects could require several new bonds per job, overall project costs could increase significantly. Plus, if subcontractors don’t pay up, prime contractors will have to pay twice for the same labor.


Seeing beyond size in vision care networks

There are many other factors to consider when it comes to deciding which vision care network best fits the needs of your employees. Read this blog post to learn more.


Most people believe that “size matters” in regards to provider networks, but in the world of vision care there are other important factors to consider when deciding which network matches the needs of employees. Network members usually see their vision provider for routine services just once per year. When an employer changes vision administrators, employee in-network utilization is more than 90% regardless of the new network size. Why? Employees are not concerned about changing providers to access in-network benefits. Plus, the new vision provider network will always provide access to multiple providers wherever the employee lives and works.

But what about the quality of the vision care network? To properly assess this measurement of competing networks, employers and benefit advisers need to ask several different questions.

Determine the network’s quality
The quality of the network is vital. Start asking these questions: How are vision care providers credentialed? Do they follow the National Committee for Quality Assurance (NCQA) guidelines developed to improve healthcare quality? Are there provider audit programs provided on an ongoing basis? Is the vision care provider re-credentialed and how often? How frequently are reviews conducted of the Office of Inspector General and Medicare and Medicaid disbarment lists?

Establish the network’s effectiveness
Once you know you have a quality network, now you must ask how effective the network is. How diverse is the network? Are there ample ophthalmologists, optometrists and optical retailers we can access? Are some private practitioners? You want to make sure that a solid provider mix is available to give employees options when choosing a vision care provider.

It’s critical to know what languages are spoken within the employee population as well as the providers who care for them. If you have a large population who speak a certain language you want to make sure your network gives them access to people who can truly understand them and with whom they feel comfortable.

Finally, look at the hours of operations. With schedules being busier now than ever before, people need flexibility when it comes to visiting hours. Do they offer evening hours? Weekend hours? This is particularly important for single parents who work during the week and need the flexibility to visit an eye care professional with his or her child after work.

Having a diverse, quality vision care provider network with convenient access helps keep employees happy, healthy and in-network.

Other factors to consider
One of the other factors to be cognizant of is network ownership. Today, many managed vision care companies are involved in not only providing coverage for vision care but also in delivering it. This means the vision benefits company you’re considering may own optical laboratories, frame companies or retail locations, which can pose conflicts of interest between you, your employees and the managed vision care company. Their need to produce profits can lead to undo pressure on your employees to purchase expensive and potentially unnecessary lens types, materials and options. Coupled with direct to consumer advertising and the expansion of brands, eyeglasses have become even more expensive.

This leads to another factor for consideration. Does the potential vision benefit administrator provide meaningful information to help your employees make informed decisions about what they really need, when it comes to the myriad of options available for frames, lenses and lens options?

Network matching
Start by remembering two things when matching networks. First, if you’ve changed vision carriers in the past, you selected a network that was not identical to your previous one. Vision networks never match each other. Some have higher proportions of independent providers and lower percentages of large retailer chains. Second, the infrequency with which the vision benefit is available to be used mitigates the impact of changing providers. People don’t have the same attachment to their eye care professional as they do with their physician.

Beyond quality and effectiveness is the important factor of access. The vision industry has grown to a point where there are often many more providers than would ever be necessary to provide convenient access for your membership. The reality is that two networks may be equally sized in an area and yet there may be little overlap, making the selection of the best network with the lowest overall cost a better strategic direction than simply selecting the one with the highest provider match.

The vision industry has long demonstrated that employees are willing to select new providers, especially when costs are more competitive, and services are more convenient.

SOURCE: Moroff, C (22 August 2018) "Seeing beyond size in vision care networks" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/seeing-beyond-size-in-vision-care-networks?feed=00000152-a2fb-d118-ab57-b3ff6e310000


Checklist: Updating your employee handbook

Preparing or revising employee handbooks can be daunting and confusing. Guarantee you don’t miss any essential information with this simple employee handbook checklist:


When you are preparing or revising an employee handbook, this checklist may be helpful.

Acknowledgment

  • Do employees sign a signature page, confirming they received the handbook?
  • On the signature page, do employees agree to follow the policies in the handbook?
  • Does the signature page state that this handbook replaces any previous versions?
  • On the signature page, do employees agree that they will be “at-will” employees?
  • Do employees agree that the employer may change its policies in the future?

Wage and hour issues

  • Does the employer confirm that it will pay employees for all hours worked?
  • Before employees work overtime, are they required to obtain a supervisor’s approval?
  • During unpaid breaks, are employees completely relieved of all duties? (For example, while a receptionist takes an unpaid lunch break, this person shouldn’t be required to greet visitors or answer phone calls.)
  • Are employees paid when they attend a business meeting during lunch?
  • Are employees paid for attending in-service trainings?
  • Are employees paid while they take short breaks?

Paid Time Off

  • Has the employer considered combining vacation time, sick time, and personal time into one “bucket” of paid time off?
  • Does the paid time off policy line up with the employer’s business objectives? (For example, does it provide incentives for employees to use paid time off during seasons when business is slower?)
  • Does the handbook say what will happen to paid time off when employment ends? (In Pennsylvania, employers are not required to pay terminated employees for the value of their paid time off. Some employers choose to do this, as an incentive for employees to give at least two weeks’ notice.)
  • If the Family and Medical Leave Act (FMLA) applies to the employer, does the handbook inform employees of their rights?
  • Does the handbook list all types of leave that are available? (For example, does the employer offer bereavement leave? How about leave while an employee serves as a juror or witness? What about municipal laws that provide certain types of leave, such as paid sick leave?)

Reasonable accommodations

  • How should employees request a reasonable accommodation?
  • Does the employer permit employees with disabilities to bring service animals to work (Employers should avoid blanket policies that ban all animals.)
  • May employees deviate from grooming and uniform requirements for a religious reason, or a medical reason? (For example, an employee may have a religious reason to wear a headscarf, even if the employer has a blanket policy that would otherwise prohibit this.)

Discrimination and retaliation

  • Does the employer inform employees that they are protected against discrimination and retaliation?
  • Is there an accurate list of protected categories? (Confirm all locations where the employer does business. Some states or municipalities may provide employees with greater protection than federal law. Are there any categories, such as sexual orientation, that the employer should add?)
  • Do employees have a clear way to report discrimination and retaliation?
  • Is there more than one way to report discrimination and retaliation? (In other words, employees shouldn’t be required to make a report to the same person who they believe is committing acts of discrimination.)

Restrictive covenants/trade secrets

  • Are employees required to keep the employer’s information confidential?
  • Do employees confirm they are not subject to any restrictive covenants (such as non-compete agreements) that would limit their ability to work for the employer?
  • Are employees prohibited from giving the employer confidential information that belongs to a previous employer?

Labor law issues

  • If employees belong to a union, does the employer state that it doesn’t intend for the handbook to conflict with any collective bargaining agreement?
  • Does the employer have a content-neutral policy on soliciting and distributing materials in the workplace? (In general, if an employer wants to limit union-related communications, the employer must apply the same rules to solicitations which don’t involve a union.)
  • Does the handbook accurately reflect whether employees may wear union-related apparel, such as hats, buttons, T-shirts and lanyards?
  • Are employees permitted to discuss their wages with each other? (Some employers try to prohibit this, but the National Labor Relations Act entitles employees to discuss their wages with each other. This rule applies to all employers—whether or not they have a union.)

Other

  • If the employer has a progressive discipline policy, does the employer reserve the right to deviate from this policy?
  • Does the employer reserve the right to inspect company computers and email accounts?
  • Does the employer have a social media policy, or a medical marijuana policy?
  • If the employer has other policies, how do they fit together with the handbook? (Does it make sense to incorporate the policies into the handbook? Or, should the handbook clarify which other policies will remain in effect?)
  • Does the handbook contain any provisions that the employer is unlikely to enforce? (For example, does the handbook prohibit employees from using all social media? Does it prohibit employees from talking on the phone while driving?)

SOURCE: Lipkin, B (20 August 2018) "Checklist: Updating your employee handbook" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/08/20/is-your-employee-handbook-up-to-date-compare-it-wi/


Do employees know where to go in a health crisis?

Often, employees are unsure who they should go to first when they have a health crisis at work. Many employers don’t have a consistent process in place for addressing health crises. Read this blog post to learn more.


When talking to employers about their disability programs, I often ask, “Who do your employees go to first for assistance when they have a health condition?”

If I ask that question of a direct supervisor, it’s met with a quick response of “Me!”, which is quickly followed by the statement, “My employees know that my door is always open and I’m here to help them!”

Sadly, this is not true. Another insurance company recently surveyed employees who experienced a health condition in the workplace and asked that same question: Who did you go to for assistance? The responses varied.

For example, we found that at midsize companies with 100 to 499 employees, it varied:

· 44% went to their HR manager
· 33% went to their direct supervisor
· 18% went to their HR manager and direct supervisor
· 5% went elsewhere

What this shows is that many employers don’t have a consistent process in place for addressing employees with health conditions. This confusion or misunderstanding about whom to approach for assistance can create an inconsistent process for your clients and their workforce — potentially resulting in a negative experience for employees and lost productivity for employers.

Based on the survey findings, employees who worked with their HR manager tended to have a more positive experience and felt more valued and productive after speaking with them about their health condition.

For instance, 54% of employees felt uncomfortable discussing their health condition with their direct supervisor, versus only 37% of employees who went to their HR manager. In addition, 73% of employees who worked with their HR manager felt they knew how to provide the right support for their condition versus 61% of employees who worked with their direct supervisor.

There are several reasons why working with an HR manager can be more beneficial for employees, and ultimately, your clients. Typically, working with an HR manager can lead to more communication while an employee is on leave. Our research shows employees who worked with an HR manager were more likely to receive communication on leave and returned to work 44% faster than when they worked with their direct supervisor.

HR managers also are usually more aware of available resources and how to connect employees to necessary programs to help treat their condition. HR managers who engaged their disability carriers saw a 22% boost in employees’ use of workplace resources, such as an EAP, or disease management or wellness program, when involved in a return-to-work or stay-at-work plan.

This connection to additional resources is essential, as it can help employees receive holistic support to manage their health condition — whether it’s financial wellness support, connection to mental health resources through an EAP or one-on-one sessions with a health coach. HR managers also are usually able to better engage their disability carrier to provide tailored accommodations, which can help aid in stay-at-work or return-to-work plans.

Providing your client with these findings can help them understand the importance of creating a disability process that puts HR as the main point of contact. Not only does this create a consistent experience that helps provide employees with the support they need, it can improve employee morale and reduce turnover.

SOURCE: Smith, Jeffery (16 August 2018) "Do employees know where to go in a health crisis?" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/do-employees-know-where-to-go-in-a-health-crisis


3 questions to ask about paid leave programs

Paid leave is offered for numerous reasons. Employers want to attract new talent, promote employee well-being and more, but are they asking the right questions regarding the costs of these programs. Keep reading to learn about what questions employers need to be asking.


Employers provide paid time away from work policies for a variety of reasons: to attract and retain talent (responding to employee needs and changing demographics); to be compliant with local, state and federal laws (which are proliferating); and to support general employee well-being (recognizing that time away from work improves productivity and engagement).

While offering paid absence policies delivers value to both employees and the employers, employers recognize the need to balance the amount of available time with the organization’s ability to deliver its products and services.

To help employers balance paid time away drivers, here are three key questions to ask to get a handle on the costs and benefits of paid leave.

1. Do you have a complete picture of the costs associated with your employees’ time away from work?

A challenge for many employers is getting a handle on the cost of time away from work and the related benefits. If an employer cannot quantify the costs of absence, it may not be able to define management strategies or to engage leadership to adopt new initiatives, policies or practices related to paid and unpaid time away programs.

Ninety percent of employers participating in the 2017 Aon Absence Pulse Survey reported they hadn’t yet quantified the cost of absence, and 43 percent of participants identified defining the cost of absence as a top challenge and priority. Though intuitively managers and executives recognize there is an impact when employees are absent from work, particularly when an absence is unscheduled, they struggle to develop concrete and focused strategies to address absence utilization without the ability to measure the current cost and collectively the impact of new management initiatives.

Employers struggle to quantify the cost of absence in the context of productivity loss, including replacement worker costs. According to the Bureau of Labor Statistics in 2017, employers’ cost of productivity loss associated with absenteeism was $225.8 billion, and 9.6 percent of compensation was spent on lost time benefits and overtime.

Employers are expanding their view of absence, recognizing that use of paid and unpaid time away programs are often associated with an employee’s health. As a result, combining data across health and absence programs allows an employer to recognize drivers of absence “work-related value” and define strategies to address not just how to manage the absence benefit, but to target engagement to improve well-being and the organization’s bottom-line.

As an example, musculoskeletal conditions are frequently associated with absence, which is not surprising when 11 percent of the workforce has back pain. It is noteworthy that of those with back pain, 34 percent are obese, 26 percent are hypertensive and 14 percent have mood disorders. The Integrated Benefits Institute reported in 2017 that back pain adds 2.5 days and $688 in wages to absence associated with this condition. It is this type of information pairing that provides employers with the insight to develop strategies to address comprehensive absence.

When absence and health costs are quantified, organizations quickly recognize the impact on the business’s bottom line. As the old saying goes, “we can only manage what we can measure.”

2. What is your talent strategy to improve work-life benefits, inclusive of time off to care for family?

The race for talent is on, and every industry recognizes the huge impact the changing workforce demographics currently has, and will continue to have. The current workforce incorporates five generations, though an Ernst and Young report from 2017 estimates that by 2025 millennials will make up 75 percent of the workforce. As a result, the work-life needs of millennials—and their perspectives around benefits—is driving change, including time away from work policies.

It is worth noting that, per a 2015 Ernst and Young survey, millennial households are two times more likely to have both spouses working. The Pew Research Center reported in 2013 that, among all workers, 47 percent of adults who have a parent 65 years or older are raising a minor child or supporting a grown child. Additionally, a 2016 report from the Center for Work Life Law at the University of California Hastings claimed that 50 percent of all employees expect to provide elder care in the next five years.

In response, employers are expanding paid time off programs for care of family members. The paid family leave continuum often begins with a paid parental policy providing time to bond with a new birth or adoption placement. An elder care policy may follow, and the culmination might be a family care policy covering events like those under the job-protected Family Medical Leave Act. An Aon SpecSelect Survey reported that 94 percent of employers offer some form of paid parental leave in 2017; this is a significant change from 2016 when 62 percent offered this benefit. Two weeks of 100 percent paid parental leave was the norm per Aon’s SpecSelect 2016 Survey, but we are finding that many employers are expanding these programs, offering between 4 to 12 weeks.

Offering paid leave programs on their own may meet immediate needs for both time and financial support, but may be incomplete to help the employee address the full spectrum of issues that could affect success at work. In combination with family care needs—even those associated with a happy event such as a birth—there may be other health, social or financial issues. Employers combining their paid leave programs with a broader well-being strategy deliver greater value, improve engagement and increase productivity.

3. If you’re a multi-state employer, how are you ensuring your sick and family leave policies are compliant across all relevant jurisdictions?

Paid leave is a hot legislative topic lately. Last December saw the enactment of a paid FMLA tax credit pilot program as part of the federal Tax Reform The paid sick leave law club now totals 42 states and myriad municipalities. Both Washington state and Washington, D.C. are ramping up to implement paid family leave laws in 2020, joining the four states and one city that already have some form of paid family or parental leave law.

How are multi-state employers keeping up with this high-stakes evolving environment? The 2017 Pulse Survey saw 70 percent of employers report they are aware they have an employee who is subject to a paid sick leave law. Ten percent of respondents said they did not know if they had anyone subject to such a law. If knowledge is the first step in the process of compliance, deciding on a compliance strategy and then successfully implementing it are surely steps two and three.

With respect to paid sick leave, there are three major compliance options: comply on a jurisdiction-by-jurisdiction level, with as many as 42 different designs and no design more generous than it has to be; comply on a national level with one, most generous design, or meet somewhere in the middle, perhaps with one design for each state where a state- or local-level law is in place, or by grouping jurisdictions with similar designs together to strike a balance between being overly generous and being bogged down by dozens of administrative schemes.

Data analytics can be a key driver in designing a successful compliance strategy—compare your employee census to locations with paid sick leave laws. The ability to track and report on available leave is a requirement in all jurisdictions, and at this point, few if any third-party vendors are administering multi-state paid sick leave.

For paid family leave, the primary policy design issue is how an employer’s FMLA, maternity leave and short-term disability benefits will interact with the various paid family leave laws. So, while there may be fewer employer choices to be made with statutory paid family leave, clear employee communications will be critical to success.

Employers may tackle time away from work program issues individually to meet an immediate need, or collectively as a comprehensive strategy. Such a strategy would include data analytics across health and lost-time programs, absence policies that meet today’s needs for the employer and employee, health and wellness programs targeting modifiable health behaviors, and absence program administration that is aligned to operational goals. The expected outcome for time away from work programs isn’t about the programs themselves: it is about an engaged, productive workforce who delivers superior products/services. How do your programs stack up?

SOURCE:
VanderWerf, S and Arnedt, R (13 July 2018) "3 questions to ask about paid leave programs" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/05/3-questions-to-ask-about-paid-leave-programs/


A vacation can't undo the damage of a stressful work environment

Researchers say employees experience chronic stress during their workday and vacations aren't helping to fix it. Take a look at why a stress-free work environment is critical for productivity.


That easy breezy feeling after taking a vacation slips away pretty quickly when people have to face the same systemic workplace issues that wore them down in the first place, according to the American Psychological Association’s 2018 Work and Well-Being survey.

The Harris Poll surveyed 1,512 U.S. adults who were employed either full time, part time or were self-employed, and found that nearly a quarter (24 percent) say the positive effects of vacation time – such as more energy and feeling less stress – disappear immediately upon returning to work. Forty percent say the benefits last only a few days.

“Employers shouldn’t rely on the occasional vacation to offset a stressful work environment,” says David W. Ballard, head of APA’s Center for Organizational Excellence. “Unless they address the organizational factors causing stress and promote ongoing stress management efforts, the benefits of time off can be fleeting. When stress levels spike again shortly after employees return to work, that’s bad for workers and for business.”

More than a third (35 percent) of respondents say they experience chronic stress during their workday, due to low pay (49 percent), lack of opportunity for growth or advancement (46 percent), too heavy of a workload (42 percent) and unrealistic job expectations and long hours (39 percent each).

However, just half say their employer provides the resources necessary to help them meet their mental health needs. When adequate resources are provided, only 33 percent of the respondents say they typically feel tense or stressed out during the workday, compared to 59 percent of those who say their employer doesn’t provide sufficient mental health resources. When it comes to overall well-being, nearly three-fourths of employees supported with mental health resources (73 percent) say their employer helps them develop and maintain a healthy lifestyle, compared to 14 percent who say they don’t have the resources.

“Chronic work stress, insufficient mental health resources, feeling overworked and under supported – these are issues facing too many workers, but it doesn’t have to be this way,” Ballard says. “Psychological research points the way in how employers can adopt effective workplace practices that go a long way in helping their employees thrive and their business grow.”

Even in a very supportive workplace environment, encouraging vacations can boost morale and performance even more, according to the survey. Upon returning from vacation, employees who say their organization’s culture encourages time off were more likely to report having more motivation (71 percent) compared to employees who say their organization doesn’t encourage time off (45 percent). They are also more likely to say they are more productive (73 percent vs. 47 percent) and that their work quality is better (70 percent vs. 46 percent).

Overall, respondents are more likely to say they feel valued by their employer (80 percent vs. 37 percent), that they are satisfied with their job (88 percent vs. 50 percent) and that the organization treats them fairly (88 percent vs. 47 percent). They are similarly more likely to say they would recommend their organization as a good place to work (81 percent vs. 39 percent).

“A supportive culture and supervisor, the availability of adequate paid time off, effective work-life policies and practices, and psychological issues like trust and fairness all play a major role in how employees achieve maximum recharge,” Ballard says. “Much of that message comes from the top, but a culture that supports time off is woven throughout all aspects of the workplace.”

SOURCE:
Kuehner-Hebert, K (13 July 2018) "A vacation can't undo the damage of a stressful work environment" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/02/a-vacation-cant-undo-the-damage-of-a-stressful-wor/


HSA How-To

Health Savings Accounts can be tricky, employees have the control, employers and insurance companies are there to guide them in the right direction. Here is a how to helping guide to assist your customers to the right HSA plan.


If an employer wants to offer employees pretax payroll deferrals to their health savings accounts, the employer needs to first create a Section 125 plan or cafeteria plan that allows HSA deferrals.

A cafeteria plan is the only way for employers to offer employees a choice between taxable and nontaxable benefits, “without the choice causing the benefits to become taxable,” the IRS says. “A plan offering only a choice between taxable benefits is not a Section 125 plan.”

Here are five things to know about HSAs and Section 125 plans.

1. A Section 125 plan is just one of several ways for employers to help employees with funding their HSAs.

Employers offering HDHPs face the choice of whether and how to help their employees with the funding of the employees’ HSAs. The options include the following:

  • Option 1 – Employee after-tax contributions.Employers are not required to help with the employees’ HSAs and may choose not to. In this case, employees may open HSAs on their own and receive the tax deduction on their personal income tax return. This option allows for income tax savings, but not payroll taxes. A variation on this option is for employers to allow for post-tax payroll deferral (basically, direct deposit of payroll funds into an HSA without treating the deposit any differently than other payroll which may also be directly deposited into an employee’s personal checking account).This does not change the tax or legal situation, but it does provide convenience for employees and will likely increase HSA participation and satisfaction.
  • Option 2 – Employee pretax payroll deferral.Employers can help employees fund their HSAs by allowing for HSA contributions via payroll deferral. This is inexpensive and can be accomplished by adding a Section 125 cafeteria plan with HSA deferrals as an option. Employers benefit by not having to pay payroll taxes on the employees’ HSA contributions. Employees save payroll taxes as well. Plus, HSA contributions are not counted as income for federal, and in most cases, state income taxes. Setting up automatic payments generally simplifies and improves employee savings.
  • Option 3 – Employer-funded contributions.Employers may make contributions to their employees’ HSAs without a Section 125 plan if the contributions are made directly. The contributions must be “comparable,” basically made fairly (with a lot of rules to follow). This type of contribution is tax deductible by the employer and not taxable to the employee (not subject to payroll taxes or federal income taxes and in most cases, not subject to state income taxes either).
  • Option 4 – Employer and employee pretax funding.Employers can combine options 2 and 3, where the employer makes a contribution to the employees’ HSAs and the employer allows employees to participate in a Section 125 plan and enabling them to defer a portion of their pay pretax into an HSA. This is a preferred approach for a successful HDHP and HSA program, as it ensures that employees get some money into their HSA through the employer contribution and allows for the best tax treatment to allow for employees to contribute more on their own through payroll deferral.
  • Options for more tax savings.Some employers go beyond these options to increase tax savings even more. Although a number of strategies exist to increase tax savings, using a limited-purpose FSA (or HRA) is a common one. Generally, FSAs are not allowed with HSAs; however, an exception exists for limited-purpose FSAs. Limited-purpose FSAs are FSAs limited to payments for preventive care, vision and dental care. This provides more tax savings and employees use the FSA to pay for the limited-purpose expenses (dental and vision) and save the HSA for other qualified medical expenses.

HRAs can also be used creatively in connection with HSA programs. The HRA cannot be a general account for reimbursement of qualified medical expenses, but careful planning can allow for a limited-purpose HRA, a postdeductible HRA, or other special types of HRAs.

2. There are several benefits for an employer using a Section 125 plan combined with an HSA.

  • Employees can make HSA contributions through payroll deferral on a pretax basis.
  • Employees may pay for their share of insurance premiums on a pretax basis.
  • Employers and employees save payroll taxes (7.65 percent each on FICA and FUTA for contributions).
  • Employers avoid the “comparability” rules for HSA contributions although employers are subject to the Section 125 plan rules.

3. The employer is responsible for administering the Section 125 plan.

For payroll deferral into an HSA through a Section 125 plan, the employer must reduce the employees’ pay by the amount of the deferral and contribute that money directly into the employees’ HSA.

The employer may do this administration itself or it may use a payroll service or another type of third-party administrator. In any case, the cost of the Section 125 plan itself and the ongoing administration are generally small and offset, if not entirely eliminated, by employer savings through reduced payroll taxes.

Another administrative element is the collection of Section 125/HSA payroll deferral election forms from employees. Employers that have offered Section 125 plans prior to introducing an HSA program are familiar with this process.

Unlike other Section 125 plan deferral elections, which only allow annual changes, the law allows for changes to the HSA deferral election as frequently as monthly.

Although frequent changes to the elections create a small administrative burden on the employer, the benefit to employees is significant. Employers are not required to offer changes more frequently than annually.

The full extent of the administrative rules for Section 125 plans is beyond the scope of this discussion.

4. Contributions to HSAs under Section 125 plans are subject to nondiscrimination rules.

A cafeteria plan must meet nondiscrimination rules. The rules are designed to ensure that the plan is not discriminatory in favor of highly compensated or key employees.

For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. Contributions that favor lower-paid employees are not prohibited.

The cafeteria plan must not: (1) discriminate in favor of highly compensated employees as to the ability to participate (eligibility test), (2) discriminate in favor of HCEs as to contributions or benefits paid (contributions and benefits test), and (3) discriminate in favor of HCEs as measured through a concentration test that looks at the contributions made by key employees (key employee concentration test). Violations generally do not result in plan disqualification, but instead may cause the value of the benefit to become taxable for the highly compensated employees or key employees.

The nondiscrimination rules predate the creation of HSAs and how the rules apply to HSA contributions is an area where additional government guidance would be welcome.

5. An employer needs a Section 125 plan to allow for HSA contributions through payroll deferral.

Can an employer allow for HSA contributions through payroll deferral without a Section 125 plan? No, not if the goal is to save payroll taxes. Employers can offer HSA payroll deferral on an after-tax basis without concern over the comparability rules or the Section 125 plan rules. Amounts contributed under this method are treated as income to the employee and are deductible on the employee’s personal income tax return. The lack of any special tax treatment for this approach makes it unattractive for most employers and with just a small additional investment of money and time, a Section 125 plan could be added allowing for pretax deferrals.

Here is an example: Waving Flags, Inc. does not offer health insurance or a Section 125 plan to its employees. Waving Flags does provide direct deposit services to its employees that provide it with their personal checking account number and bank routing number. Maggie, an employee of Waving Flags, Inc., approaches the human resources person and asks to have her direct deposit split into two payment streams with $100 per month being directly deposited to her HSA and the balance of her pay being deposited into her personal checking account. She provides Waving Flags the appropriate account and routing numbers and signs the proper election forms.

Waving Flags is not subject to the Section 125 nondiscrimination rules for pretax payroll deferral, nor is Waving Flags subject to the HSA comparability rules. Waving Flags is simply paying Maggie by making a direct deposit into her HSA. The $1,200 Maggie elects to have directly deposited to her HSA in this manner will be reflected in Box 1 of her IRS Form W-2 from Waving Flags as ordinary income. She will be subject to payroll taxes on the amount. She can claim an HSA deduction on line 25 of her IRS Form 1040 when she files her tax return.

Maggie benefits from this approach by setting up an automatic contribution to her HSA, which often improves the commitment to savings. Most HSA custodians will offer a similar system that HSA owners can set up on their own by having their HSA custodian automatically draw a certain amount from a personal checking account at periodic intervals. Employer involvement is not necessary. Individuals with online banking tools available to them may be able to set it from their personal checking account as well to push money periodically to an HSA.

SOURCE:
Westerman, P (2 July 2018) "HSA How-To" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/01/01/hsa-how-to/


3 questions advisers should ask about the potential CVS-Aetna deal

In a rapid changing market, stay ahead of the curve by asking these three questions on the potential CVS-Aetna deal to help determine how it will impact the health insurance industry.


The news that CVS has reportedly launched a $66 billion bid to buy Aetna shows that once unimaginable mergers are becoming the norm. But it also raises some important questions for brokers about the future of group benefits, and how to operate in a fast-moving and constantly changing landscape.

Here are three questions to ask when determining how this potential business deal will impact the employer-based health insurance market:

1) Will this move give Aetna a competitive advantage in the group space?

How are other carriers going to feel about having to compete with an insurer that has pharmacy data on the majority of Americans? Anthem may be at the top of the list with worries, as the company just last week announced that it will partner with CVS to launch its own pharmacy benefits manager called IngenioRx.

2) Are healthcare companies too focused on M&A?

A year ago, Aetna was trying to acquire Humana, and Anthem was trying to buy Cigna. Brokers everywhere were concerned about carrier consolidation and what a lack of competition would do to group prices. How have things pivoted to pharmacy so quickly?

The CVS deal may represent gains for both parties. The deal would give Aetna a new avenue for business growth, and CVS would gain some much needed ground against Amazon’s rumored entrance into the drug business.

But what does this emphasis on inorganic, M&A growth say about the healthcare industry? Healthcare consolidation has been a trend for years, but it hasn’t always worked in consumers’ favor, which could leave brokers wary of this deal.

3) Why should employers care?

What impact will this deal have on prescription prices for employers? Prescription drug costs are one of the largest drivers of employer healthcare spend, so the question is critical. Will Aetna and CVS be able to improve efficiencies and lower costs, or monopolize their group markets?

Another point of interest for employers is the possibility of narrowed prescription options. With narrowing provider networks becoming standard, this deal could result in limited consumer options when it comes to prescription drugs.

On the other hand, the deal could spark cost-saving changes in healthcare delivery. It’s not hard to imagine CVS augmenting their MinuteClinic operations with Aetna’s volume.

Employees might find they like having retail access to primary care at a lower price point, with after-hours service, easy-to book appointments, and pharmacy services built right in. This partnership may be the push retail healthcare needs to become a cornerstone of the primary care model.

SOURCE:
Tolbert, B (22 June 2018) "3 questions advisers should ask about the potential CVS-Aetna deal" [Web Blog Post]. Retrieved from https://www.employeebenefitadviser.com/opinion/3-questions-advisers-should-ask-about-the-potential-cvs-aetna-merger


How faking your feelings at work can be damaging

Putting up a fake smile on Monday morning is sometimes unavoidable. There could be consequences to carrying a heavy emotional labor load to get over the Monday Blues.


Imagine yourself 35,000 feet up, pushing a trolley down a narrow aisle surrounded by restless passengers. A toddler is blocking your path, his parents not immediately visible. A passenger is irritated that he can no longer pay cash for an in-flight meal, another is demanding to be allowed past to use the toilet. And your job is to meet all of their needs with the same show of friendly willingness.

For a cabin crew member, this is when emotional labour kicks in at work.

A term first coined by sociologist Arlie Hochschild, it’s the work we do to regulate our emotions to create “a publicly visible facial and bodily display within the workplace”.

Simply put, it is the effort that goes into expressing something we don’t genuinely feel. It can go both ways – expressing positivity we don’t feel or suppressing our negative emotions.

Unhelpful attitudes such as ‘I’m not good enough’ may lead to thinking patterns in the workplace such as ‘No-one else is working as hard as I seem to be’ or ‘I must do a perfect job’, and can initiate and maintain high levels of workplace anxiety -  Leonard

Hochschild’s initial research focused on the airline industry, but it’s not just in-flight staff keeping up appearances. In fact, experts say emotional labour is a feature of nearly all occupations in which we interact with people, whether we work in a customer-facing role or not. The chances are, wherever you work, you spend a fair portion of your working day doing it.

When research into emotional labour first began, it focused on the service industry with the underlying presumption that the more client or customer interaction you had, the more emotional labour was needed.

However, more recently psychologists have expanded their focus to other professions and found burnout can relate more closely to how employees manage their emotions during interactions, rather than the volume of interactions themselves.

Perhaps this morning you turned to a colleague to convey interest in what they said, or had to work hard not to rise to criticism. It may have been that biting your lip rather than expressing feeling hurt was particularly demanding of your inner resource.

But in some cases maintaining the façade can become too much, and the toll is cumulative. Mira W, who preferred not to give her last name, recently left a job with a top airline based in the Middle East because she felt her mental wellbeing was at stake.

In her last position, the “customer was king”, she says. “I once got called 'whore' because a passenger didn't respond when I asked if he wanted coffee. I’d asked him twice and then moved to the next person. I got a tirade of abuse from the man.”

“When I explained what happened to my senior, I was told I must have said or done something to warrant this response… I was then told I should go and apologise.”

“Sometimes I would have to actively choose my facial expression, for example during severe turbulence or an aborted landing,” she says. “Projecting a calm demeanour is essential to keep others calm. So that aspect didn't worry me. It was more the feeling that I had no voice when treated unfairly or extremely rudely.”

During her time with the airline, she encountered abuse and sexism – and was expected to smile through it. “I was constantly having to hide how I felt.

Over the years and particularly in her last role, handling the stress caused by suppressing her emotions became much harder. Small things seemed huge, she dreaded going to work and her anxiety escalated.

“I felt angry all the time and as if I might lose control and hit someone or just explode and throw something at the next passenger to call me a swear word or touch me. So, I quit,” she says.

She is now seeing a therapist to deal with the emotional fallout. She attributes some of the problems to isolation from family and a brutal travel schedule, but has no doubt that if she hadn’t had to suppress her emotions so much, she might still be in the industry.

Mira is not alone. Across the globe, employees in many professions are expected to embrace a work culture that requires the outward display of particular emotions – these can including ambition, aggression and a hunger for success.

The way we handle emotional labour can be categorised in two ways – surface acting and deep acting

A few years ago, the New York Times wrote a “lengthy piece about the “Amazon Way”,describing very specific and exacting behaviour the retail company required of its employees and the effects, both positive and negative, that this had on some of them. While some appeared to thrive in the environment, others struggled with constant pressure to show the correct corporate face.

“How we cope with high levels of emotional labour likely has its origins in childhood experience, which shapes the attitudes we develop about ourselves, others and the world,” says clinical and occupational psychologist Lucy Leonard.

“Unhelpful attitudes such as ‘I’m not good enough’ may lead to thinking patterns in the workplace such as ‘No-one else is working as hard as I seem to be’ or ‘I must do a perfect job”, and can initiate and maintain high levels of workplace anxiety,” says Leonard.

Workers are often expected to provide good service to people expressing anger or anxiety – and may have to do this while feeling frustrated, worried or offended themselves.

“This continuous regulation of their own emotional expression can result in a reduced sense of self-worth and feeling disconnected from others,” she says.

Hochschild suggests that the way we handle emotional labour can be categorised in two ways – surface acting and deep acting – and that the option we choose can affect the toll it takes on us.

Take the example of a particularly tough phone call. If you are surface acting you respond to the caller by altering your outward expression, saying the appropriate things, listening while keeping your actual feelings entirely intact. With deep acting you make a deliberate effort to change your real feelings to tap in to what the person is saying – you may not agree with the manner of it but appreciate the aim.

Both could be thought of as just being polite but the latter approach – trying to emotionally connect with another person’s point of view – is associated with a lower risk of burnout.

Jennifer George’s role as a liaison nurse with a psychiatric specialism in the Accident & Emergency department at Kings College London Hospital puts her at the sharp end of health care. Every day she must determine patients’ needs – do they genuinely need to be admitted, just want to be looked after for a while or are they seeking access to drugs?

“It’s important to me that I test my own initial assumptions,” she says. “As far as I can, I tap into the story and really listen. It’s my job but it also reduces the stress I take on.”

“Sometimes I’ll have an instinctive sense that the person is trying to deceive, or I can become bored with what they’re saying. But I can’t sit there and dismiss something as fabrication and I don’t want to.”

This process can be upsetting, she says. Sometimes she has to say no “in a very direct way”, and the environment can be noisy and threatening. “I stay as much as I can true to myself and my beliefs. Even though I need to be open to what both fellow professionals and would-be and genuine patient cases say to me, I will not say anything I don’t believe and that I don’t believe to be right. And that helps me,” she says.

When things get tough, she talks to colleagues to unload. “It’s the saying it out loud that allows me to test and validate my own reaction. I can then go back to the person concerned,” she says.

Ruth Hargrove, a former trial lawyer based in California, also faces tricky interactions in her work representing San Diego students pro bono in disciplinary matters. “Pretty much everyone you are dealing with in the system can make you labour emotionally,” she says.

One problem, says Hargrove, is that some lawyers will launch personal attacks based on any perceived weakness – gender, youth – rather than focusing on the actual issues of the case.

“I have dealt with it catastrophically in the past and let it eat at my self-esteem,” she says. “But when I do it right, I realise that I can separate myself out from it and see that [their attack] is evidence of their weakness.”

Rather than refuting specific, personal allegations, she simply sends back a one-line email saying she disagrees. “Not rising to things is huge,” she says. “It’s a disinclination to engage in the emotional battle that someone else wants you to engage in. I keep in sight the real work that needs to be done.”

Those who report regularly having to display emotions at work that conflict with their own feelings are more likely to experience emotional exhaustion

Hargrove also has to deal with the expectations of clients who believe – sometimes unrealistically – that if they have been wronged, justice will prevail. She understands their feelings, even as she has to set them straight.

“I empathise here, as a parent, with their thought that there should be a remedy, even when I know it’s not going to be achievable. It helps me that this feeling is also true to me.”

Remaining true to your feelings appears to be key – numerous studies show those who report regularly having to display emotions at work that conflict with their own feelings are more likely to experience emotional exhaustion.

Of course, everybody needs to be professional at work and handling difficult clients and colleagues is often just part of the job. But what’s clear is that putting yourself in their shoes and trying to understand their position is ultimately of greater benefit to your own well-being than voicing sentiments that, deep down, you don’t believe.

Leonard says there are steps individuals and organisations can take to prevent burnout. Limiting overtime, taking regular breaks and tackling conflict with colleagues through the right channels early on can help, she says, as can staying healthy and having a fulfilling life outside work. A “climate of authenticity” at work can be beneficial.

“Organizations which allow people to take a break from high levels of emotional regulation and acknowledge their true feelings with understanding and non-judgemental colleagues behind the scenes tend to fare better in the face of these demands,” she says.

Such a climate can also foster better empathy, she adds, by allowing workers to maintain emotional separation from those with whom they must interact.

Where it is possible, workers should be truly empathetic, be aware of the impact the interaction is having on them and try to communicate in an authentic way. This, she says, can “protect you from communicating in a disingenuous manner and then feeling exhausted by your efforts and resentful of having to fake it”.

SOURCE:
Levy, K (25 June 2018) "How faking your feelings at work can be damaging" [Web Blog Post]. Retrieved from http://www.bbc.com/capital/story/20180619-why-suppressing-anger-at-work-is-bad


Five steps to becoming a trusted retirement plan adviser

Discover creative ways to deliver the best retirement plan to your employees with these five steps in retirement plan advising.


Many trends within the employee benefits industry challenge advisers to think creatively on behalf of their clients. For instance, millennials are more likely to pay off student loans and less likely to contribute to their company’s 401(k) plan. They lose the benefit of compound interest over all those years to retirement, which over decades, can amount to up to 80% of a millennial’s nest egg.

When companies experience low participation rates with new hires, the overall health of the plan will suffer and many of the more highly compensated and key employees may not be able to defer as much as they would like into the plan. Advisers must develop relationships with business owners to establish customized retirement plans that work best for their and their employees’ needs.

When advisers overcome these challenges they expand their client base and move toward success. The following five steps will help retirement plan advisers bring their career to the next level:

Understand the fiduciary requirements and minimize the risk of the employer

Strive to impart knowledge on the employer and the participants to make them confident in their retirement plans. Company owners will feel more comfortable if an adviser helps to reduce the fiduciary risk associated with the creation and ongoing operation of a plan. Advisers can share and even take over most of the fiduciary responsibility with the employer to lessen the pressure. With the right information, a business owner can understand the requirements of the plan and is motivated to establish a 401(k) or other type of plan for the benefit of their employees and overall business objectives.

Know the best plan options for the companies you’re serving

Not every company should have a 401(k) plan. While 401(k) plans may be optimal for large and even small companies, small companies may benefit from other types of plans. Small businesses often operate at a loss or minimal profit for many years before they generate significant profit. As a result, business owners may seek a plan — such as a defined benefit plan — that allows them to contribute more toward their retirement. In some cases, this may more than triple the amount of yearly contributions an employer can make compared to a 401(k) plan. Employers can contribute to a defined benefit plan and take a tax deduction equivalent to the contributions made to the plan.

Understand the tax advantages of retirement plans

Successful plan advisers should understand the tax advantages associated with the chosen retirement plan for both the owners and the participants. Traditional 401(k) plans tend to provide the most benefits to employees with tax-deferred contributions. On the other hand, small company owners can benefit from the tax advantages of properly designed cash balance or defined benefit plans. These frequently overlooked plans enable employers to deduct the cost of the company’s plan from their taxable income to secure tax savings.

Employee benefit advisers must have this foundational understanding of the tax advantages to successfully serve their clients. Partner with a retirement company record-keeper and a third-party administrator to learn the details for each option.

Discover profitable prospects among small companies too

Many employee benefit advisers in search of success avoid talking to small companies. However, these small companies have significant potential and are vital to success in an otherwise crowded market. Small companies, even with only three to five employees, are great to work with, especially if you help them establish a defined benefit plan, and if it’s the best plan for them. Through these plans, retirement plan advisers can receive the fees needed to provide the service because the company is making larger contributions than to a profit sharing or 401(k) plan.

Target underserved, yet vibrant markets

According to a recent study from the Pew Charitable Trusts, only 53% of small to midsize companies have retirement plans in place. Owners may think they are too small to be able to afford and monitor a program. These businesses are important prospects to pursue. Make yourself known to these companies and show the employer that there is a retirement plan that will work for their employees and company, no matter the size. Explain what program the company can implement and easily administer with your guidance.

Small companies provide great opportunities for advisers to become successful and differentiate themselves from other industry professionals. Keep in mind that these small companies are also more dependent on advisers because of the costs and risk associated with retirement plans. They will require more frequent contact for advice and personalized service. If you do not have the right expertise in the beginning, partner with someone in your office or a TPA until you have the credentials and knowledge to advise small companies on your own.

SOURCE:
Weintraub, M (19 June 2018) "Five steps to becoming a trusted retirement plan adviser" [Web Blog Post]. Retrieved from https://www.employeebenefitadviser.com/opinion/five-steps-to-becoming-a-trusted-retirement-plan-adviser?brief=00000152-146e-d1cc-a5fa-7cff8fee0000