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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.
A Decade of Great Change: And Great Benefits.
Vandermillen, Luke J.; Benefits Quarterly; v28 no2 pp 18-20 2nd Qtr 2012; journal article
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International Foundation of Employee Benefit Plans
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A close look at the small and midsized firms recognized on The Principal's annual lists of 10 Best Companies for Employee Financial Security reveals an evolution in benefits offered and how they are managed. The focus of the outstanding companies is on helping employees become financially stable and secure, usually by stressing engagement in defined contribution pension plans. Automatic enrollment and deferral increases, matching catch-up contributions and targeted participant education are the norm. The firms demonstrate a trend toward customized benefits for employees' specific needs and a focus on physical fitness and wellness. They work with financial professionals and benefits brokers to craft benefit plans for their workforce and communicate benefits effectively. By keeping their employees' needs in mind, these organizations have been able to do the right thing for their business.
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Link To Full Article
IRS Issues W-2 Reporting Guidance.
Bongiovanni, Kate; Employee Benefit News; v26 no3 p 26 Mar 2012; journal article
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Abstract :
Notice 2012-9, issued by the IRS in January 2012, addresses reporting on the cost of employer-provided health benefits on Form W-2, as required by the Patient Protection and Affordable Care Act. The notice makes clear that employers need not report on some kinds of coverage, including dental and vision benefits under separate policies, wellness programs, onsite clinics and employee assistance programs. Contributions to health reimbursement arrangements, health savings account and health flexible spending arrangements may be included on W-2s but are not required. The notice discusses use of the small employer exception when an agent files the W-2s as well as reporting health FSA costs when the amount exceeds the employee's deferral election. The reporting requirement takes effect with the 2012 calendar year.
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Lured by the Group Captive.
Lenckus, Dave; Risk & Insurance; v23 no2 pp 28-29 Mar 2012; journal article
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In the continuing search for effective health benefit cost-containment strategies, larger self-funded employers are showing interest in group captive insurers. The approach has been useful for smaller and midsized organizations choosing to self fund. It smoothes cost volatility and lowers the impact of lasering after a catastrophic claim for a solo self-funder. Groups buying stop-loss coverage but holding insufficient cash reserves gain by joining forces and using a group captive, especially since the Patient Protection and Affordable Care Act eliminated lifetime and annual benefit caps. While group captives do not need DOL approval, the challenge comes in convening employers of like mind about health benefits who are willing to commit to the group for at least three years.
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New Balance.
Burnett-Nichols, Helen; Benefits Canada; v36 no3 pp 21-22, 24 Mar 2012; journal article
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Abstract :
Many midsized plan sponsors find it challenging to keep employees engaged in retirement saving. Consultants have a number of suggestions, including creating a culture of savings within the organization and linking retirement and benefits programs. All plan sizes need to ensure members are paying attention to communications and not making panicked decisions. Plans of different sizes have similar challenges, but they rely on different solutions. Larger plans can take on longevity risks that midsized and small plans must divert, and small plans cannot offer as many benefits customization options as larger plans.
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Small Shops Ready to Roll Out More Variety.
Beyer, Lisa; Workforce Management; v91 no3 pp 3-4 Mar 2012; journal article
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A November 2011 survey of small business owners by HealthPass New York revealed strong support for state health exchanges. Eighty-four percent saw them as a good idea, 76 percent will consider using them and 60 percent who do not offer health coverage are more likely to do so through an exchange. Small business owners need plan options and simple administration. Over half report spending too much time scouting plans, the majority prefer a small business exchange in the private sector, and 45 percent want an online purchasing option. The state exchanges are seen as a good opportunity for companies with under 50 full-time workers, though the situation may be complicated for those with workers in multiple states. Business owners know health benefits are important for attracting and retaining workers, but they are looking for guidance to help plan for health reform law compliance.
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STD Isn't Enough.
Gillespie, Lisa V.; Employee Benefit News; v26 no3 pp 37-38 Mar 2012; journal article
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Abstract :
Maternity, paternity and adoption leave involve a balancing act that is increasingly coming into play as more women are waiting longer to have children and men are more involved in child rearing. While 95 percent of companies polled by Towers Watson offered maternity leave in 2010-2011, only 59.9 percent offered paternity leave and 63.3 percent offered adoption leave. Beyond the 12 week leave mandated by the Family and Medical Leave Act (FMLA), just 11.7 percent of employers guarantee employment. Benefits at smaller firms are typically leaner, often requiring parents to cobble together parental benefits, if offered, short-term disability (STD) and unpaid FMLA leave. Flexible and graduated scheduling, such as that offered by PricewaterhouseCoopers, is welcome support to let parents balance home and work and ease back into productivity. Some employees, especially fathers, have a hard time taking available leave because of the organizational culture.
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Tax Savings on Health Care for Every Size of Employer.
LeTourneau, Janet; Broker World; v32 no3 pp 56, 58, 60 Mar 2012; journal article
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Providing insurance and health benefits for employees is an obvious plus for the employee and gives the employer a tax advantage. There is considerable variation among types of small businesses in eligibility and who pays what for group insurance premiums and other health care expenses, as well as the source and beneficiary of tax savings. Owners and employees in C corporations can participate in cafeteria plans, health reimbursement arrangements (HRAs) and health savings accounts (HSAs), but participation in these plans and premium reimbursement accounts is restricted for more than two percent shareholders in S corporations, partners in a partnership, limited liability corporations and sole proprietorships. Those operations can, however, benefit from savings on payroll taxes. Payment for individual health insurance premiums through a flexible spending account or HRA is usually permissible but seeking legal advice is recommended.
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Weighing the Assets.
Faba, Neil; Benefits Canada; v36 no3 pp 27-28 Mar 2012; journal article
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Abstract :
According to the Pension Investment Association of Canada the average Canadian pension plan had invested 7.5 percent of its assets in alternatives in 2000, mostly real estate and private equity, compared to allocations in 2010 of 8.9 percent in real estate, 7.2 percent in private equity and venture capital and 4.2 percent in infrastructure. Alternatives can replace the returns once reliably gained from domestic equities, but investment committees and financial advisors must be educated on alternative investment options. Small plans tend to favor real estate, but the costs of infrastructure funds are dropping into the range where they are attractive to small and midsized plans. Small plans wanting to invest in alternatives can take advantage of pooled funds or coinvesting.
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Choosing a TPA Pits Independents Against Insurers.
Kertesz, Louise; Business Insurance; v46 no8 p 14 Feb 20, 2012; journal article
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While large self-insured employers frequently turn to administrative services only (ASO) contracts with insurers, small to midsized employers often rely on third-party administrators (TPAs). TPAs have been seen as more agile than an insurer, though the differences between ASOs and TPAs are diminishing and some insurers also have their own TPAs. TPAs may offer less discount on provider networks but may compensate with lower administrative costs. It is important to evaluate ASO and TPA candidates, focusing on the specific services needed without bundling. Stop-loss insurance, sometimes integrated with ASO contracts but an extra cost with TPAs, may also be factored in. For employers choosing a TPA, additional services and reports may be available through a broker.
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Regulators Wary of Self-Funding for Smaller Firms.
Pallarito, Karen; Business Insurance; v46 no8 p 17 Feb 20, 2012; journal article
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Abstract :
There is concern that the coming of state health insurance exchanges in 2014 may lead to adverse selection in insured plans sponsored by midsized companies. Employers with healthy workforces may choose to self-fund, leaving coverage of less healthy individuals up to the exchanges. State insurance regulators are considering subjecting the purchase of stop-loss insurance by self-funding companies to more rigorous requirements to avoid this imbalance. The National Association of Insurance Commissioners (NAIC) warned that very low attachment points for stop-loss coverage effectively avoid the requirements of the Patient Protection and Affordable Care Act. The Self-Insurance Institute of America rejects any implication that employers' self-funding would negatively affect state exchanges. The NAIC has had longstanding concerns about self-funded plans' exemption from state regulation and proposed model legislation with criteria for issuing stop-loss policies, adopted by three states as of early 2012.
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Special Issue: Self-Insurance: Taking Control of Your Benefits Program.
Wojcik, Joanne; Business Insurance; v46 no8 pp 3-4, 6 Feb 20, 2012; journal article
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Nearly six in ten of employers having 200 to 999 employees self-funded health benefits in 2010, and while the figure fell to 50 percent in 2001, the rate is forecast to rise with the economy. Self-insured plans typically have lower costs, more flexibility and exemption from premium taxes and state mandates. Predictive modeling and stop-loss insurance at reasonable costs are expanding self-funding opportunities to small and midsized companies. Health insurers are joining third-party administrators, targeting the middle market to offer administrative services only contracts or bundled service arrangements. The Patient Protection and Affordable Care Act may spark self-funding growth due to lower costs, the spotlight on medical cost ratio and broker commissions, and the need for data access for cost and claim management analysis.
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Health Insurance: Few Small Employers Will Avoid Regulation by Grandfathering, Self-Insuring, Study Finds.
Hansard, Sara; BNA's Pension & Benefits Reporter; v39 p 303 Feb 14, 2012; journal article
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Patient Protection and Affordable Care Act (PPACA) exemptions available to grandfathered or self-insured plans will have little effect on the small group market since few businesses will be able to take advantage of them. Small plans are likely to buy coverage through state health insurance exchanges, according to a Rand Corp. study. Eighty-eight percent of small firms are expected to lose that status by 2016 since they will be unlikely to continue with the same health benefit coverage without some changes. The best strategy for containing premium costs may come through merging individual and small group exchanges.
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Employers and the Exchanges Under the Small Business Health Options Program: Examining the Potential and the Pitfalls.
Jost, Timothy S.; Health Affairs; v31 no2 pp 267-274 Feb 2012; journal article
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The Small Business Health Options Program (SHOP) is a key component of the Patient Protection and Affordable Care Act. For SHOP health exchanges to succeed, they will need to be more attractive than existing options for small employers. They will need to aggressively market themselves and reduce costs and administrative burdens on employers. Issues such as the relationship between SHOPs and individual exchanges, enrollment and participation schemes and the choice of plans offered by the exchange will affect how attractive the SHOP exchange is.
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Health Insurance Exchanges of Past and Present Offer Examples of Features That Could Attract Small-Business Customers.
Gardiner, Terry; Health Affairs; v31 no2 pp 284-289 Feb 2012; journal article
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Abstract :
The health insurance exchanges mandated by the Patient Protection and Affordable Care Act (PPACA) will be a boon for small businesses, but there are challenges in creating an exchange that will appeal to small business owners. Successful past and current exchanges have used brokers to avoid major problems attracting these employers. The PPACA requires the exchanges to have navigators who guide employers and participants to the best insurance for them, and these navigators will need to be supplemented with additional communication efforts. Services such as comparative plan information, a clear line of communication with the exchange and a wellness program will make exchanges more attractive to small employers.
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How Small-Business Health Exchanges Can Offer Value to Their Future Customers: And Why They Must.
Kingsdale, Jon; Health Affairs; v31 no2 pp 275-283 Feb 2012; journal article
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The success of the state health insurance exchange program scheduled to open in January 2014 will depend largely on convincing employers and health plans to participate. Critical program objectives include reducing employer costs, creating administrative efficiencies and offering choices small employers would otherwise not have access to. Meeting these objectives will create incentives for small businesses to participate. The exchanges must also maintain excellence to remain competitive with traditional alternatives. Merging operations with the larger exchange for individuals will allow the small business exchanges to attract more qualified health plans and to take advantage of economies of scale. Exchange designers will also have to consider the definition of a small plan, the implications of opening the exchanges to large plans when they are allowed to in 2017 and the possibility of allowing employers to restrict their employees to a single plan or insurer.
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Regulating Stop-Loss Coverage May Be Needed to Deter Self-Insuring Small Employers From Undermining Market Reforms.
Hall, Mark A.; Health Affairs; v31 no2 pp 316-323 Feb 2012; journal article
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The Patient Protection and Affordable Care Act may encourage small businesses to self-insure instead of participating in the regulated insurance markets. If too many young or healthy groups self-insure, premiums for group insurance could rise significantly. States can discourage self-insurance by restricting the comprehensiveness of stop-loss coverage, regulating it or banning it altogether. The extent of states' ability to regulate stop-loss coverage is unclear, and guidance from the National Association of Insurance Commissioners, the Labor Department, the Department of Health and Human Services or the IRS would be helpful.
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Small Firms' Actions in Two Areas, and Exchange Premium and Enrollment Impact.
Eibner, Christine; Price, Carter C.; Vardavas, Raffaele; Cordova, Amado; Girosi, Federico; Health Affairs; v31 no2 pp 324-331 Feb 2012; journal article
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Abstract :
Using a RAND microsimulation model, the effects of Patient Protection and Affordable Care Act regulations restricting the ability of employers to continue grandfathering their health plans are examined. Lower levels of grandfathering are predicted to result in lower state health insurance exchange premiums and slightly lower enrollment rates in the exchanges. Additional regulations restricting self-insurance are predicted to reduce exchange enrollment without significantly affecting premiums. A possibly significant factor difficult to simulate in this model is the availability of low-cost stop-loss insurance.
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Foreign Plans: Canada Updates Fee Structure for Assessments on Pension Plans.
Menyasz, Peter; BNA's Pension & Benefits Reporter; v9 p 100 Jan 17, 2012; journal article
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The Canadian federal pension regulator released final regulations that updated the fee structure on January 4, 2012. Effective April 1, 2012, the pension plan assessment formula will apply to more plans and the fee base cap will be higher. The Office of the Superintendent of Financial Institutions said the higher cap will shift costs to larger defined benefit pension plans, which take up more agency resources, and help recover the full costs of administering federally regulated plans. Most defined contribution plans will see decreased fees, but the smallest plans will pay slightly more under the updated fee structure.
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Health Care Reform: IRS Modifies Forms W-2 Guidance for Reporting Cost of Group Health Coverage.
Boehm, Rachel; BNA's Pension & Benefits Reporter; v39 p 57 Jan 10, 2012; journal article
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With Notice 2012-9 the IRS changed employer guidance for health coverage reporting for the 2012 tax year. The information, presented as questions and answers, affects reporting for Indian tribal governments, small businesses, employers not using a common paymaster and dental and vision plans. There is also a correction for reporting premium payments as gross income for S corporation shareholder-employees. The notice supersedes the earlier Notice 2011-28, modifying some points and addresses further issues. The updated notice discusses employee assistance plan coverage costs with health reimbursement arrangements and an exception for fixed indemnity insurance offered on an after tax basis. Employers filing fewer than 250 W-2 forms are not subject to the reporting changes for 2012.
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Paystub Life Buoys: Benefits for the Other 99%.
Bell, Allison; National Underwriter: Life & Health; v116 no1 pp 58-61 Jan 2012; journal article
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As the cost of traditional comprehensive health insurance rises, it may be losing support to a raft of voluntary benefits. Voluntary and worksite benefit sales grew three percent in 2009, lost most of that in 2010 and rose five percent in the first three months of 2011. Insurers note more employer interest in purely voluntary products or subsidizing voluntary benefit choices. Changes are being driven by rising health care costs, the weak economy, interest in niche benefits and ease of payment processing. The Patient Protection and Affordable Care Act is a major driver, with cost requirements seen as opening opportunities for new entrants in the voluntary benefit arena. The industry should fend off any claims that voluntary benefits are misleading or too narrow by ensuring that consumers fully understand benefits' scope and limits.
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Health Insurance: Most Health Insurers Met Requirements for Medical Loss Ratio in 2010, GAO Says.
Hansard, Sara; BNA's Pension & Benefits Reporter; v38 p 2218 Dec 6, 2011; journal article
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According to a Government Accountability Office report, at least 64 percent of all insurers covering at least 1,000 life years would have met the medical loss ratio (MLR) requirements in 2010, the year before they were implemented. The MLR is a key requirement of the Patient Protection and Affordable Care Act, requiring plans to spend a minimum percentage of insurance premiums on medical claims or quality improvements. For 2010 the MLR varied widely, especially for the individual market and small insurers serving 1,000 to 75,000 lives. The MLR requirement adjusts upward for insurers covering the latter group to reflect the disproportionate impact of variability on smaller plans.
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Feds Issue Proposed Rules for Health Insurance Exchanges.
Hollowway, Mark; Fensholt, Edward; Benefits Law Journal; v24 no4 pp 66-72 Winter 2011; journal article
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State health insurance exchanges are central to the Patient Protection and Affordable Care Act, and the Department of Health and Human Services (HHS) has proposed regulations for setting up exchanges. By September 2011, 11 states had enacted laws to establish an exchange and two already had exchanges. HHS will operate a state exchange for any states unprepared to operate an exchange by January 1, 2013. Starting in 2014, individuals will be able to purchase coverage through an exchange, and the small business health options program (SHOP) will be open to small businesses. Exchanges must certify qualifying plans for coverage of essential benefits and will offer subsidies for qualified individuals. Enrollment rules will be similar to those of employer health plans. Though not eligible for the SHOP, large employers should become familiar with its provisions to help their employees with transitions.
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The Safe Harbor 401(k) Plan: More Flexible Than You Think.
Turley, Erin; Murphy, Lindsay; Benefits Law Journal; v24 no4 pp 26-34 Winter 2011; journal article
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The product of the Small Business Job Protection Act of 1996, a safe harbor 401(k) plan is exempt from actual deferral and actual contribution percentage testing, as long as some requirements are met. They have the same eligibility requirements as other qualified plans but must meet minimum coverage requirements, demonstrated through a ratio test or average benefit test. Safe harbor plans feature flexibility in their contribution formulas, compensation definition, timing and amounts of elective deferrals, and the dual eligibility requirements of the over plan and under plan linked with minimum age and service. Safe harbor plans are not limited to the compensation definition of Internal Revenue Code Section 414(s) or 415(c)3), and their flexibility defining compensation with regard to elective deferrals exempts them from annual nondiscrimination testing.
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Employers and Health Insurance Exchanges Have Shared Interests: Employers Should Care About Exchanges, States Should Care About Whether Employers Care.
Macey, Scott J.; Roberson, Kendra L.; BNA's Pension & Benefits Reporter; v38 p 2180 Nov 29, 2011; journal article
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In planning for the implementation of the Patient Protection and Affordable Care Act, states are working on details of their health insurance exchanges. Many of those details directly affect employers and their health coverage and budget planning. Exchanges must focus on affordable and competitive rates and the effects on their insurance risk pools. Since design flexibility will influence employers' choice to have employees seek coverage through the exchanges, states should involve employers in design planning. States must appreciate their role in adjudicating employee eligibility for premium tax credits or subsidies, which in turn influences employers' liability for penalties. Access to exchanges starts in 2014 for small employers and 2017 for large companies, and employers of all sizes have a number of compelling reasons to consider purchasing coverage through exchanges.
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Access Pass.
Blythe, Scot; Benefits Canada; v35 no11 pp 70-73 Nov 2011; journal article
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Experts say that volatility and low returns in the public markets are making more pension funds seek alternative investments to add additional returns. According to the Pension Investment Association of Canada, alternative assets in 2011 make up 25 percent of the average Canadian pension fund portfolio, compared to 7.5 percent in 2000. Private equity has risk, but the returns are higher than public markets by two to four percent. The real estate market may be nearing saturation in 2011, but opportunities still exist. While large pension funds have teams to evaluate alternative investments, smaller plans must usually rely on directly traded companies, real estate investment trusts or closed-end funds, all of which are less divorced from stock market fluctuations.
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