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Monthly Archives

September 2009


By Employment Resources | No Comments

Just as employers that match employees’ 401(k) plan contributions see higher employee participation in the plan, employers that contribute to employees’ health savings accounts (HSAs) are more likely to see eligible employees open an HSA.

An examination by UnitedHealthcare of HSA-eligible participants found that when an employer made an HSA contribution on its employees’ behalf, 86% of eligible employees chose to open an account, compared with 27% who opened an account when the employer did not provide “seed money.” Account adoption was highest among employees who earned less than $25,000 annually, with 64% of employees at this income level having an account. The percentage of employees who opened an account then steadily dropped as income level rose: 56% of those in the $25,000-$49,999 earnings range, 52% of those in the $50,000-$99,999 earnings range and 50% of those earning $100,000 or more. However, as might be expected, the average employee HSA contribution rose as income level rose: $1,166 for employees earning less than $25,000 annually, $1,422 for those earning $25,000-$49,999, $1,823 for those earning $50,000-$99,999 and $2,290 for those earning $100,000 or more.

Neither age nor marital status drove or deterred an employee’s likelihood to open an account, according to the survey. More than half of young singles (62%), singles over age 40 (52%), young couples (58%), young families (59%) and mature families (55%) opened an HSA. However, the highest contribution rate was seen among families, both young and mature. Also, employees of small companies were more likely to open an HSA if eligible, with 74% of small company employees taking this step, compared with 67% of employees at mid-size companies and 45% of employees at large companies.

The vast majority of HSA-participating employees had account balances at the end of the year, a testament to the usefulness of HSAs as a savings tool for future health care expenses, including retiree health care expenses.

As this survey suggests, HSAs have application across all income groups, life stages and employer environments, making it an appropriate health plan offering for just about any company to consider.


By Employment Resources | No Comments

College students covered under a parent’s health plan will be able to keep that coverage while taking a medically necessary leave of absence from school, under a new law.

Under H.R. 2851 — also known as Michelle’s law — group health plans or insurers may not terminate coverage of a dependent child who is eligible for coverage under a parent’s plan on the basis of being enrolled in a post-secondary educational institution, when that dependent takes a medically necessary leave of absence from school due to a serious illness or injury. Coverage must remain in place for one year after the medically necessary leave of absence begins, or the date coverage would otherwise have terminated under the plan, whichever occurs first. So, for example, if the plan by its terms will cover a college student enrolled on a full-time basis until the end of the year in which the student turns age 22, a student beginning a medically necessary leave of absence could not have coverage terminated until the earlier of that date, or one year after beginning the leave.

Plans and insurers may require a written certification by a treating physician verifying that the covered dependent is suffering from a serious illness or injury, and that the leave is medically necessary.

Also, if the health plan under which the dependent is covered changes, the dependent must be allowed to continue coverage under the new plan.

According to estimates from the Congressional Budget Office, less than 1% of students go on medical leave of absence annually, and about half of these are covered as dependents under employer-sponsored health insurance.

The new law is effective for plan years beginning on or after October 9, 2009.


By Employment Resources | No Comments

The cost of preventable medical errors exceeds $17 billion annually, with nearly half of these expenditures representing direct health care costs. Medical errors, by some estimates, are the eighth leading cause of death in the United States. In addition to health care expenses and the costs associated with untimely mortality, the cost of medical mistakes includes lowered workplace productivity, unnecessary absences, and an increased incidence of disability.

The scope of “medical errors” is broad. According to a report from the Institute of Medicine (IOM), medical errors fall into these categories:

  • Diagnostic errors — Mistaken or delayed diagnosis; failure to use an indicated diagnostic test; use of an outmoded test or therapy; failure to take action as a result of patient monitoring or test results.
  • Treatment errors — Mistakes made during an operation, procedure or test; mistakes in administering a treatment; incorrect prescribing or dosing of medication; delaying treatment in response to an abnormal test result; providing care that is not indicated.
  • Preventive errors — Failing to provide prophylactic treatment; inadequately monitoring or following up.
  • Other errors — failing to communicate; equipment failure; other system failure.

Most data on medical mistakes centers on errors that occur in the hospital setting. For example, the IOM estimates that 44,000 to 98,000 people die each year in hospitals as a result of medical mistakes, and a report from HealthGrades found that Medicare patient safety events and deaths resulting from hospital errors cost approximately $2.0 billion from 2005 through 2007. In contrast, little data exists on the extent of medical mistakes made in physicians’ offices, nursing homes, pharmacies and urgent care centers, and in the course of home health care.

Though much of the cause of medical errors is systemic, employers can play a role in reducing the incidence of such errors. According to the IOM report, by raising expectations for improvements in safety and for health care providers’ performance, purchasers of health care — including employers — can impact patient safety positively and thereby lessen the chances of errors occurring. One way employers can do this is by making safety a primary factor in the contracting decision process.

Employers can also contribute toward lowering the rate of medical errors by communicating actively the importance of the issue to employees. With employer group health plans being a major purchaser of health care in the United States, this puts employees and dependents who use this care on the front lines of battling medical mistakes. The IOM notes that, for example, in the case of errors involving medications, patients can provide a major safety check in hospitals, clinics and physicians’ offices. Patients should know which medications they’re taking, what their medications look like, what their usual dose is, and what possible side effects can result, and notify their doctor immediately if they notice anything seemingly wrong with their prescription or any side effects. Resources on patient safety are available on the Web site of the Agency for Healthcare Research and Quality, http://www.ahrq.gov/qual/errorsix.htm.

Talking to employees about the role they can play in this regard — in a company newsletter article, in benefits communications materials, or during a lunchtime presentation — can impress on them that by being an active participant in their health care, they can lessen the chance that they will be a victim of a medical mistake. Reducing the incidence of mistakes can help to control costs for both an employer and employees, and can improve employee patient safety substantially.


By Your Employee Matters | No Comments

The National Employer Lawyers Association (NELA) files what they call “amicus” briefs, in which they weigh in on a particular cutting-edge issue. The most recent report identified some of these concerns:

  • Maintaining the right to bring class action wage and hour claims.
  • Protecting employees for being fired for cooperation with an employer’s internal sexual harassment investigation.
  • Obtaining “mixed motive” instructions in Title VII and other cases.
  • Fighting a return to work following medical/disability leave requirement that employees be 100% healed (although this might work in a Workers Comp case, it poses significant problems under the ADA).
  • Continuing to push glass ceiling arguments, such as those that resulted in the Wal-Mart case. These issues include “tap on the shoulder” promotions, failure to post job openings, too much discretion in compensation policies, gender stereotyping, statistical patterns, and the absence of effective accountability structures to address such disparities.
  • Preventing employers from making blanket classifications that employees are exempt from overtime. Instead, employers must make individual analysis of specific employees.
  • Reviewing the availability of attorneys fees, punitive damages, and other sanctions and penalties.
  • Misclassifying employees as independent contractors for wage and hour, benefit, and other purposes.
  • Undermining the arbitration process.

NELA’s 2009 Workplace Heroes include: The person who blew the whistle on the IRS, Lilly Ledbetter — whose case encouraged the passage of the Ledbetter Act so that women can bring fair pay claims, and a union organizer who led a group of workers that locked themselves into a shut-down plant. You can learn more about the NELA agenda at www.nela.org.


By Your Employee Matters | No Comments

After the Supreme Court ruled against Lilly Ledbetter, the Congress got busy passing the Ledbetter Act. With a Democratic majority and president, it was passed into law this year. Section III of the Ledbetter Act amends Title VII as follows:

For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice … Liability may accrue and an aggrieved person may obtain relief as provided in subsection (g)(1) including recovery of back pay for up to two years preceding the filing of the charge …

This means that employers are now subject to a possible two-year exposure for unequal pay claims even when that exposure was generated many years ago. What’s an employer to do?

In a sense, this situation is like finding out you had a wage and hour violation for misclassification of an employee and failure to pay overtime. The only difference is that under the Ledbetter Act the statute of limitations never really expires. Somebody can wait a long time to finally claim that they were treated unfairly and then seek the difference between pay scales of men and women during the past two years as their damages. Employers basically have three choices:

  1. Ignore the difference and hope it goes away. Since there’s a “rolling” statute of limitations which starts and expires every day for a two-year period, theoretically the claim of anyone who has worked for you for a while doesn’t expand much.
  2. Try to pay a “caught up” rate and hope that the employee doesn’t file a claim.
  3. Reimburse the employee for the difference during the past two years.

The court basically said that a woman can go as far back in time to show where the pay disparity started and how it affected her career. As a result, some attorneys are advising clients to save payroll records and compensation decisions forever. Since this is a brand new act, it will be interesting to see how the courts interpret it.


By Your Employee Matters | No Comments

According to the 19th Annual Retirement Confidence Survey published by the Employee Benefit Research Institute (www.ebri.org), a record low 13% of Americans say they’re confident that they have enough money to live comfortably in retirement. The percentage of those feeling confident about retirement has tumbled by half in the past two years.

In light of today’s economic realities, 28% of workers said they expect to retire later, and 72% will be seeking to supplement their income during retirement by working. According to the report, workers are reducing their expenses (81%), changing the way they invest (43%), working more hours or a second job (38%), saving more (25%), and seeking advice from a financial professional (25%).

Savvy employers should be aware of how addressing these needs can impact hiring and retaining a maturing workforce.


By Your Employee Matters | No Comments

Are you planning ahead for what’s coming your way? If you’re a human resource executive, or at least responsible for this role, you should be aware of these trends and have a plan to manage them:

  1. An aging workforce – Do you have a plan to keep your current employees well trained so they don’t become dinosaurs? Have you allowed your older employees to act as mentors and to be mentored by younger employees comfortable with technology skills? Have you considered possible phased retirement plans? Or “stepped down” roles within the organization (think Wal-Mart greeters)?
  2. An increasingly female workforce – More women than men are coming out of professional schools. Women will continue to demand flexible work schedules so they can perform their nurturing roles at home. Do you have a plan for flexible scheduling? Do you support day care and elder care needs? Have you allowed folks to “job share” or continue to collect benefits while working part-time?
  3. Heavier demand for retirement planning – Most Americans do a poor job of planning for their finances and health. Due to the recession, many employees can’t retire as planned. Many more employees won’t be able to retire because they failed to engage in retirement planning. As we grow older, health becomes a greater issue and impacts attendance as well as finances. To what degree have you brought in wellness programs, retirement advice, and so on? I predict that as we move forward, the most that many employers can afford to provide employees in these areas is an education.
  4. Continued outsourcing – As business structures continue to evolve, look for more and more outsourcing to PEOs and contingent workers. Remember this adage: If it walks and talks like an employee, it probably is one. You might be responsible for joint employment obligations and misclassifications. If you engage in these relationships, please read the HR That Works Special Reports on Contingent Workers and Independent Contractors.
  5. Technological innovation – We’re in a constant battle to keep up with the latest and greatest technology. Many employees are reluctant to learn new technologies; savvy companies will plan for this learning. Just as important, once employees are trained technologically, don’t lose them to a competitor looking for someone with this experience. I remember one head-hunter looking for people trained in SAP telling me that he calendared the date when a company got its SAP contracts and then two or three years later recruited SAP trained employees away from that company.
  6. Increasing minority presence in the workplace – Despite the fact we have an African American president and a shrinking percentage of white workers, the number of racial discrimination and harassment claims has grown significantly during the past six months. It’s not just African Americans filing these claims; more Hispanics and Asians will do so as well. White employees who feel that they’ve faced systematic discrimination will go to court, as did the New Haven firefighters who recently won their discrimination case before the US Supreme Court.
  7. Growing spirituality – More people are bringing their religion to work. Whether it’s owners or the rank and file, there’s far more discussion of spirituality in today’s workplace. The 60 million or so “cultural creatives” are seeking a deeper significance out of their daily grind. The employer who has a plan for tapping into this need will certainly attract these employees. As an employer, you’ll need to bring greater “meaning” to the workplace, while at the same time, avoiding claims of religious proselytizing or persecution.

These “mega-trends” affect the workforce no matter what business you’re in. The bottom line: Have a plan with goals and action items.


By Life and Health | No Comments

If you’ve decided to purchase Long-Term Care insurance (LTCI), good for you. There’s no question that LTCI can help protect your family’s finances by covering the exorbitant costs of long-term care if and when necessary.

However, because LTCI is such an important and sometimes costly purchase, it’s vital that you do your research and buy a policy for the right reasons. Too many insurance companies persuade consumers to buy LTCI with exaggerated claims and “facts.”

When purchasing an LTCI policy, keep your eye out for these top five sales pitches:

  1. An LTCI policy is a valuable tax write-off. This might be true in some cases, particularly for business owners, but this statement is a myth for many LTCI policy owners. Although premiums paid for a tax-qualified LTCI policy ultimately can reduce your tax bill, you have to itemize deductions to qualify.
    Additionally, for tax write-off purposes, LTCI premiums fall into the medical and dental expenses categories. This category is limited to expenses that surpass 7.5% of your income. So, if you’re income is $75,000, you’ll need more than $5,625 in unreimbursed health and dental care expenses before you can even add in your LTCI premiums.
    Plus, even if your LTCI premiums go above 7.5% of your income, you can’t include all of the payments in your medical and dental expenses deduction. Your premiums are deductible according to a sliding scale based on your age.
  2. All assisted-living facilities are created equal. Under current law, there is no national standard definition for “long-term care facility.” Therefore, if your LTCI policy says it covers a stay in an “assisted-living facility” or “adult day-care facility,” this could mean something different depending on the particular policy and the state where the policy was created.
    Therefore, if you purchase an LTCI policy and then move to another state, there’s a possibility that there are no facilities in your new state that match the definitions of your policy. Obviously, this could put you and your family in a serious bind if you ever require long-term care. Before you sign on the dotted line, ask plenty of questions and make sure you fully understand what type of facilities the policy covers.
  3. Buy now to lock in the price. When purchasing an LTCI policy, many consumers are under the false impression that their premiums will be the same forever. Although your premiums typically depend on your age at the time you purchase the policy, this does not mean the premiums will stay the same for the life of the policy. Your premiums can go up any time your insurance company enacts a rate increase, as long as the increase is approved by the state insurance commissioner.
    Additionally, LTCI is particularly vulnerable to rate increases because it’s relatively new to the insurance world. Insurance companies don’t have a sufficient amount of data to predict the number of long-term care claims they will face in coming years.
  4. You should replace your current LTCI policy with a newer one. Although some LTCI policies might have an added benefit that your current policy doesn’t include, it might not be a wise move to switch policies mid-game. First of all, your premiums are based on your age at the time you purchase the LTCI policy. Therefore, if you switch to a new policy, your premiums could increase. On top of that, you might have developed a pre-existing condition since you purchased the first policy, and this might not be covered by the new policy.
    If you want to add benefits to your policy, you’re probably better off to upgrade your current policy instead of buying a new one.
  5. An insurance company’s financial rating isn’t important. Before you buy an LTCI policy, check the company’s financial rating with Standard & Poor’s, Moody’s, A.M. Best, Fitch or Weiss — these are all reputable financial rating services. You might also want to contact your state’s insurance department for additional details on specific companies.
    Consult with one of our LTCI specialists to review these and other areas of this valuable coverage. We want to make sure that you’re getting the most for your LTCI premium.