Author: Site Staff

Enrollment in health savings accounts linked to high-deductible health insurance plans continues to surge, with 8 million people covered by HSAs as of January 1, a 31 percent increase in the past year, according to an annual census released Wednesday, May 13, by an industry group.

HSA enrollment rose in all markets, according to Washington-based America’s Health Insurance Plans, and posted the greatest percentage increase in the large-employer market.

Employers with at least 51 employees had 3.8 million people enrolled in HSAs as of January 1, a roughly 35 percent increase in the past year.

Enrollment also increased in other markets. In the small-employer market—or businesses with up to 50 employees—HSA enrollment increased to 2.4 million people, up about 34 percent from a year earlier, while enrollment in the individual market climbed to 1.8 million, an increase of about 22 percent.

HSAs, authorized under a 2003 federal law that added a prescription drug benefit to the Medicare program, became available on January 1, 2004, and enrollment has been surging since then.

For example, AHIP surveys found HSA enrollment of 1 million people in March 2005, 3.2 million as of January 2006, 4.5 million as of January 2007 and 6.1 million as of January 2008.

The key factor driving HSA growth is that premiums for high-deductible health insurance plans—to which HSAs must be linked by law—tend to be much lower than more traditional health plans, where enrollee cost-sharing is lower. In 2009, the minimum deductible of an HSA-linked health insurance plan is $1,150 for single coverage and $2,230 for family coverage.

The census is based on 96 insurers and their subsidiaries offering HSA-linked health insurance plans. AHIP said it believes its annual census covers virtually all people enrolled in plans linked to HSAs.

Copies of the 2009 census are available at www.ahipresearch.org.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

Members of Congress weighed the implications of the federal government’s regulating the insurance industry during a hearing Wednesday, May 14.

“The events of the last year have demonstrated that insurance is an important part of our financial markets,” said Rep. Paul E. Kanjorski, D-Pennsylvania and chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. “The federal government therefore should have a role in regulating the industry.”

However, just how involved the federal government should be in its oversight was a topic of hot debate among the witness panel members and the subcommittee members in the hearing.

Bob Hunter, director of insurance at the Consumer Federation of America in Washington, suggested that the federal government step in to manage systemic risk, oversee solvency risks and establish a repository of expertise and data analysis.

However, the federal government can’t handle everything, he argued. An optional federal charter would be incapable of handling systemic risk, as carriers can decide who has oversight.

Rather, a combination of state and federal oversight would handle local consumers’ concerns, while addressing overarching industry issues, Hunter said.

“We conclude that the split in regulation that best deals with the pros and cons of each level of government is to have the federal government deal with systemic risk, solvency and international issues but to have the states deal with consumer protection, complaints and market conduct issues,” he said.

Solvency, risk management and policyholder protection—the factors that kept carriers from going the way of the banks during the economic downturn—will have to be at the heart of any new federal role in insurance regulation, according to Patricia L. Guinn, managing director of risk and financial services at Towers Perrin of Stamford, Connecticut.

New regulatory systems will have to preserve the best aspects of the state-based system without being duplicative, she said.

“Regulation at the federal level needs to be carefully structured and designed to supplement and improve the existing regulatory framework, not replace it,” Guinn said. “Reform should recognize that there is a great body of expertise in the state regulatory system that should be retained and leveraged.”

Guinn recommended that solvency and policyholder security be handled on a federal level, but the market-conduct ball could fall into the state regulators’ court, where it is closer to the customer.

No state regulators were present at the hearing, but congressional members disputed their abilities to manage complex matters, such as carriers’ involvement in securities lending and credit default swaps, particularly as American International Group of New York became a massive problem last year that had gone unchecked until the last minute.

Rep. Ed Royce, R-California, co-sponsor of the optional-federal-charter bill, argued that the state regulators waited too long to react when AIG became overleveraged.

“Only when AIG was on the [brink] of collapsing did the New York state commissioner and governor propose to redirect $20 billion from the surplus of the insurers to the holding company. Fortunately, that was aborted, but that’s the scale of oversight that existed,” Royce said.

“It’s the overleveraging on top of all the rest of this—the fact that that couldn’t be caught because of the piecemeal patchwork here,” he said. “I think this would have been caught by a world-class regulator with full access to all the information.”

Filed by Darla Mercado of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

The help-wanted postings promise career-boosting experience.

“Be responsible for conducting one-on-one educational sessions with associates regarding new consumer-driven health plan options,” one says. “For new grads, this internship may convert into our associate account representative role, a regular full-time position which comes with a complete benefits package.”

The catch: no pay, at least for now.

Unpaid internships populate job search sites as companies contending with hiring freezes, smaller budgets or downsized workforces see this low-cost talent as a way of meeting their staffing needs until the economy rebounds.

“That’s not necessarily a viable option under the law,” warns Terri Stewart, an attorney with Fisher & Phillips in Atlanta. Employers contemplating this strategy need to understand the Fair Labor Standards Act’s criteria for unpaid internships.

Based on a landmark 1947 Supreme Court case, the six criteria include providing training similar to what would be given by a vocational school, not displacing regular employees with interns, and gaining “no immediate advantage” from their work.

“It almost has to be a little bit of a thorn in your side,” Stewart says.

It is unclear how many complaints are filed with the government each year about unpaid internships possibly violating labor law.

The U.S. Department of Labor does not separately track internship cases, says spokeswoman Dolline Hatchett. They are included with other minimum wage and overtime violations, she says.

In robust economies, these violations tend to go unreported, labor law attorneys say.

“As the economy tightens up, they’re going to start coming back,” says Randy Renick, an attorney with Hadsell, Stormer, Keeny, Richardson & Renick in Pasadena, California.

One of the best-known settlements involved an Atlanta public relations firm that paid $31,520 to former interns after the Department of Labor investigated its unpaid program.

“The person taking the internship can be taken advantage of,” says John Challenger, CEO of Challenger, Gray & Christmas, a Chicago outplacement firm. “When there is payment, there is accountability on all sides.”

The National Association of Colleges and Employers found that 98.6 percent of the internships offered by organizations that responded to a recent survey are paid. They plan to offer about 21 percent fewer internships this year, but to pay those interns better.

“The employers who tend to respond to this survey tend to use internships as a steppingstone to full-time employment,” says Edwin Koc, NACE’s director of strategic and foundation research. “They’re testing out the people.”

A previous study by NACE found that unhappy interns tended to be unpaid interns.

“If you have a dissatisfied intern, when they come back to campus, they are a bad ambassador for you,” says Claudia Tattanelli, CEO of Universum North America, which consults on employer branding and recruitment strategies.

The bad buzz isn’t limited to campuses anymore. Sites like InternshipRatings.com provide databases of reviews by former interns and list the best and worst programs.

“We’ll see more of that,” Tattanelli says.

Intern Bridge, a recruiting and consulting firm focused on Generation Y, found that 18 percent of internships were unpaid in 2007, the most recent data available.

Not paying interns shrinks the talent pool a company attracts, says Richard Bottner, president of Intern Bridge, and potentially cuts out stronger candidates.

“There is a huge population of students who simply can’t afford an unpaid internship,” he says.

Stewart recommends structuring unpaid internship program to meet the six-prong test at the outset.
 
“One of the absolute safest courses of action,” says Stewart, “is just to pay minimum wage.”

—Todd Henneman

Workforce Management’s online news feed is now available via Twitter

Changing the tax-favored status of employer-provided health care coverage could make the system fairer, according to Senate Finance Committee Chairman Max Baucus, D-Montana.

As his committee moves closer to considering comprehensive health care reform legislation, Sen. Baucus voiced concerns Tuesday, May 12, about the current system in which employers can fully deduct group health care premiums as a business expense and the cost of the premiums is excluded from employees’ taxable income.

At a Finance Committee hearing, Sen. Baucus said he opposes a total repeal of the health care tax exclusion. But the senator also said the exclusion “is not perfect. It is regressive. It often leads people to buy more health insurance than they need,” he said.

“We should look at ways to modify the current tax exclusion so that it provides the right incentives. And we should look at ways to make it fairer and more equitable for everyone,” Sen. Baucus said.

While not mentioning them by name, Sen. Baucus suggested that tax breaks provided through health savings accounts also should be examined to ensure that the benefits are structured fairly and efficiently. Under law, employees can take a tax deduction or reduce their taxable salaries by the amount of their HSA contributions, and accumulated interest on the contributions can be withdrawn tax-free to pay health care-related expenses.

Alarmed at possible moves to curb the tax-favored status of employer-provided health care coverage, the Washington-based National Business Group on Health warned Wednesday, May 13, that such changes could result in making coverage more costly and possibly lead some employers and employees to drop coverage.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

 

 Michigan economist David Littmann predicts that unemployment in Michigan could approach 17 to 20 percent by year’s end.

Michigan’s unemployment rate in March was 12.6 percent—a full 5 percentage points higher than a year ago.

A news release issued Tuesday, May 12, from the Midland-based Mackinac Center for Public Policy, where Littmann is senior economist, cites Littmann as also predicting that “revenues for the state will continue to plummet.”

Filed by Amy Lane of Crain’s Detroit Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

Effective July 1, cash-balance pension plan participants no longer will accrue new benefits, though they will continue to earn interest credits on their account balances.

In addition, on July 1 the managed care company will fully vest all employees who are not yet vested. This enhancement will apply to anyone who was a Cigna employee as of April 1.

Effective January 1, 2010, Cigna will sweeten its 401(k) plan in several ways. It will match 100 percent of employees’ deferrals, up to the first 3 percent of pay, and will match 50 percent of employee deferrals on the next 3 percent of pay.

It currently matches 50 percent of contributions, up to the first 6 percent of pay.

Cigna also will ease plan eligibility requirements so new employees will become eligible for a company matching contribution as soon as they join the plan; currently, employees have to complete one year of service before they are eligible for a matching contribution.

In addition, employees will fully vest in matching contributions after two years of service, down from the current five-year requirement.

Cigna, which estimates that the changes will result in annual savings of $40 million, noted that its retirement benefits plan package already was “significantly higher than the average package provided by our competitors. These actions bring our retirement benefits in line with those of our direct competitors.”

While the decision to freeze the cash-balance plan was “a difficult one,” the 401(k) plan enhancements will result in employees receiving “a total package of benefits and rewards that is very competitive,” the company said.

Philadelphia-based Cigna is the second large, well-known employer to announce a cash-balance plan freeze within the past week. Last week, Wells Fargo & Co. in San Francisco said it will freeze its cash-balance plan, also effective July 1.

Employers in large numbers have been moving away from all types of defined-benefit plans. Last week, Watson Wyatt Worldwide reported that only 45 of the Fortune 100 companies now offer a defined-benefit plan to new salaried employees. As recently as 1998, 90 percent of Fortune 100 companies offered a defined-benefit to new salaried employees.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Wells Fargo & Co. is freezing its cash-balance pension plan, making it one of the largest employers to do so.

Effective July 1, employees no longer will earn benefits in the plan. Wells Fargo also is freezing the cash-balance plan sponsored by Wachovia Corp., a Charlotte, North Carolina-based bank Wells Fargo acquired last year.

Wells Fargo will continue to match 100 percent of employees’ 401(k) plan salary deferrals, up to the first 6 percent of pay.

Wells Fargo said in a statement that the decisions to freeze the plans were “difficult” but that it is “confident that we’re taking the right steps to ensure the long-term strength of our company.”

It also said that the 401(k) plan “is one of the most beneficial tools” for employees to save for retirement.

San Francisco-based Wells Fargo, which ranks at No. 41 on the Fortune 100, joins several other large, well-known companies—including Boeing Co., IBM Corp. and Verizon Communications Inc.—that have announced during the last couple of years that they are phasing out their cash-balance plans.

Some benefits experts predicted that cash-balance plans would make a big comeback after Congress made clear in a 2006 law that the plans’ basic design does not discriminate against older employees, ending uncertainty about cash balance plans’ legal status.

While a few major employers, including most recently Coca-Cola Co., have adopted cash-balance plans since the 2006 law, such startups have been outnumbered by other big employers’ decisions to phase out the plans. Such changes are part of a larger trend of employers moving away from all types of defined-benefit plans.

Cash-balance plans are so named because employees’ accrued benefits are communicated as a cash lump sum rather than as an annuity payable at retirement.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

The International Association of Machinists is trying to win back the mechanics at United Airlines.

The IAM, which was voted out in 2003, says it was approached recently by some mechanics about representing them again. It’s the largest union at United, representing about 17,000 ramp workers, customer service agents and others.

The move comes as the Chicago-based airline begins negotiations with all six of its unions, and it could force the third change in representation for the mechanics in less than a decade.

IAM’s key selling point is its traditional defined-benefit pension plan; its members are the only United workers who still have such a plan. The company-sponsored pension plans were ended after parent UAL Corp. entered bankruptcy protection, and they were transferred to the Pension Benefit Guaranty Corp., which pays a fraction of the original amount.

United switched its retirement program to a 401(k) plan with a company contribution, lowering its labor costs. But 401(k) plans took a beating during the recent downturn that has left the stock market down by nearly half from its peak in 2007. IAM workers can contribute to United’s 401(k), but instead of a company match, they opted for contributions to the IAM national pension plan.

“Anybody who has looked at a 401(k) plan recently wishes they had a defined-benefit plan,” the union spokesman says.

United’s 5,500 active mechanics, including about 450 in Chicago, last year voted to be represented by the International Brotherhood of Teamsters. The Teamsters replaced the Aircraft Mechanics Fraternal Association, which ousted the IAM in 2003, when United was in bankruptcy.

The IAM will begin collecting signatures from 9,000 active and furloughed mechanics in an effort to force a vote. But because the mechanics selected a new union last year, the earliest an election could be called would be April 2010. Judging by the slow pace of labor negotiations in the airline industry, it’s unlikely United will have reached any agreement with unions on new contracts by then.

The Teamsters did not return calls seeking comment.

Filed by John Pletz of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

 

When Sen. Arlen Specter, D-Pennsylvania, recently switched parties, he vowed to remain opposed to a bill that would make it easier for workers to join unions.

But Specter’s move has stoked negotiations over the Employee Free Choice Act that may lead to two key provisions being modified.

One would allow the formation of a union when a majority of workers sign cards authorizing one. Another would mandate binding arbitration if a company and a union don’t reach an agreement on a first contract within 120 days of the union being recognized.

In a March 24 statement, Specter said he opposed both ideas. But he asserted that management-labor relations are broken and proposed ways to amend the National Labor Relations Act. Some of those ideas are finding their way into negotiations over the union bill.

The so-called card-check provision may be replaced with a plan to shorten union elections to a range of seven to 21 days after a petition has been filed, according to a source familiar with the talks. The mandatory arbitration proposal might be replaced with one focusing on expedited mediation.

Opponents say the card-check process would effectively eliminate secret-ballot union elections. Proponents say that the bill would preserve the secret ballot but give employees the option of using card check.

Capitol Hill talks have been spurred by Specter’s crossing the aisle.

His move raised the number of Senate Democrats to 57. The two Senate independents usually caucus with the Democrats, giving them a total of 60, if Democratic candidate Al Franken is declared the winner in Minnesota by a state court.

With 60 members, Democrats could squelch Republican filibusters like the one that killed the union bill in 2007. But Specter and some moderate Democrats have qualms about the card-check and arbitration provisions, leaving supporters short of a filibuster-proof number.

That has led Sen. Tom Harkin, D-Iowa and author of the Senate version of the bill, to launch negotiations with Specter.

The card-check provision may be fading because supporters see an opportunity to achieve it, or something like it, through National Labor Relations Board rulings when the appropriate case comes up, according to one source. The NLRB membership is set to swing to a 3-2 Democratic advantage now that a Democrat is in the White House.

Union advocates don’t mention card-check by name when they discuss the principles they want to see in a final bill.

“Workers need to have a real choice to form a union and bargain for a better life, free from intimidation,” AFL-CIO spokeswoman Alison Omens said.

She also said companies should not be able to “engage in endless delays and stalling tactics” to prevent a first contract, and that penalties for violating workers’ rights should be strengthened.

Kate Cyrul, communications director for Harkin, used similar language in outlining the EFCA principles that should survive negotiations.

“One thing all Democrats can agree on is that the current system is broken and we need real reform to level the playing field,” Cyrul said. “[Harkin] believes we are on the right track, and we will get a bill to the president’s desk that achieves these important goals.”

Not if the business community has its way.

Fierce opposition to EFCA has not cooled among such groups as the U.S. Chamber of Commerce and the National Association of Manufacturers. A bill with a diluted card-check provision would also be rejected.

“We oppose any proposal that stems from the fundamentally flawed EFCA,” said Keith Smith, NAM director of employment and labor policy. “No compromise. EFCA is a dangerous power grab by union leaders.”

NAM and other groups argue that the bill would increase costs for companies fighting the recession. Advocates say that greater unionization will lead to higher wages and benefits for struggling workers.

Although EFCA is organized labor’s top priority, leaders believe that nothing decisive will happen until Franken is seated in the Senate.

“Labor’s committed to get a deal, and there’s a lot of patience to hang together until we get a deal,” said Jamie Horwitz, a union consultant based in Washington.

—Mark Schoeff Jr.

Workforce Management’s online news feed is now available via Twitter

After an at times tumultuous relationship with ad agencies, the No. 1 job site in the country, CareerBuilder, will no longer work with an agency of record and is taking its advertising in-house.

The move ends CareerBuilder’s two-year run with Wieden & Kennedy of Portland, Oregon, which picked up the account after the job site’s acrimonious split with its former creative shop, Chicago-based Cramer-Krasselt.

“We’ve had a very positive, collaborative experience with Wieden & Kennedy and put together a fantastic campaign with breakthrough creative,” CareerBuilder chief marketing officer Richard Castellini said in a statement. “We made a strategic decision to change our advertising approach and leverage the expertise of our advertising pros in-house.”

“It is unfortunate that, in this economy, companies have had to make these tough decisions,” Tom Blessington, Wieden’s managing director, said in a statement. “CareerBuilder.com was truly a great client, and we value their partnership and friendship. We wish them all the best in their future endeavors and would love to have the chance to work with them again down the road.”

CareerBuilder said it plans to continue the current campaign from Wieden, called “Start Building.”

CareerBuilder earned a reputation as an ungrateful client thanks to a bitter parting with indie shop CK after a successful five-year partnership that saw the online jobs site overtake rival Monster in total listings and online traffic.

In the wake of the split—which CK chief executive Peter Krivkovich had blamed on a Super Bowl spot’s ranking on USA Today’s “Ad Meter” poll—CareerBuilder threw its account into review. CK refused to take part and resigned the account.

CareerBuilder’s measured media spending has steadily declined in recent years. It tracked about $60 million in 2005 and 2006, but that dropped to a total of $52 million in 2007, and then reduced again to about $44 million in 2008, according to TNS Media Intelligence data.

Much of CareerBuilder’s marketing dollars have always been devoted to online, though the brand is no stranger to TV advertising, including buying up expensive Super Bowl airtime.

CareerBuilder’s owners include three companies largely or entirely devoted to the newspaper business, which has tanked in the recession largely due to pullbacks in advertising.

Gannett, the country’s biggest newspaper owner, reported a nearly 60 percent drop in profit for the first quarter; even its newspapers’ Web sites, excluding USAToday.com, posted a 20 percent ad-revenue decline in the quarter. McClatchy reported a $37.7 million loss from continuing operations in the first quarter. And Tribune Co., which owns papers including the Los Angeles Times and the Chicago Tribune, filed for bankruptcy protection in December.

Microsoft, CareerBuilder’s only non-media owner, last month suffered the first year-over-year quarterly revenue drop in its history, and the company initiated another round of employee cuts on Wednesday, May 6.

For the first quarter of 2009, CareerBuilder posted North American revenue of $141 million.

“While the industry is trending down year over year, CareerBuilder’s decline has been significantly less than that of our competitors,” a spokeswoman said.

Filed by Rupal Parekh of Advertising Age, a sister publication of Workforce Management. Advertising Age reporters Nat Ives and Jeremy Mullman contributed to this report. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter